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

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

(3) In subsection (3) omit paragraph (b) and the “and” immediately before it.

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

102

Omit section 515 (exemption for signatories to Operating Agreement for INMARSAT).

103

Omit section 516 (Government securities held by non-resident central banks).

104

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105

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107

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108

(1) Amend section 527 (spreading of royalties over several years) as follows.

(2) For subsection (1) substitute—

(1) Where— (a) a royalty or other sum is paid to a company in respect of the user of a patent, (b) the user extended over a period of six complete years or more, and (c) the payment is one from which a sum representing income tax must be deducted under section 903 of ITA 2007, the company may on the making of a claim require that the corporation tax payable by it by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of corporation tax which would have been payable by it if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.

(3) Omit subsection (4).

109

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110

Omit sections 536 (taxation of royalties where owner abroad), 537 (public lending right) and 537B (taxation of design royalties where owner abroad).

111

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112

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113

Omit section 555 (entertainers and sportsmen: payment of tax).

114

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115

In section 558 (supplementary provisions) omit subsections (1) to (4).

116

In section 571 (schemes for rationalising industry: cancellation of certificates) after subsection (1) insert—

(1A) An amount charged to income tax under subsection (1) above is treated for income tax purposes as an amount of income.

117

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118

Omit section 574 (share loss relief for individuals).

119

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120

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128

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129

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132

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133

Omit section 581A (interest on foreign currency securities etc).

134

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135

Omit section 582A (designated international organisations: miscellaneous exemptions).

136

Omit section 587A (new issues of securities: extra return).

137

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138

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139

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140

In section 615(3) (exemption from tax in respect of certain pensions) for “section 349(1)” substitute “ Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments and patent royalties) ”.

141

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142

In section 658(4)(b) (supplementary) omit “(notwithstanding anything in section 348)”.

143

In section 659E(1) (treatment of income from property investment LLPs) at the end insert “ (see section 1004 of ITA 2007) ”.

144

Omit section 660C(3) (nature of charge on settlor).

145

Omit sections 685A to 687 (liability of trustees).

146

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147

Omit section 689A (disregard of trustees' expenses where beneficiary non-UK resident).

148

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149

Omit sections 690 to 694.

150

Omit section 698A.

151

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152

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156

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157

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159

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160

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161

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162

Omit sections 710 to 727A (accrued income scheme).

163

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164

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165

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166

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167

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168

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169

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170

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171

(1) Amend section 736B (deemed manufactured payments in the case of stock lending arrangements) as follows.

(2) In subsection (2)—

(a) after “that Schedule” insert “ , and section 97 of the Finance Act 1996 (loan relationships: manufactured interest), ”, and

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

(3) In subsection (2A)—

(a) in paragraph (a) omit “income tax or”, and

(b) in paragraph (b) omit “total income or, as the case may be,”.

172

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173

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174

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175

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176

(1) Amend section 737E (power to modify sections 727A, 730A, 730BB and 737A to 737C) as follows.

(2) In subsections (1) and (2) omit “727A,”.

(3) In subsections (4) and (6)(b) omit “or 263D”.

(4) In the sidenote omit “727A,”.

177

Omit sections 739 to 746 (transfer of assets abroad).

178

In section 747(4) (imputation of chargeable profits and creditable tax of controlled foreign companies) omit paragraph (b) and the “and” immediately before it.

179

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180

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181

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182

Omit section 775 (sale by individual of income derived from his personal activities).

183

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184

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195

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196

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197

(1) Amend section 804 (relief against income tax in respect of income arising in years of commencement) as follows.

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

(3) Omit subsection (6).

198

(1) Amend section 807 (sale of securities with or without accrued interest) as follows.

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

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

(4) In the full-out words of subsection (1)—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) omit “or corporation tax”.

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

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

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

(8) Omit subsection (6).

199

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200

In section 811(2) (deduction for foreign tax where no credit allowable)—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) omit paragraph (b) and the “and” immediately after it.

201

In section 812(5) (withdrawal of right to tax credit of certain non-resident companies connected with unitary states) for paragraph (c) substitute—

(c) whether a person is connected with another is determined in accordance with section 839;

202

In section 816 (disclosure of information)—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) omit subsection (3A).

203

Omit section 818 (arrangements for payments of interest less tax or of fixed net amount).

204

Omit section 819 (old references to standard rate tax).

205

In section 821(3) (under-deductions from payments made before passing of annual Act)—

(a) for paragraph (a) substitute—

(a) any payment to which section 906 of ITA 2007 applies (certain royalties etc where usual place of abode of owner is abroad), and

, and

(b) omit paragraph (aa) and the “and” immediately after it.

206

Omit section 823 (adjustments of reliefs where given at different times).

207

Omit section 827A (territorial scope of charges under certain provisions to which section 836B applies).

208

(1) Amend section 828 (orders and regulations made by the Treasury or the Board) as follows.

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

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

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

(5) In subsection (4)—

(a) omit “1(6),”

(b) omit “257C, 582A(1),”, and

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

209

Omit section 829 (application of Income Tax Acts to public departments and avoidance of exempting provisions).

210

In section 830(1) (territorial sea) omit “income tax and”.

211

In section 831(3) (interpretation of ICTA) after the definition of “ITTOIA 2005” insert—

“ITA 2007” means the Income Tax Act 2007;

212

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213

Omit section 833 (interpretation of the Income Tax Acts).

214

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215

Omit section 835 (“total income” in the Income Tax Acts).

216

Omit section 836 (returns of total income).

217

Omit section 836B (table of provisions to which that section applies).

218

Omit section 837 (“annual value” of land).

219

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220

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221

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222

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223

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224

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225

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226

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227

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228

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229

Omit section 842AA (venture capital trusts).

230

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231

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232

(1) Amend Schedule 14 (provisions ancillary to section 266) as follows.

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

(3) In paragraph 6(1) for “subsections (6) and (7)” substitute “ subsection (7) ”.

(4) In paragraph 8 after sub-paragraph (3) insert—

(3A) In sub-paragraph (3) “industrial assurance business” means any industrial assurance business within the meaning given by— (a) section 1(2) of the Industrial Assurance Act 1923, or (b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979, which was carried on before 1 December 2001.

233

In Part 1 of Schedule 15 (qualifying policies for the purposes of section 267) after paragraph 20 insert—

(20A) In this Part of this Schedule “industrial assurance business” means any industrial assurance business within the meaning given by— (a) section 1(2) of the Industrial Assurance Act 1923, or (b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979, which was carried on before 1 December 2001.

234

Omit Part 1 of Schedule 15B (venture capital trusts: relief from income tax).

235

Omit Schedule 16 (collection of income tax on company payments).

236

In paragraph 2(b) of Schedule 19B (petroleum extraction activities: exploration expenditure supplement) after “section 837B” insert “ of this Act and section 1003 of ITA 2007 ”.

237

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238

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239

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240

Omit Schedule 28B (venture capital trusts: meaning of “qualifying holding”).

Part 2 — Other enactments

Chevening Estate Act 1959 (c. 49)

241

In section 2(1A)(a) of the Chevening Estate Act 1959 (provisions as to income tax, estate duty and stamp duty) for “section 505(1A) of the Income and Corporation Taxes Act 1988” substitute “ section 533(2) of the Income Tax Act 2007 ”.

Taxes Management Act 1970 (c. 9)

242

The Taxes Management Act 1970 is amended as follows.

243

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244

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245

(1) Amend section 12AB(1) (partnership return to include partnership statement) as follows.

(2) In paragraph (a)—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) omit sub-paragraph (iv) and the “and” immediately before it.

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

246

In section 12B(4A)(a) (records to be kept for purposes of returns) for sub-paragraph (ii) substitute—

(ii) section 495(1) or 975(2) or (4) of ITA 2007 (statements about deduction of income tax),

247

(1) Amend section 17 (interest paid or credited by banks etc without deduction of income tax or after deduction of income tax) as follows.

(2) In subsection (1) after “bank” insert “ or building society ”.

(3) In subsection (1A) for “section 840A of the principal Act” substitute “ section 991 of ITA 2007 ”.

(4) After subsection (6) insert—

(7) In the application of this section in relation to building societies, references to interest include references to dividends. For this purpose “dividend” includes any distribution (whether or not described as a dividend).

(5) In the sidenote after “banks” insert “ , building societies ”.

248

In section 21(5A) (transactions in securities etc) for “Schedule 23A to the principal Act” substitute “ Chapter 2 of Part 11 or Chapter 9 of Part 15 of ITA 2007 ”.

249

In section 24(3A) (power to obtain information as to income from securities) for “section 840A of the principal Act” substitute “ section 991 of ITA 2007 ”.

250

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251

In section 36(3A) (fraudulent or negligent conduct)—

(a) after “section 257BA of the principal Act” insert “ or any of sections 47 to 49 of ITA 2007 ”, and

(b) for “(elections as to transfer of married couple's allowance)” substitute “ (tax reductions for married couples and civil partners: elections to transfer relief) ”.

252

(1) Amend section 37A (effect of assessment where allowances transferred) as follows.

(2) For “income tax reduction or deduction from total income” in both places where it occurs substitute “ deduction from net income or tax reduction ”.

(3) After “spouse” insert “ or civil partner ”.

(4) After “the principal Act” insert “ or section 39, 51 or 52 of ITA 2007 ”.

253

In section 42(7) (procedure for making claims etc)—

(a) in paragraph (a) omit “723(3),”,

(b) omit “and” at the end of paragraph (d), and

and (f) sections 668 and 669 of ITA 2007.

254

In section 43A(2A) (further assessments: claims etc)—

(a) in paragraph (a) after “section 257BA of the principal Act” insert “ or any of sections 47 to 49 of ITA 2007 ”,

(b) in paragraph (a) for “(election as to transfer of married couple's allowance)” substitute “(tax reductions for married couples and civil partners: elections to transfer relief)”, ...

255

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256

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257

In section 55(1) (recovery of tax not postponed)—

(a) omit paragraph (c), and

(b) in paragraph (d) for “that Act” substitute “ the principal Act ”.

258

For section 87 (interest on income tax on company payments) substitute—

(87) (1) Income tax which is assessable under Chapter 15 of Part 15 of ITA 2007 carries interest at the rate applicable under section 178 of the Finance Act 1989 from the date when it was due under section 951 of ITA 2007 until payment. (2) Subsection (1) applies— (a) whether or not an assessment is made, and (b) whether or not income tax which is assessed has been paid when the assessment is made. (3) Subsection (1) applies even if the date when the income tax should have been paid is a non-business day as defined by section 92 of the Bills of Exchange Act 1882. (4) Subsection (5) applies to any income tax which— (a) was payable under Chapter 15 of Part 15 of ITA 2007 (collection: deposit-takers, building societies and certain companies) in respect of payments within section 946 of that Act made in a return period, (b) was not paid on the date when it was due under section 951 of that Act, and (c) has subsequently been discharged or repaid under section 953 of that Act because the person who made the payments received payments on which it suffered income tax by deduction in a later return period. (5) The income tax carries interest under subsection (1) from the date when it was due under section 951 of ITA 2007 until the earliest of— (a) the date when the income tax was paid, (b) the date when the person delivered a return for the later return period, and (c) the expiry of 14 days after the end of that period, but subsection (1) does not otherwise apply to the income tax. (6) In this section “return period” means a period for which a return is required to be made under Chapter 15 of Part 15 of ITA 2007.

259

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260

(1) Amend section 98 (special returns etc) as follows.

(2) In subsection (4A)(a) for “section 350(1) of, or Schedule 16 to, the principal Act” substitute “ Chapter 15 or 16 of Part 15 of ITA 2007 ”.

(3) In subsection (4B) for paragraphs (a) to (d) substitute—

(a) the payment is made by a company, local authority or qualifying partnership (within the meaning of section 932 of ITA 2007) without an amount representing income tax on the payment being deducted from it, (b) at the time the payment is made, the company, authority or partnership— (i) does not believe that the payment is an excepted payment for the purposes of Chapter 11 of Part 15 of ITA 2007 (payments between companies etc: exception from duties to deduct), or (ii) if it does so believe, cannot reasonably do so, (c) the payment is one from which tax is deductible under Part 15 of ITA 2007 unless the company, authority or partnership reasonably believes that it is an excepted payment for the purposes of Chapter 11 of that Part, and (d) the payment is not an excepted payment at the time the payment is made.

(4) Omit subsection (4C).

(5) For subsection (4D) substitute—

(4D) A payment is within this subsection if— (a) it is a payment from which a sum representing income tax must be deducted under Chapter 6 (deduction from annual payments and patent royalties) or 7 (deduction from other payments connected with intellectual property) of Part 15 of ITA 2007, (b) a company, purporting to rely on section 911 of that Act (double taxation arrangements: deduction at treaty rate), deducts less from the payment than required by those Chapters, and (c) at the time the payment is made the payee (as defined in section 913 of that Act) is not entitled to relief under double taxation arrangements (as defined in section 1023 of that Act) and the company— (i) does not believe that it is entitled to such relief, or (ii) if it does so believe, cannot reasonably do so.

(6) For subsection (4DA) substitute—

(4DA) A payment is within this subsection if— (a) it is a payment from which a sum representing income tax must be deducted under Chapter 6 (deduction from annual payments and patent royalties) or 7 (deduction from other payments connected with intellectual property) of Part 15 of ITA 2007, (b) a company, purporting to rely on section 914 of ITA 2007 (EU companies: discretion to make payment gross), makes the payment without deducting a sum representing income tax, and (c) at the time the payment is made the payment is not exempt from income tax as a result of section 758 of ITTOIA 2005 (exemption for certain interest and royalty payments) and the company— (i) does not believe that the payment is so exempt, or (ii) if it does so believe, cannot reasonably do so.

(7) In subsection (4E)(b) for “section 349(2) of the principal Act” substitute “ section 874 of ITA 2007 ”.

(8) In the first column of the Table—

(a) omit the entry relating to regulations under section 42A of ICTA,

(b) omit the entry relating to regulations under section 476(1) of ICTA,

(d) omit the entry relating to section 482(3) of ICTA,

(e) omit the entry relating to regulations under section 482(11) of ICTA,

(f) omit the entry relating to section 483 of ICTA,

(g) omit the entry relating to regulations under section 555(7) of ICTA,

(h) omit the entry relating to section 745(1) of ICTA,

(i) omit the entry relating to paragraph 5(2) of Schedule 15B to ICTA,

(j) omit the entry relating to regulations under paragraph 11B(5) of Schedule 28B to ICTA,

(k) omit the entry relating to section 86(12) of FA 1995,

(l) omit the entry relating to regulations under Schedule 33 to FA 2002, and

(m) at the end insert—

sections 242 and 243(1) and (2) of ITA 2007; section 271(2) of ITA 2007; regulations under Chapter 5 of Part 6 of ITA 2007; regulations under section 330(5) of ITA 2007; section 703 of ITA 2007; section 748(1) and (2) of ITA 2007; section 771 of ITA 2007; section 788 of ITA 2007; section 862 of ITA 2007; regulations under section 871(1) of ITA 2007; regulations under section 969(1) of ITA 2007; regulations under section 971(1) of ITA 2007; paragraph 155(5) of Schedule 2 to ITA 2007.

(9) In the second column of the Table—

(a) omit the entry relating to regulations under section 42A of ICTA,

(b) omit the entry relating to section 350(1) of ICTA,

(d) omit the entry relating to regulations under section 477A(1) of ICTA,

(e) omit the entry relating to section 482(2) of ICTA,

(f) omit the entry relating to regulations under section 482(11) of ICTA,

(g) omit the entry relating to regulations under section 555(7) of ICTA,

(h) omit the entry relating to paragraph 5(1) of Schedule 15B to ICTA,

(i) omit the entry relating to Schedule 16 to ICTA,

(j) omit the entry relating to regulations under Schedule 33 to FA 2002,

(k) omit the entry relating to regulations under section 122 of FA 2006, and

(l) at the end insert—

sections 240 and 241 of ITA 2007; section 271(1) of ITA 2007; regulations under Chapter 5 of Part 6 of ITA 2007; section 373 of ITA 2007; regulations under section 871(1) of ITA 2007; Chapter 15 of Part 15 of ITA 2007; Chapter 16 of Part 15 of ITA 2007; regulations under section 969(1) of ITA 2007; regulations under section 971(1) of ITA 2007; regulations under section 973(1) of ITA 2007.

(10) After the paragraph at the end of the Table insert— “ References in this Table to sections 240, 241, 242 and 243(1) and (2) of ITA 2007 are to provisions that apply only in relation to shares issued after 5 April 2007. ”

261

In section 99A (certificates of non-liability to income tax) for “section 477A of the principal Act (building societies) or section 480B of that Act (deposit-takers)” substitute “ section 852 of ITA 2007 ”.

262

After section 99A insert—

(99B) Where a person fraudulently or negligently gives any incorrect information in a declaration under any of sections 858 to 861 of ITA 2007, the person shall be liable to a penalty not exceeding £3,000.

263

In section 118(1) (interpretation)—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) after the definition of “ITTOIA 2005” insert—

““ITA 2007” means the Income Tax Act 2007,”.

264

In paragraph 9(2) of Schedule 1A (claims etc not included in returns)—

(a) in paragraph (a) for “(personal reliefs for non-residents)” substitute “ or section 56 or 460 of ITA 2007 (residence etc of claimants) ”, and

(b) in paragraph (c) for “of that Act” substitute “ of the principal Act ”.

Finance Act 1971 (c. 68)

265

Omit section 21 of, and Schedule 3 to, the Finance Act 1971 (occupational pension schemes).

Biological Standards Act 1975 (c. 4)

266

In section 2(4A)(a) of the Biological Standards Act 1975 (general provisions about the Board) for “section 505(1A) of the Income and Corporation Taxes Act 1988” substitute “ section 533(2) of the Income Tax Act 2007 ”.

House of Commons Disqualification Act 1975 (c. 24)

267

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

Inheritance Tax Act 1984 (c. 51)

268

The Inheritance Tax Act 1984 is amended as follows.

269

In section 157(6) (non-residents' bank accounts) for “section 840A of the Taxes Act 1988” substitute “ section 991 of the Income Tax Act 2007 ”.

270

In section 204(5) (limitation of liability) for “section 739 or 740 of the Taxes Act 1988” substitute “ Chapter 2 of Part 13 of the Income Tax Act 2007 ”.

271

In section 272 (general interpretation) in the definition of “authorised unit trust” for the words from “section 469” to “section)” substitute “ the Income Tax Acts (see section 1007 of the Income Tax Act 2007) ”.

Administration of Justice Act 1985 (c. 61)

272

In paragraph 36(3) of Schedule 2 to the Administration of Justice Act 1985—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) after “1988” insert “ and sections 749, 771(5) and (6) and 788(5) and (6) of the Income Tax Act 2007 ”.

Building Societies Act 1986 (c. 53)

273

In section 8(9) of the Building Societies Act 1986 (raising funds and borrowing) for “482(6) of the Income and Corporation Taxes Act 1988” substitute “ 866(2) and (3) of the Income Tax Act 2007 ”.

Finance Act 1988 (c. 39)

274

The Finance Act 1988 is amended as follows.

275

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

276

In Schedule 6 (commercial woodlands) omit paragraph 3(3) to (5).

277

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

Finance Act 1989 (c. 26)

278

The Finance Act 1989 is amended as follows.

279

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

280

In section 111 (residence of personal representatives)—

(a) omit subsections (1) to (3) and (6) to (8), and

(b) in subsection (5) omit the words “Subject to subsections (6) to (8) below,”.

281

(1) Amend section 151 (assessment of trustees and personal representatives) as follows.

(2) In subsection (2)(a) omit the words from “other” to “2005,”.

(3) Omit subsection (2)(b) and the “and” immediately before it.

(4) Omit subsection (3).

282

In section 182(3) (disclosure of information) at the end of paragraph (d) insert “ or section 704 of the Income Tax Act 2007 ”.

283

(1) Amend Schedule 5 (employee share ownership trusts) as follows.

(2) In paragraph 15 for “section 840 of the Taxes Act 1988” substitute “ section 995 of the Income Tax Act 2007 ”.

(3) In paragraph 16(2)—

(a) in paragraph (b) for “section 840 of that Act” substitute “ section 995 of the Income Tax Act 2007 ”, and

(b) in paragraph (c) for “that Act” substitute “ the Taxes Act 1988 ”.

Finance Act 1990 (c. 29)

284

(1) Amend section 25 of the Finance Act 1990 (c. 29) (donations to charity by individuals) as follows.

(2) Omit subsections (1) to (9A), (11) and (13).

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

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

Finance Act 1991 (c. 31)

285

The Finance Act 1991 (c. 31) is amended as follows.

286

Omit section 53 (Income Tax (Building Society) Regulations 1986).

287

Omit section 72 (deduction of trading losses).

288

The Social Security Contributions and Benefits Act 1992 (c. 4) is amended as follows.

289

In section 4A(3)(i)(i) (earnings of workers supplied by service companies etc) for “section 839 of the Income and Corporation Taxes Act 1988” substitute “ section 993 of the Income Tax Act 2007 ”.

290

(1) Amend Schedule 2 (levy of Class 4 contributions with income tax) as follows.

(2) In paragraph 1 after paragraph (ab) insert—

(ac) “ITA 2007” means the Income Tax Act 2007;

(3) In paragraph 3—

(a) in sub-paragraph (1)—

(i) for “the Act of 1988” substitute “ ITA 2007 ”,

(ii) in paragraph (a) for “sections 380 and 381” substitute “ sections 64 and 72 ”,

(iii) in paragraph (c) for “section 385” substitute “ section 83 ”, and

(iv) in paragraph (d) for “sections 388 and 389” substitute “ section 89 ”,

(b) in sub-paragraph (2)—

(i) omit “of the Act of 1988”,

(ii) in paragraph (a) after “Chapter I of Part VII” insert “ of the Act of 1988 and Chapters 2 and 3 of Part 3 and sections 457, 458 and 459 of ITA 2007 ”,

(iii) in paragraph (b) for “section 353” substitute “ section 383 of ITA 2007 ”,

(iv) omit paragraph (c), and

(v) in paragraph (d) for “section 390” substitute “ sections 88 and 94 of ITA 2007 ”,

(d) in sub-paragraph (5)—

(i) omit paragraph (a), and

(ii) in paragraph (b) for “section 353 of that Act” substitute “ section 383 of ITA 2007 ”.

(4) In paragraph 9(4) for “section 832 of the Act of 1988” substitute “ section 989 of ITA 2007 ”.

291

The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.

292

293

(1) Amend Schedule 2 (Schedule 2 to the Social Security Contributions and Benefits Act 1992: levy of Class 4 contributions with income tax) as follows.

(2) In paragraph 1 after paragraph (ab) insert—

(ac) “ITA 2007” means the Income Tax Act 2007;

(3) In paragraph 3—

(a) in sub-paragraph (1)—

(i) for “the Act of 1988” substitute “ ITA 2007 ”,

(ii) in paragraph (a) for “sections 380 and 381” substitute “ sections 64 and 72 ”,

(iii) in paragraph (c) for “section 385” substitute “ section 83 ”, and

(iv) in paragraph (d) for “sections 388 and 389” substitute “ section 89 ”,

(b) in sub-paragraph (2)—

(i) omit “of the Act of 1988”,

(ii) in paragraph (a) after “Chapter I of Part VII” insert “ of the Act of 1988 and Chapters 2 and 3 of Part 3 and sections 457, 458 and 459 of ITA 2007 ”,

(iii) in paragraph (b) for “section 353” substitute “ section 383 of ITA 2007 ”,

(iv) omit paragraph (c), and

(v) in paragraph (d) for “section 390” substitute “ sections 88 and 94 of ITA 2007 ”,

(d) in sub-paragraph (5)—

(i) omit paragraph (a), and

(ii) in paragraph (b) for “section 353 of that Act” substitute “ section 383 of ITA 2007 ”.

(4) In paragraph 9(4) for “section 832 of the Act of 1988” substitute “ section 989 of ITA 2007 ”.

Taxation of Chargeable Gains Act 1992 (c. 12)

294

The Taxation of Chargeable Gains Act 1992 is amended as follows.

295

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

296

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

297

For section 11 (visiting forces, agents-general etc) substitute—

(11) (1) If section 833 of ITA 2007 (visiting forces and staff of designated allied headquarters) applies to an individual throughout a period, the period is not treated for capital gains tax purposes as— (a) a period of residence in the United Kingdom, or (b) creating a change of the individual's residence or domicile. (2) If an individual is entitled to immunity from income tax by virtue of section 841 of ITA 2007 (which provides immunity from income tax for official agents of Commonwealth countries or the Republic of Ireland etc), the individual is entitled to the same immunity from capital gains tax as that to which a member of the staff of a mission is entitled under the Diplomatic Privileges Act 1964. (3) “A member of the staff of a mission” is to be read in accordance with the Diplomatic Privileges Act 1964.

298

In section 16(1) (computation of losses) for “section 72 of the Finance Act 1991” substitute “ sections 261B, 261D and 263ZA ”.

299

In section 37 (consideration chargeable to tax on income) at the end insert—

(5) If— (a) because section 759(4) or (6) of ITA 2007 applies, the person charged to tax under Chapter 3 of Part 13 of that Act (transactions in land) is a person other than the person (“A”) by whom the gain was realised, and (b) the income tax has been paid, for the purposes of this section the amount charged to that tax is regarded as having been charged as the income of A. (6) If— (a) because section 777(5) of that Act applies, the person charged to tax under Chapter 4 of Part 13 of that Act (sales of occupation income) is a person other than the person (“B”)— (i) for whom the capital amount was obtained, or (ii) in the case of income treated as arising under section 779 of that Act, by whom the property or right was sold or realised, and (b) the income tax has been paid, for the purposes of this section the amount charged to that tax is regarded as having been charged as the income of B. (7) In subsection (6) “capital amount” has the same meaning as in Chapter 4 of Part 13 of that Act (sales of occupation income) (see section 777(7) of that Act).

300

In section 39 (exclusion of expenditure by reference to tax on income) after subsection (3) insert—

(4) If— (a) because section 759(4) or (6) of ITA 2007 applies, the person charged to tax under Chapter 3 of Part 13 of that Act (transactions in land) is a person other than the person (“A”) by whom the gain was realised, and (b) the income tax has been paid, for the purposes of this section the amount charged to that tax is regarded as having been charged as the income of A.

301

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

302

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

303

In section 98(2) (power to obtain information for purposes of sections 87 to 90)—

(a) for the words from the beginning to “745(1)” substitute “ Sections 748(3) to (5), 749 and 750 of ITA 2007 shall have effect in relation to subsection (1) above as they have effect in relation to section 748(1) and (2) of that Act ”, and

(b) in paragraph (a) for “Chapter III of Part XVII of the Taxes Act” substitute “ Chapter 2 of Part 13 of that Act ”.

304

In section 101B(1)(a) (transfer of a company's assets to VCT), for “section 842AA of the Taxes Act” substitute “ Part 6 of ITA 2007 ”.

305

In section 101C(7) (transfer within group to VCT), for “section 842AA of the Taxes Act” substitute “ Part 6 of ITA 2007 ”.

306

(1) Amend section 105A (shares acquired on the same day: elections for alternative treatment) as follows.

(2) In subsection (4)—

(a) after “Chapter 3 of Part 7 of the Taxes Act” insert “ , relief under Part 5 of ITA 2007 ”,

(b) after “section 299 of the Taxes Act” insert “ or section 246 of ITA 2007 ”,

(d) for “that section” substitute “ section 299 of the Taxes Act or subsection (4) of section 246 of ITA 2007 ”.

(3) In subsection (7)—

(a) after “Chapter 3 of Part 7 of the Taxes Act” insert “ or relief under Part 5 of ITA 2007 ”,

(b) for “that Act” substitute “ the Taxes Act or section 245 of ITA 2007 ”, and

(4) After subsection (8) insert—

(9) In this section references to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.

307

In section 108(1)(a) (identification of relevant securities) for “section 710 of the Taxes Act” substitute “ Chapter 2 of Part 12 of ITA 2007 (accrued income profits) ”.

308

(1) Amend section 119 (transfer of securities subject to the accrued income scheme) as follows.

(2) For subsections (1) to (5) substitute—

(1) Where there is a transfer of securities within the meaning of Chapter 2 of Part 12 of ITA 2007 (accrued income profits)— (a) if a payment is treated as made to the transferor under section 632 of that Act or by the transferor under section 633 of that Act, section 37 shall be disregarded in computing the gain accruing on the disposal concerned; (b) if a payment is treated as made by the transferee under section 632 of that Act or to the transferee under section 633 of that Act, section 39 shall be disregarded in computing the gain accruing to the transferee if he disposes of the securities; but subsections (2) and (3) below shall apply. (2) Where the securities are transferred with accrued interest (within the meaning of that Chapter)— (a) if a payment is treated as made to the transferor under section 632 of ITA 2007, an amount equal to the amount of that payment shall be excluded from the consideration mentioned in subsection (8) below; (b) if a payment is treated as made by the transferee under that section, an amount equal to the amount of that payment shall be excluded from the sums mentioned in subsection (9) below. (3) Where the securities are transferred without accrued interest (within the meaning of that Chapter)— (a) if a payment is treated as made by the transferor under section 633 of ITA 2007, an amount equal to the amount of that payment shall be added to the consideration mentioned in subsection (8) below; (b) if a payment is treated as made to the transferee under that section, an amount equal to the amount of that payment shall be added to the sums mentioned in subsection (9) below. (3A) Subsections (3B) and (3C) below apply where there is a transfer of variable rate securities (within the meaning of that Chapter) and— (a) the transferor is treated as making accrued income profits under section 630(2) of ITA 2007, or (b) a payment is treated as made to the transferor under section 635 of that Act. (3B) Section 37 shall be disregarded in computing the gain accruing on the disposal concerned. (3C) An amount equal to the amount of the profits or payment shall be excluded from the consideration mentioned in subsection (8) below. (4) Where there is a transfer of securities with unrealised interest (within the meaning of Chapter 2 of Part 12 of ITA 2007)— (a) if section 630 of that Act applies or a payment is treated as made to the transferor under section 634 of that Act, section 37 shall be disregarded in computing the gain accruing on the disposal concerned, but the relevant amount shall be excluded from the consideration mentioned in subsection (8) below; (b) if section 681 of that Act applies, section 39 shall be disregarded in computing the gain accruing on the disposal concerned, but the relevant amount shall be excluded from the sums mentioned in subsection (9) below. (5) In subsection (4) above “the relevant amount” means an amount equal to— (a) if paragraph (b) below does not apply, the amount of the unrealised interest in question (within the meaning of Chapter 2 of Part 12 of ITA 2007); (b) if section 660 of that Act applies— (i) in a case falling within subsection (4)(a) above, the amount taken, by virtue of section 660 or 661 of that Act (as the case may be), to be the unrealised interest value for the purposes of section 660(2) or (3) of that Act; (ii) in a case falling within subsection (4)(b) above, the amount of income that is exempt from liability to income tax under section 681 of that Act.

(3) In subsection (6) for the words from “as if” to the end substitute “as if for “ is treated as made ”, in each place where it occurs, there were substituted “would, if the disposal were a transfer, be treated as made”.”

(4) For subsection (7) substitute—

(7) Where there is a disposal of securities for the purposes of this Act which is not a transfer (within the meaning of Chapter 2 of Part 12 of ITA 2007) but, if it were such a transfer, a payment would be treated as made under section 632 or 633 of that Act, the securities shall be treated— (a) for the purposes of subsection (6) above, as transferred on the day of the disposal, and (b) for the purposes of subsections (2) and (3) above, as transferred with accrued interest if, had the disposal been a transfer within the meaning of that Chapter, it would have been a transfer with accrued interest and as transferred without accrued interest if, had the disposal been such a transfer, it would have been a transfer without accrued interest. (7A) In relation to any securities which by virtue of subsection (7B) below are treated for the purposes of this subsection as having been transferred, subsection (3A) above shall have effect as if— (a) for “is treated as making” there were substituted “ would, if the disposal were a transfer, be treated as making ”, and (b) for “is treated as made” there were substituted “ would, if the disposal were a transfer, be treated as made ”. (7B) Where there is a disposal of securities for the purposes of this Act which is not a transfer (within the meaning of Chapter 2 of Part 12 of ITA 2007) but, if it were such a transfer, the transferor would be treated as making accrued income profits under section 630(2) of that Act in respect of a transfer of variable rate securities or a payment would be treated as made under section 635 of that Act— (a) the securities shall be treated, for the purposes of subsection (7A) above, as transferred on the day of the disposal, and (b) the transfer shall be treated, for the purposes of subsection (3A) above, as a transfer of variable rate securities.

(5) In subsection (10) for the words from “a person is treated”, in the first place where it occurs, to “(determined under that section)”, in the first place it occurs, substitute “ a payment is treated as made to a person under section 632 or 635 of ITA 2007, or a person is treated as making accrued income profits under section 630(2) of that Act in respect of a transfer of variable rate securities, an amount equal to the amount of the payment or profits ”.

(6) In the full-out words of subsection (10) for the words from “a person is treated” to “(determined under that section)” substitute “ a payment is treated as made by a person under section 633 of that Act an amount equal to the amount of the payment ”.

309

After section 125 insert—

(125A) (1) If loss relief under section 573 of the Taxes Act or Chapter 6 of Part 4 of ITA 2007 (“share loss relief”) is obtained in respect of a loss or any part of a loss, no deduction is to be made in respect of the loss or (as the case may be) the part under this Act. (2) If a claim is made for share loss relief in respect of a loss accruing on the disposal of shares, section 30 has effect in relation to the disposal as if for the references in subsections (1)(b) and (5) to a tax-free benefit there were substituted references to any benefit whether tax-free or not. (3) All such adjustments of corporation tax on chargeable gains or capital gains tax are to be made, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of— (a) share loss relief being obtained in respect of an allowable loss, or (b) such relief not being obtained in respect of the whole or part of such a loss in respect of which a claim is made.

310

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

311

(1) Amend section 150A (enterprise investment schemes) as follows.

(2) In subsection (2) after “section 312 (1A)(a) of the Taxes Act” insert “ or section 159(2) of ITA 2007 ”.

(3) In subsection (3) for paragraphs (a), (aa) and (b) substitute—

(a) an individual's liability to income tax has been reduced (or treated by virtue of section 304 of the Taxes Act or section 245 of ITA 2007 (spouses and civil partners) as reduced) for any year of assessment under section 289A of the Taxes Act or section 158 of ITA 2007 in respect of any issue of shares, (b) the amount of the reduction (“A”) is less than the amount (“B”) which is equal to tax at the savings rate for that year on the amount subscribed for the issue, and (c) A is not found under section 289A(2)(b) of the Taxes Act or (as the case may require) is not within paragraph (b) solely by virtue of section 29(2) and (3) of ITA 2007,

(4) In subsection (4) after “the Taxes Act” insert “ or as provided by section 246 of ITA 2007 ”.

(5) In subsection (8B) for the words from “subsection (2)” to the end substitute “ section 306(2) of the Taxes Act or section 203(1) of ITA 2007 and in accordance with section 306 of the Taxes Act or sections 204 and 205 of ITA 2007 ”.

(6) In subsection (8C) after “Taxes Act” insert “ or section 159(2) of ITA 2007 ”.

(7) In subsection (8D)—

(a) after “section 304A of the Taxes Act” insert “ or section 247 of ITA 2007 ”, and

(b) for paragraph (b) substitute—

(b) the following— (i) subsections (2)(b), (3) and (4) of section 304A of the Taxes Act and subsection (5) of that section so far as relating to section 306(2) of that Act, or (ii) sections 247(3)(b), 248(2)(a) and 249 of ITA 2007, shall apply for the purposes of this section as they apply for the purposes of Chapter 3 of Part 7 of the Taxes Act or Part 5 of ITA 2007.

(8) In subsection (10A) for “the same meaning as in the Taxes Act” substitute “ the meaning given in section 989 of ITA 2007 ”.

(9) In subsection (11)—

(a) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”, and

(b) after “that Chapter” insert “ or means shares that meet the requirements of section 173(2) of ITA 2007 ”.

(10) After subsection (12) insert—

(13) References in this section to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.

312

(1) Amend section 150B (enterprise investment scheme: reduction of relief) as follows.

(2) In subsection (1)—

(a) after “section 300(1A)(a) of the Taxes Act” insert “ or section 213(2)(a) of ITA 2007 ”, and

(b) for “that Act” substitute “ the Taxes Act or section 224(2)(a) of ITA 2007 ”.

(3) In subsection (6) for “Subsections (11) and (12)” substitute “ Subsections (11) to (13) ”.

313

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

314

In section 151A(7) (venture capital trusts: reliefs) for “the meaning of the Taxes Act” substitute “ the meaning given in section 989 of ITA 2007 ”.

315

(1) Amend section 151B (VCTs: supplementary) as follows.

(2) In subsection (3)—

(a) in paragraph (a) for “been given” substitute “ obtained ” and for “Part 1 of Schedule 15B to the Taxes Act” substitute “ Chapter 2 of Part 6 of ITA 2007 ”, and

(b) in paragraphs (b) and (c) for “been given” substitute “ obtained ” and for “that Part of that Schedule” substitute “ that Chapter of that Part ”.

(3) In subsection (6)(b) for “section 842AA(8) of the Taxes Act” substitute “ section 281(3) of ITA 2007 ”.

(4) In subsection (8)(b) for “given” substitute “ obtained ” and for “Part 1 of Schedule 15B to the Taxes Act” substitute “ Chapter 2 of Part 6 of ITA 2007 ”.

316

After section 151B insert—

(151BA) (1) This section applies for the purpose of identifying the securities or shares disposed of in any case where— (a) an individual or company (“the investor”) disposes of part of a holding of securities or shares (“the holding”), and (b) the holding includes securities or shares to which CITR is attributable in respect of one or more years of assessment or accounting periods that have been held by the investor continuously from the time they were issued until the disposal. (2) Any disposal by the investor of securities or shares included in the holding which have been acquired by the investor on different days is treated as relating to those acquired on an earlier day rather than to those acquired on a later day. (3) If there is a disposal by the investor of securities or shares included in the holding which have been acquired by the investor on the same day, any of those securities or shares— (a) to which CITR is attributable, and (b) which have been held by the investor continuously from the time they were issued until the time of disposal, are treated as disposed of after any other securities or shares included in the holding which were acquired by the investor on that day. (4) For the purposes of this section a holding of securities is any number of securities of a company which— (a) carry the same rights, (b) were issued under the same terms, and (c) are held by the investor in the same capacity. It does not matter for this purpose that the number of the securities grows or diminishes as securities carrying those rights and issued under those terms are acquired or disposed of. (5) For the purposes of this section a holding of shares is any number of shares in a company which— (a) are of the same class, and (b) are held by the investor in the same capacity. It does not matter for this purpose that the number of the shares grows or diminishes as shares of that class are acquired or disposed of. (6) Chapter 1 of Part 4 (share pooling, etc) has effect subject to this section. (7) Sections 104 to 107 (which make provision for the identification of securities and shares on a disposal) do not apply to securities or shares to which CITR is attributable. (8) In a case to which section 127 (equation of original shares and new holding) applies, shares included in the new holding are treated for the purposes of subsections (2) and (3) as acquired when the original shares were acquired. (9) In subsection (8)— (a) the reference to section 127 includes a reference to that section as it is applied by virtue of any enactment relating to chargeable gains, and (b) “original shares” and “new holding” have the same meaning as in section 127, or (as the case may be) that section as applied by virtue of the enactment in question. (10) In this section and sections 151BB and 151BC— (a) if the investor is an individual— (i) “CITR” has the meaning given by section 333 of ITA 2007, (ii) references to CITR being attributable to securities, shares or debentures are to be read in accordance with section 357 of that Act, and (iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with section 380 of that Act, (b) if the investor is a company— (i) “CITR” means relief under Part 5 of Schedule 16 to the Finance Act 2002, (ii) references to CITR being so attributable are to be read in accordance with paragraph 26 of that Schedule, and (iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with paragraph 49 of that Schedule.

317

After section 151BA insert—

(151BB) (1) If— (a) an individual or company (“the investor”) holds shares in the CDFI which are of the same class and held in the same capacity (“the existing holding”), (b) there is a reorganisation affecting the existing holding as a result of an allotment which— (i) falls within section 126(2)(a) (an allotment of shares or debentures in respect of and in proportion to an original holding), and (ii) is not an allotment of corresponding bonus shares, (c) immediately after the reorganisation, CITR is attributable to the shares included in the existing holding or the shares or debentures allotted in respect of those shares, in respect of one or more years of assessment or accounting periods, and (d) if CITR is attributable to the shares included in the existing holding at that time, those shares have been held by the investor continuously from the time they were issued until the reorganisation, sections 127 to 130 (treatment of share capital following a reorganisation) do not apply in relation to the existing holding. (2) Section 116(10) (reorganisations, conversions and reconstructions) does not apply in any case where the old asset consists of shares held (in the same capacity) by the investor— (a) that have been held by the investor continuously from the time they were issued until the relevant transaction, and (b) to which CITR is attributable immediately before that transaction. In this subsection “old asset” and “the relevant transaction” have the meaning given by section 116. (3) For the purposes of subsection (1)— - “corresponding bonus shares” means bonus shares that— 1. are issued in respect of shares included in the existing holding, and 2. are in the same company, are of the same class, and carry the same rights as, those shares, - “reorganisation” has the meaning given in section 126. (4) The following provisions of this Act have effect subject to this section— - section 116 (reorganisations, conversions and reconstructions); - Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc). (5) In this section “the CDFI” is to be read— (a) if the investor is an individual, in accordance with section 334(2) of ITA 2007, (b) if the investor is a company, in accordance with paragraph 1(2) of Schedule 16 to the Finance Act 2002.

318

After section 151BB insert—

(151BC) (1) If— (a) an individual or company (“the investor”) holds shares in or debentures of a company (“company A”), (b) there is a reconstruction or amalgamation affecting that holding (“the existing holding”), (c) immediately before the reconstruction or amalgamation, CITR is attributable to the shares or debentures included in the existing holding in respect of one or more years of assessment or accounting periods, and (d) the shares or debentures included in the existing holding have been held by the investor continuously from the time they were issued until the reconstruction or amalgamation, sections 135 and 136 (share exchanges and company reconstructions) do not apply in respect of the existing holding. (2) Subsection (1)(a) applies only if the shares or debentures are held by the investor in the same capacity. (3) For the purposes of subsection (1) a “reconstruction or amalgamation” means an issue by a company of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A. (4) The following provisions of this Act have effect subject to this section— - section 116 (reorganisations, conversions and reconstructions), - Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc). (5) The investor is treated as disposing of any securities or shares which but for subsection (1) the investor— (a) would be treated as exchanging for other securities or shares by virtue of section 136, or (b) would be so treated but for section 137(1) (which restricts section 136 to genuine reconstructions).

319

In section 151C(5) (strips: manipulation of price: associated payment giving rise to loss) for “section 709(1)” substitute “ section 840ZA ”.

320

In section 151D(5) (corporate strips: manipulation of price: associated payment giving rise to loss) for “section 709(1)” substitute “ section 840ZA ”.

321

In section 161 (stock in trade: appropriations to and from stock) after subsection (4) insert—

(5) If— (a) any person is charged to income tax under section 755 of ITA 2007 (charge to tax from transactions in land) on the realisation of a gain because the condition in section 756(3)(d) is met, and (b) the gain is calculated on the basis that any property was appropriated as trading stock, the property shall be treated on that basis also for the purposes of this section.

322

In section 169D(1) (gifts to settlor-interested settlements: exceptions) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “ 508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property) ”.

323

In section 226B(1) (private residence relief: special cases) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “ 508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property) ”.

324

In section 231(1) and (3) (shares: special provision) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

325

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

326

(1) Amend section 256 (charities) as follows.

(2) In subsection (1) for the words “subsection (2) below” substitute “ the following provisions of this section ”.

(3) After subsection (2) insert—

(3) Subsection (4) below applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment. (4) Gains accruing to the charitable trust in the year of assessment are treated as being, and always having been, chargeable gains so far as they are attributed under section 256A to the non-exempt amount. (5) For restrictions on exemptions under Part 10 of ITA 2007 (special rules about charitable trusts etc) see section 539 of that Act.

327

After section 256 insert—

(256A) (1) This section applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment. (2) Attributable gains of the charitable trust for the year of assessment may be attributed to the non-exempt amount but only so far as the non-exempt amount has not been used up. (3) The non-exempt amount can be used up (in whole or in part) by— (a) attributable gains being attributed to it under this section, or (b) attributable income being attributed to it under section 541 of ITA 2007. (4) The whole of the non-exempt amount must be used up by— (a) attributable gains being attributed to the whole of it under this section, (b) attributable income being attributed to the whole of it under section 541 of ITA 2007, or (c) a combination of attributable gains being attributed to some of it under this section and attributable income being attributed to the rest of it under section 541 of ITA 2007. (5) See section 256B for the way in which gains are to be attributed to the non-exempt amount under this section. (6) In this section and section 256B a charitable trust's “attributable income”, and “attributable gains”, for a tax year have the same meaning as in Part 10 of ITA 2007 (see section 540 of that Act). (256B) (1) This section is about the ways in which attributable gains can be attributed to a non-exempt amount under section 256A. (2) The trustees of the charitable trust may specify the attributable gains that are to be attributed to the non-exempt amount. (3) A specification under subsection (2) is made by notice to an officer of Revenue and Customs. (4) Subsection (6) applies if— (a) an officer of Revenue and Customs requires the trustees of a charitable trust to make a specification under this section, and (b) the trustees have not given notice under subsection (3) of the specification before the end of the required period. (5) The required period is 30 days beginning with the day on which the officer made the requirement. (6) An officer of Revenue and Customs may determine the attributable gains that are to be attributed to the non-exempt amount.

328

In section 257 (gifts to charities etc) after subsection (2) insert—

(2A) Subsection (2B) applies if relief is available under Chapter 3 of Part 8 of ITA 2007 or section 587B of the Taxes Act (gifts of shares, securities and real property to charities) in relation to the disposal of a qualifying investment to a charity (whether or not a claim for relief is actually made). (2B) The consideration for which the charity's acquisition of the qualifying investment is treated by virtue of subsection (2) above as having been made— (a) is reduced by the relievable amount if relief in relation to the disposal is available only under Chapter 3 of Part 8 of ITA 2007, (b) is reduced by the relevant amount if relief in relation to the disposal is available only under section 587B of the Taxes Act, (c) is reduced by the relievable amount if relief in relation to the disposal is available both under that Chapter and that section as a result of section 442 of ITA 2007 and section 587BA of the Taxes Act, or (d) is reduced to nil if that consideration is less than the amount referred to in paragraph (a), (b) or (c) (as the case may be). (2C) In subsections (2A) and (2B)— - “qualifying investment” has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 432 of that Act), - “relevant amount” has the same meaning as in section 587B of the Taxes Act, and - “relievable amount” has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 434 of that Act).

329

After section 261A insert—

(261B) (1) A person may make a claim under this section if— (a) relief is available to the person under section 64 or 128 of ITA 2007 (trade or employment loss relief against general income) for a tax year in relation to an amount of loss, and (b) the person makes a claim under that section for the amount to be deducted in calculating the person's net income for the tax year. (2) A person may also make a claim under this section if— (a) relief is available to the person as mentioned in subsection (1)(a) for a tax year in relation to an amount of loss, but (b) the person's total income for the tax year is nil or does not include any income from which the amount can be deducted. (3) A claim under this section is for determining so much of the amount of the loss (“the relevant amount”) as— (a) is not deducted in calculating the person's net income for the tax year, and (b) has not already been taken into account for the purposes of any relief for any other tax year or any year of assessment (whether under ITA 2007, this section or otherwise). (4) When the relevant amount can no longer be varied— (a) by the Commissioners on appeal, or (b) on the order of a court, it is treated for the purposes of capital gains tax as an allowable loss accruing to the person in the year of assessment corresponding to the tax year. (5) But so much of the relevant amount as exceeds the maximum amount (see section 261C) is not to be treated for the purposes of capital gains tax as an allowable loss. (6) The excess may, however, be used in giving effect to any other loss relief under Part 4 of ITA 2007 (depending on the terms of the relief). (7) The amount treated as an allowable loss under this section— (a) is no longer to be regarded as an amount available for income tax relief, and (b) is not to be deductible from chargeable gains accruing to a person in any year of assessment that begins after the person has permanently ceased to carry on the trade, profession, vocation, employment or office in which the loss was made. (8) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year in which the loss was made in the trade, profession, vocation, employment or office. (9) In this section “normal self-assessment filing date”, “tax year” and “total income” have the same meaning as in the Income Tax Acts (see section 989 of ITA 2007). (261C) (1) For the purposes of section 261B “the maximum amount” is the amount on which the person would be chargeable to capital gains tax for the year of assessment if— (a) the provisions mentioned below were ignored, and (b) no account were taken of the event mentioned below. (2) The provisions are— (a) section 2A (taper relief), (b) section 3(1) (annual exempt amount), and (c) section 261B. (3) The event is any event— (a) which occurs after the date on which the relevant amount (see section 261B(3)) can no longer be varied by the Commissioners on appeal or on the order of a court, and (b) in consequence of which the amount chargeable to capital gains tax is reduced as a result of an enactment relating to capital gains tax. (261D) (1) A person may make a claim under this section if— (a) relief is available to the person under section 96 or 125 of ITA 2007 (post-cessation trade or property relief) for a tax year in relation to an amount, and (b) the person makes a claim under that section to deduct the amount in calculating the person's net income for the tax year. (2) A person may also make a claim under this section if— (a) relief is available to the person as mentioned in subsection (1)(a) for a tax year in relation to an amount, but (b) the person's total income for the tax year is nil. (3) A claim under this section is for treating for the purposes of capital gains tax so much of the amount as is not deducted in calculating the person's net income for the tax year (“the relevant amount”) as an allowable loss accruing to the person in the year of assessment corresponding to the tax year. (4) But so much of the relevant amount as exceeds the maximum amount (see section 261E) is not to be treated for the purposes of capital gains tax as an allowable loss. (5) The relevant amount is no longer to be regarded as an amount available for income tax relief. (6) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year mentioned in subsection (1) or (2) (as the case may be). (7) In this section “normal self-assessment filing date”, “tax year” and “total income” have the same meaning as in the Income Tax Acts (see section 989 of ITA 2007). (261E) (1) For the purposes of section 261D “the maximum amount” is the amount on which the person would be chargeable to capital gains tax for the year of assessment if the following were ignored. (2) The matters to be ignored are— (a) any allowable losses falling to be carried forward to that year from a previous year for the purposes of section 2(2), (b) section 3(1) (annual exempt amount), and (c) any relief under section 261B or 261D.

330

After section 261E insert—

(261F) (1) This section applies if — (a) the repurchase price of UK shares, UK securities or overseas securities is treated by section 604(2), (4) or (5) of ITA 2007 (deemed increase in repurchase price: repos and options) as increased for the purposes of section 607 of that Act (treatment of price differences under repos), (b) condition A or B is met, and (c) section 263A does not apply. (2) Condition A is that, as a result of the increase, there is no difference for the purposes of section 607 of that Act between the sale price and the repurchase price. (3) Condition B is that, as a result of an exception in section 608 of that Act, section 607 of that Act does not apply. (4) The deemed increase of the repurchase price also has effect for capital gains tax purposes. (5) Expressions used in this section and in section 605 of ITA 2007 (deemed increase in repurchase price: other income tax purposes) have the same meanings in this section as in that section.

331

After section 261F insert—

(261G) (1) Subsections (2) and (3) apply if— (a) section 607 of ITA 2007 (treatment of price differences under repos) applies, (b) an amount is treated under that section as a payment of interest, and (c) section 263A does not apply. (2) If the repurchase price is more than the sale price, the repurchase price is treated for capital gains tax purposes as reduced by the amount of the payment of interest. (3) If the sale price is more than the repurchase price, the repurchase price is treated for capital gains tax purposes as increased by the amount of the payment of interest. (4) Expressions used in this section and in section 609 of ITA 2007 (additional income tax consequences of price differences under repos) have the same meanings in this section as in that section.

332

After section 261G insert—

(261H) (1) The Treasury may by regulations provide for section 261G to apply with modifications if the exception in section 608(2) of ITA 2007 (agreement not at arm's length) would otherwise prevent it from applying. (2) Regulations under this section may make different provision for different cases. (3) Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings. (4) The incidental, supplemental, and consequential provision may include modifications of section 261F (deemed manufactured payments: effect on repurchase price). (5) In this section “modifications” includes exceptions and omissions. (6) Accordingly, the power in subsection (1) includes power to provide for any provision of section 261G not to apply in relation to the case mentioned in that subsection.

333

(1) Amend section 263ZA (former employees: employment-related liabilities) as follows.

(2) In subsection (1)(a)—

(a) for “from total income” substitute “ in calculating net income ”, and

(b) for “when computing a former employee's total income” substitute “ in calculating a former employee's net income ”.

(3) In subsection (1)(b) for “the total income” substitute “ the remaining total income ”.

(4) In subsection (2)(b) for “the total income” substitute “ the remaining total income ”.

(5) After subsection (2) insert—

(2A) In this section “the remaining total income”, in relation to a tax year, means the former employee's total income for the tax year less reliefs already deducted for the tax year at Step 2 of the calculation in section 23 of ITA 2007 for the purpose of calculating the former employee's income tax liability.

(6) In subsection (5)—

(a) in paragraph (d) for “against capital gains tax under section 72 of the Finance Act 1991” substitute “ under section 261B ”, and

(b) in paragraph (e) for “against capital gains tax under section 90(4) of the Finance Act 1995” substitute “ under section 261D ”.

334

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

335

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

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

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

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

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

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

336

After section 263E insert—

(263F) (1) The Treasury may by regulations provide for— (a) section 261F (deemed manufactured payments: effect on repurchase price), (b) section 261G (price differences under repos: effect on repurchase price), (c) section 263A (agreements for sale and repurchase of securities), (d) section 263D (gains accruing to persons paying manufactured dividends), or (e) any of those sections, to apply with modifications in relation to non-standard repo cases. (2) The power in subsection (1) to make provision for section 263A or 263D to apply with modifications is exercisable only so far as the section applies to cases falling within section 607 of ITA 2007 (treatment of price differences under repos). (3) A case is a non-standard repo case if— (a) there is a repo in respect of securities, (b) under the repo there has been a sale (“the original sale”) of the securities by the original owner to the interim holder, and (c) any of conditions A to E is met in relation to the repo. (4) Condition A is that— (a) the obligation to buy back the securities is not performed, or (b) the option to buy them back is not exercised. (5) Condition B is that provision is made by or under an agreement for different or additional UK shares, UK securities or overseas securities to be treated as (or as included with) representative securities. (6) Condition C is that provision is made by or under an agreement for any UK shares, UK securities or overseas securities to be treated as not included with representative securities. (7) Condition D is that provision is made by or under an agreement for the sale price or repurchase price to be decided or varied wholly or partly by reference to post-agreement fluctuations. (8) Condition E is that provision is made by or under an agreement for a person to be required, in a case where there are post-agreement fluctuations, to make a payment in the period— (a) beginning immediately after the making of the agreement for the original sale, and (b) ending when the repurchase price becomes due. (9) Expressions used in this section and in section 612 of ITA 2007 (powers to modify repo provisions: non-standard repo cases) have the same meanings in this section as in that section.

337

After section 263F insert—

(263G) (1) The Treasury may by regulations provide for— (a) section 261F (deemed manufactured payments: effect on repurchase price), (b) section 261G (price differences under repos: effect on repurchase price), (c) section 263A (agreements for sale and repurchase of securities), (d) section 263D (gains accruing to persons paying manufactured dividends), or (e) any of those sections, to apply with modifications in relation to cases involving redemption arrangements. (2) The power in subsection (1) to make provision for section 263A or 263D to apply with modifications is exercisable only so far as the section applies to cases falling within section 607 of ITA 2007 (treatment of price differences under repos). (3) A case involves redemption arrangements if— (a) arrangements, corresponding to those made in cases where there is a repo, are made by an agreement, or one or more related agreements, in relation to securities that are to be redeemed in the period after their sale, (b) the securities are UK shares, UK securities or overseas securities, and (c) the arrangements are such that the seller or a person connected with the seller (instead of being required to repurchase the securities or acquiring an option to do so) is granted rights in respect of the benefits that will result from the redemption. (4) Expressions used in this section and in section 613 of ITA 2007 (powers to modify repo provisions: redemption arrangements) have the same meanings in this section as in that section.

338

After section 263G insert—

(263H) (1) Regulations under section 263F or 263G may make different provision for different cases. (2) Regulations under either section may contain incidental, supplemental, consequential and transitional provision and savings. (3) The incidental, supplemental and consequential provision may include— (a) in the case of regulations about section 261G, modifications of section 261F, and (b) in the case of regulations about section 263A or 263D, modifications of the operation of this Act in relation to cases where, by virtue of the regulations, any acquisition or disposal is excluded from those which are to be ignored for the purposes of capital gains tax. (4) In this section and sections 263F and 263G “modifications” includes exceptions and omissions. (5) Accordingly, a power in sections 263F and 263G to provide for a provision to apply with modifications in relation to a particular case includes power to provide for the provision not to apply in relation to that case.

339

After section 263H insert—

(263I) (1) The Treasury may by regulations make provision as mentioned in subsection (2) about prescribed cases where a person— (a) pays or receives a manufactured overseas dividend as mentioned in section 581(1) of ITA 2007 (manufactured overseas dividends), or (b) is treated as doing so for any purposes of Chapter 2 of Part 11 of that Act or regulations made under it (manufactured payments). (2) The regulations may provide for adjusting a relevant amount by reference to a provision which has effect under the law of a territory outside the United Kingdom. (3) A “relevant amount” is an amount which is treated for prescribed capital gains tax purposes as the amount paid or payable to a person in respect of a relevant transaction. (4) A “relevant transaction” is a sale, repurchase or other transfer of the overseas securities to which the manufactured overseas dividend relates. (5) In this section “prescribed” means prescribed in regulations under this section. (6) Subject to that, expressions used in this section and in section 582 of ITA 2007 (manufactured payments: powers about manufactured overseas dividends) have the same meanings in this section as in that section.

340

(1) Amend section 271 (miscellaneous exemptions) as follows.

(2) In subsection (3) for the words from “In this subsection” to the end substitute—

In this subsection— “health service body” has the meaning given by section 519A of the Taxes Act, and “local authority association” has the meaning given by section 1000 of ITA 2007.

(3) After subsection (7) insert—

(7A) Chargeable gains are exempt from tax if they accrue to a bank, or issue department of a bank, to which this subsection applies for the time being. (7B) Her Majesty may by Order in Council direct that subsection (7A) applies to a bank or its issue department if it appears to Her Majesty that the bank— (a) is not resident in the United Kingdom, and (b) is entrusted by the government of a territory outside the United Kingdom with the custody of the territory's principal foreign exchange reserves. (7C) No recommendation may be made to Her Majesty in Council to make an order under subsection (7B) unless a draft of the order has been laid before and approved by a resolution of the House of Commons.

341

After section 285 insert—

(285A) (1) The following rules about European Economic Interest Groupings apply for the purposes of charging tax in respect of chargeable gains— Rule 1 A grouping is treated as acting as the agent of its members. Rule 2 The activities of a grouping are treated as those of its members acting jointly. Rule 3 Each member of a grouping is treated as having a share of the grouping's property, rights and liabilities. Rule 4 Any trade or profession carried on by the grouping is treated as carried on in partnership by members of the grouping. Rule 5 A person is to be regarded as acquiring or disposing of a share of the assets of the grouping not only where there is an acquisition or disposal of assets by the grouping while he is a member of it, but also where he becomes or ceases to be a member of a grouping or there is a change in his share of the property of the grouping. (2) For the purposes of Rule 3, a member's share of any property, rights or liabilities of a grouping is determined according to the contract under which the grouping is established. (3) If the contract does not provide for this, the member's share is determined by reference to the share of the profits of the grouping to which the member is entitled under the contract. (4) If the contract does not provide for this either, the members are treated as having equal shares of the property, rights and liabilities of the grouping. (5) “European Economic Interest Grouping” means a European Economic Interest Grouping formed under Council Regulation (EEC) No 2137/85 of 25th July 1985, whether registered in Great Britain, Northern Ireland or elsewhere.

342

(1) Amend section 288 (interpretation) as follows.

(2) In subsection (1)—

(a) in the definition of “allowable loss” after “16” insert “ , 261B, 261D ”,

(b) after the definition of “ITTOIA 2005” insert—

“ITA 2007” means the Income Tax Act 2007;

(d) after the definition of “the Management Act” insert—

“net income” has the same meaning as in the Income Tax Acts (see section 989 of ITA 2007);

(e) in the definition of “period of account” for “section 832(1) of the Taxes Act” substitute “ section 989 of ITA 2007 ”,

(f) in the definition of “property investment LLP” for “section 842B of the Taxes Act” substitute “ section 1004 of ITA 2007 ”,

(g) in the definition of “recognised stock exchange” for “section 841 of the Taxes Act” substitute “ section 1005 of ITA 2007 ”,

(h) in the definition of “venture capital trust” for “the meaning given by section 842AA of the Taxes Act” substitute “ the same meaning as in Part 6 of ITA 2007 ”, and

(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In subsection (2) for “section 833(2) of the Taxes Act” substitute “ section 989 of ITA 2007 ”.

(4) In subsection (3) for “section 282 of the Taxes Act” substitute “ section 1011 of ITA 2007 ”.

343

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

344

In paragraph 14 of Schedule 4A (deemed disposal of underlying assets where disposal of interest in settled property: exception) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “ 508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property) ”.

345

(1) Amend Schedule 5B (enterprise investment scheme: re-investment) as follows.

(2) In paragraph 1(2) (application of Schedule)—

(a) in paragraph (e) after “that Act)” insert “ , or the requirements of section 183 of ITA 2007, ”, and

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

(3) In paragraph 1A (failure of conditions of application)—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) in sub-paragraph (5) for “or section 310(2) of the Taxes Act” substitute “ , section 310(2) of the Taxes Act or section 241(3) of ITA 2007 ”, and

(4) In paragraph 4 (gains accruing on chargeable event)—

(a) in sub-paragraph (4) after “Taxes Act” insert “ or Part 5 of ITA 2007 ” and after “that Chapter”, in each place where it occurs, insert “ or that Part ”,

(b) in sub-paragraph (4A) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”, after “that Chapter” insert “ or that Part ” and for “that Act” substitute “ the Taxes Act or section 245 of ITA 2007 ”, and

(5) In paragraph 6 (claims)—

(a) in sub-paragraph (1) after “Taxes Act” insert “ or sections 202(1), 203(1) and 204 to 207 of ITA 2007 ” and for “that Act in respect of eligible shares” substitute “ the Taxes Act or Part 5 of ITA 2007 in respect of eligible or relevant shares ”,

(b) in sub-paragraph (2) for “That section” substitute “ Section 306 ”, and

(3) Sections 202(1), 203(1) and 204 to 207 of ITA 2007, as they so apply, shall have effect as if any reference to the requirements for the relief were a reference to the conditions for the application of this Schedule.

(6) In paragraph 7(1) (reorganisations)—

(a) after “the Taxes Act” insert “ or Part 5 of ITA 2007 ”, and

(b) after “that Chapter” insert “ or that Part ”.

(7) In paragraph 8 (acquisition of share capital by new company)—

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