Income Tax Act 2007

(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;

,

• (c) in the definition of “local authority” for “section 842A of the Taxes Act” substitute “ section 999 of ITA 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

• (c) in sub-paragraph (7) after “Taxes Act” insert “ or section 236(1) of ITA 2007 ”.

• (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

• (c) in sub-paragraph (4C) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

• (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

• (c) after that sub-paragraph insert—

(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)—

• (a) in sub-paragraph (1)(e)(ii) for “subsection (2) of section 306 of the Taxes Act” substitute “ section 306(2) of the Taxes Act or section 203(1) of ITA 2007 ” and for “that section” substitute “ section 306 of the Taxes Act or sections 204 and 205 of ITA 2007 ”,

• (b) in sub-paragraph (5)(a) after “Taxes Act” insert “ or section 203(1) of ITA 2007 ”, and

• (c) in sub-paragraph (7) after “Taxes Act” insert “ or section 185 of ITA 2007 ”.

• (8) In paragraph 9 (other reconstructions and amalgamations)—

• (a) in sub-paragraph (1) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”,

• (b) in sub-paragraph (3) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”, and

• (c) in sub-paragraph (4)(b) for “subsection (2) of section 306 of the Taxes Act” substitute “ section 306(2) of the Taxes Act or section 203(1) of ITA 2007 ” and for “that section” substitute “ section 306 of the Taxes Act or sections 204 and 205 of ITA 2007 ”.

• (9) In paragraph 11(5) (pre-arranged exits)—

• (a) after “trading group” insert “ (a) ”, and

• (b) at the end insert

, or (b) is a reference to a company that meets the trading requirement in section 181(2)(b) of ITA 2007.

• (10) In paragraph 13(5) (value received by investor) after “Taxes Act” insert “ or Chapter 2 of Part 5 of ITA 2007 ”.

• (11) In paragraph 13C (provision supplemental to paragraph 13B)—

• (a) in sub-paragraph (3) for “Sub-paragraph (4) below” substitute “ This sub-paragraph ”, and

• (b) for sub-paragraph (4) substitute—

(4) Where either of the following applies— (a) sub-paragraph (3) above, and (b) section 223(3) of ITA 2007 (which makes corresponding provision in relation to EIS relief under Part 5 of that Act), the person who subscribes for the shares shall not by virtue of his subscription for those shares or any other shares in the same issue be treated as making a qualifying investment for the purposes of this Schedule.

• (12) In paragraph 14(3) (value received by other persons)—

• (a) after “Taxes Act”, in the first place where it occurs, insert “ or Part 5 of ITA 2007 ”,

• (b) for “that Act” substitute “ the Taxes Act or section 209 or 216(2)(a) of ITA 2007 ”, and

• (c) after “section 300 of the Taxes Act” insert “ or 214 of ITA 2007 ”.

• (13) In paragraph 16 (information)—

• (a) in sub-paragraph (4)—

• (i) after “Taxes Act”, in the first place where it occurs, insert “ or section 203(1) of ITA 2007 ”, and

• (ii) after “Taxes Act”, in the second place where it occurs, insert “ or section 175(3) of ITA 2007 ”,

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

• (c) in sub-paragraph (6) after “Taxes Act” insert “ or section 176(4)(b) or (5)(b), 182(2) or (4), 183(6), 185(1), 190(1)(e) or 191(2)(c), (3), (4) or (5) of ITA 2007 ”,

• (d) in sub-paragraph (7)—

• (i) in paragraph (a) after “Taxes Act” insert “ or section 182(2) or (4) of ITA 2007 ”,

• (ii) in paragraph (aa) after “Taxes Act” insert “ or section 176(4)(b) or (5)(b), 183(6) or 191(3), (4) or (5) of ITA 2007 ”, and

• (iii) in paragraph (c) after “Taxes Act” insert “ or section 185(1), 190(1)(e) or 191(2)(c) of ITA 2007 ”, and

• (e) in sub-paragraph (7A)—

• (i) after “Taxes Act” insert “ and subsections (3), (4) and (5) of section 191 of ITA 2007 ”, and

• (ii) for “that Act” substitute “ the Taxes Act or section 190(2) of ITA 2007 ”.

• (14) In paragraph 19(1) (interpretation)—

• (a) in the definition of “eligible shares” for “that Act” substitute “ the Taxes Act or means shares that meet the requirement in section 173 (2) of ITA 2007 ”,

• (b) in the definition of “ordinary share capital” for “the same meaning as in the Taxes Act” substitute “ the meaning given by section 989 of ITA 2007 ”,

• (c) in the definition of “qualifying business activity” after “Taxes Act” insert “ or section 179 of ITA 2007 ”,

• (d) for the definition of “qualifying company” substitute—

“qualifying company”, in relation to any eligible shares, means a company which, in relation to those shares, is— (a) a qualifying company for the purposes of Chapter 3 of Part 7 of the Taxes Act (except that for the purposes of this Schedule the reference in section 293(1B)(b)(i) of that Act to section 304A of that Act shall be read as a reference to paragraph 8 above), or (b) a qualifying company for the purposes of Part 5 of ITA 2007 (except that for the purposes of this Schedule the reference in section 184(1)(c)(i) of that Act to section 247 of that Act shall be read as a reference to paragraph 8 above).

• (e) in the definition of “the relevant period” for “that Act” insert “ the Taxes Act or section 159(2) of ITA 2007 ”, and

• (f) in the definition of “termination date” after “Taxes Act” insert “ or section 256 of ITA 2007 ”.

• (15) In paragraph 19(3) omit the “and” immediately before paragraph (c) and after that paragraph insert

; and (d) 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 on or after 6th April 2007

.

346

In paragraph 1(1)(a) of Schedule 5BA (enterprise investment scheme: application of taper relief) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

347

In paragraph 3(1)(f) of Schedule 5C (VCTs: deferred charge on re-investment) for “section 842AA(8) of the Taxes Act” substitute “ section 281(3) of ITA 2007 ”.

348

• (1) Amend Schedule 7C (reliefs for transfers to approved share plans) as follows.

• (2) In paragraph 2(6) (conditions relating to the disposal), in the definition of “ordinary share capital” for “section 832(1) of the Taxes Act” substitute “ section 989 of ITA 2007 ”.

• (3) In paragraph 7(1) and (3) (shares: special provision) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

349

In Schedule 8 (leases), in paragraph 5(6) for “any amount chargeable to tax under section 348 or 349 of the Taxes Act” substitute “ any amount from which a sum representing income tax is required to be deducted under Part 15 of ITA 2007 ”.

Finance (No. 2) Act 1992 (c. 48)

350

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

Tribunals and Inquiries Act 1992 (c. 53)

351

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

Judicial Pensions and Retirement Act 1993 (c. 8)

352

In section 3(6) of the Judicial Pensions and Retirement Act 1993 (the appropriate annual rate) for “section 279(1) of the Finance Act 2004” substitute “ section 4 of the Income Tax Act 2007 ”.

Charities Act 1993 (c. 10)

353

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

Finance Act 1993 (c. 34)

354

The Finance Act 1993 is amended as follows.

355

Omit section 80 (transitional relief for charities etc).

356

Omit section 118 (Scottish trusts).

357

• (1) Amend section 176 (ancillary trust funds) as follows.

• (2) In subsection (3) for paragraph (a) substitute—

(a) section 636 of ITA 2007 (exception where there is a transfer to a legatee);

.

• (3) In subsection (4) for “sections 710 to” substitute “ Part 12 of ITA 2007 and section ”.

358

• (1) Amend section 180 (underwriting profits to be earned income) as follows.

• (2) In subsection (1) for paragraph (b) substitute—

(b) accordingly, shall constitute— (i) for the purposes of Part 4 of the Finance Act 2004, relevant UK earnings within section 189(2)(b) of that Act, and (ii) income in relation to which the treatment in section 836(2) of ITA 2007 does not apply.

• (3) In the sidenote for “earned income” substitute “ relevant UK earnings etc ”.

359

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

360

In section 212 (interpretation) at the end insert “ , and “ITA 2007” means the Income Tax Act 2007 ”.

361

• (1) Amend Schedule 20A (Lloyd's underwriters: conversion to limited liability underwriting) as follows.

• (2) In paragraph 2—

• (a) in sub-paragraph (2) for “The carry-forward provision” substitute “ Section 83 of ITA 2007 ”, and

• (b) omit sub-paragraphs (3) and (4).

• (3) In paragraph 5(1), in the definition of “ordinary share capital”, for “section 832(1) of the Taxes Act 1988” substitute “ section 989 of ITA 2007 ”.

• (4) In paragraph 7(2) for “Section 385 of the Taxes Act 1988” substitute “ Section 83 of ITA 2007 ”.

Agriculture Act 1993 (c. 37)

362

In paragraph 22(2) of Schedule 2 to the Agriculture Act 1993 (tax provisions relating to the carrying out of approved scheme of reorganisation) for “section 469 of the Income and Corporation Taxes Act 1988” substitute “ the Tax Acts ”.

Finance Act 1994 (c. 9)

363

• (1) Amend paragraph 11 of Schedule 20 to the Finance Act 1994 (changes for facilitating self-assessment etc) as follows.

• (2) In sub-paragraph (3) for the words from “be treated” to “excess” substitute “ be chargeable for that year to an amount of income tax equal to the excess ”.

• (3) Omit sub-paragraph (7).

Finance Act 1995 (c. 4)

364

The Finance Act 1995 is amended as follows.

365

Omit section 73 (venture capital trusts: regulations).

366

Omit section 90 (relief for post-cessation expenditure).

367

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

368

Omit section 128 (limit on income chargeable on non-residents: income tax).

369

• (1) Amend section 154 (short rotation coppice) as follows.

• (2) In subsection (1)—

• (a) omit “Subject to subsection (1A),”, and

• (b) for “Tax Acts” substitute “ Corporation Tax Acts ”.

• (3) Omit subsection (1A).

370

• (1) Amend Schedule 22 (prevention of exploitation of Schedule 2 to ITTOIA 2005 (so far as relating to overlap profit)) as follows.

• (2) In paragraph 5(1)(b) for the words from “section 353” to “provision)” substitute “ section 383 of the Income Tax Act 2007 (relief for interest payments) ”.

• (3) In paragraph 17—

• (a) in sub-paragraph (2) for “section 839” to the end substitute “ section 993 of the Income Tax Act 2007 (but as if, in subsection (4) of that section, the words from “But this subsection” to the end were omitted). ”, and

• (b) in sub-paragraph (6)(a), in paragraph (ii) of the definition of “control”, for “section 840 of that Act” substitute “ section 995 of the Income Tax Act 2007 ”.

Finance Act 1996 (c. 8)

371

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

372

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

373

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

374

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

375

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

376

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

Finance (No.2) Act 1997 (c. 58)

377

The Finance (No.2) Act 1997 is amended as follows.

378

Omit section 29 (unauthorised unit trusts).

379

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

Finance Act 1998 (c. 36)

380

The Finance Act 1998 is amended as follows.

381

In section 56(4) (transitional provision in connection with section 55 (construction workers supplied by agencies)) for “section 385 of the Taxes Act 1988” substitute “ section 83 of the Income Tax Act 2007 ”.

382

In section 134(5) (transfer of company's assets to VCT) for “section 842AA of the Taxes Act 1988” substitute “ Part 6 of the Income Tax Act 2007 ”.

383

In section 135(5) (transfer within group to VCT) for “section 842AA of the Taxes Act 1988” substitute “ Part 6 of the Income Tax Act 2007 ”.

384

In section 161(2)(a) (non-FOTRA securities) for the words from “sections 711” to “receiving” substitute “ Chapter 2 of Part 12 of the Income Tax Act 2007 (accrued income profits) in relation only to accrued income profits which a person is treated as making under section 628(5) or 630(2) of that Act ”.

385

• (1) Amend Schedule 18 (company tax returns, assessments and related matters) as follows.

• (2) In paragraph 3 after sub-paragraph (4) insert—

(5) Sub-paragraph (1)(b) has effect as if the reference to the Corporation Tax Acts included a reference to sections 911, 912, 914 and 915 of the Income Tax Act 2007.

• (3) In paragraph 20 after sub-paragraph (3) insert—

(4) In the application of this paragraph to an error relating to information required in a return by virtue of paragraph 3(5), this paragraph has effect as if— (a) the reference in sub-paragraph (1) to a tax-related penalty were a reference to an amount not exceeding £3,000, and (b) sub-paragraphs (2) and (3) were omitted.

• (4) In paragraphs 22(3)(a) and 23(3)(a) for sub-paragraph (ii) substitute—

(ii) section 495(1) or 975(2) or (4) of the Income Tax Act 2007 (statements about deduction of income tax),

.

Greater London Authority Act 1999 (c. 29)

386

The Greater London Authority Act 1999 is amended as follows.

387

In section 157(4) (restriction on exercise of certain powers except through a company)—

• (a) in paragraph (a) omit “income tax and” and “and” at the end, and

• (b) after that paragraph insert—

(aa) section 838 of the Income Tax Act 2007 (exemption of local authorities from income tax); and

.

388

In section 419(2) (taxation: certain bodies treated as a local authority)—

• (a) in paragraph (a) for “income and corporation taxes” substitute “corporation tax”, and omit “and” at the end, and

• (b) after that paragraph insert—

(aa) section 838 of the Income Tax Act 2007 (exemption of local authorities from income tax); and

.

Finance Act 2000 (c. 17)

389

The Finance Act 2000 is amended as follows.

390

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

391

In section 44 (which makes provision about expenses of trustees) for subsections (4) and (5) substitute—

(5A) This section applies if— (a) in a year of assessment qualifying income arises under a UK settlement, (b) the qualifying income consists of charitable income and non-charitable income, and (c) expenses of the trustees are to be used to reduce the charitable income for the purpose of calculating a beneficiary's liability to corporation tax. (5B) The amount of those expenses which can used for that purpose is limited to the amount allocated to the charitable income. (5C) The amount of the expenses allocated to the charitable income is determined by apportioning them rateably between the charitable income and the non-charitable income. (5D) In this section— - “charitable income” means income within section 628(1) or 630(1) of ITTOIA 2005, - “non-charitable income” means income which is not charitable income, and - “qualifying income” and “UK settlement” have the same meaning as in section 628 of ITTOIA 2005.

392

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

393

In section 155 (interpretation) at the end insert “ and “ITA 2007” means the Income Tax Act 2007 ”.

394

• (1) Amend Schedule 15 (the corporate venturing scheme) as follows.

• (2) In paragraph 16(4) (the unquoted status requirement) after “Taxes Act 1988” insert “ or section 184(3) of ITA 2007 ”.

• (3) In paragraph 55(4) (provision supplementary to paragraph 54) after “Taxes Act 1988” insert “ or Part 5 of ITA 2007 ”.

• (4) In paragraph 56(3) (value received by other persons)—

• (a) after “Taxes Act 1988”, in the first place where it occurs, insert “ or Part 5 of ITA 2007 ”,

• (b) for “section 299 of that Act” substitute “ section 299 of the Taxes Act 1988 or section 209 of ITA 2007 ”,

• (c) for “section 300(2)(a) of that Act” substitute “ section 300(2)(a) of the Taxes Act 1988 or section 216(2)(a) of ITA 2007 ”, and

• (d) after “section 300 of the Taxes Act 1988” insert “ , section 214 of ITA 2007 ”.

• (5) In paragraph 102 (minor definitions etc) after sub-paragraph (8) insert—

(9) References in this Schedule 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.

395

In paragraph 41 of Schedule 22 (tonnage tax: the requirement not to enter into tax avoidance arrangements) for sub-paragraph (3) substitute—

(3) In this paragraph “tax advantage” has the meaning given by section 840ZA of the Taxes Act 1988.

Capital Allowances Act 2001 (c. 2)

396

The Capital Allowances Act 2001 is amended as follows.

397

• (1) Amend section 4 (capital expenditure) as follows.

• (2) In subsection (4) for “section 348 or 349(1) of ICTA (annual payments)” substitute “ Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments or patent royalties) or under section 906 of that Act (certain royalties etc where usual place of abode of owner is abroad) ”.

• (3) Omit subsection (5).

398

In section 70V(4) (tax avoidance involving international leasing) for “Chapter 1” to the end substitute “ section 840ZA of ICTA ”.

399

Omit section 70YI(4) (application of section 839 of ICTA).

400

In section 138(2)(b) (limit on amount deferred) for “section 385 or” substitute “ section 83 of ITA 2007 or section ”.

401

In section 156(1)(a) and (c) (connected persons) for “section 839 of ICTA” substitute “ section 575 ”.

402

In section 220(8)(a) (allocation of expenditure to a chargeable period) omit “, within the meaning of section 840 of ICTA”.

403

In section 232(1)(a) (meaning of connected person) for “section 839 of ICTA” substitute “ section 575 ”.

404

In section 258 (special leasing: income tax) after subsection (3) insert—

(3A) The allowance or (as the case may be) the proportionate part of the allowance is given effect at Step 2 of the calculation in section 23 of ITA 2007.

405

In section 266(5)(a) (election where predecessor and successor are connected persons) for “section 839 of ICTA” substitute “ section 575 ”.

406

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

407

In section 437 (research and development allowances) for subsection (2) substitute—

(2) In this Part “research and development”— (a) means activities that fall to be treated as research and development in accordance with generally accepted accounting practice, and (b) includes oil and gas exploration and appraisal. (3) But— (a) activities that, as a result of regulations made under section 1006 of ITA 2007, are “research and development” for the purposes of that section are also “research and development” for the purposes of this Part, and (b) activities that, as a result of any such regulations, are not “research and development” for the purposes of that section are also not “research and development” for the purposes of this Part.

408

In section 479 (persons having qualifying non-trade expenditure: income tax) after subsection (2) insert—

(2A) The allowance is given effect at Step 2 of the calculation in section 23 of ITA 2007.

409

At the beginning of Chapter 6 of Part 12 insert—

(570B) (1) Any orders or regulations made by the Treasury or the Commissioners for Her Majesty's Revenue and Customs under this Act must be made by statutory instrument. (2) Any orders or regulations made by the Treasury or the Commissioners under this Act are subject to annulment in pursuance of a resolution of the House of Commons. (3) Subsection (2) does not apply to any regulations made under section 70YJ or any order made under section 82(4)(d).

410

In section 574(1) at the end insert “(but, for the purposes of section 575, this definition applies only where expressly indicated)”.

411

For section 575 (connected persons) substitute—

(575) (1) For the purposes of this Act whether a person is connected with another is determined in accordance with this section unless otherwise indicated. (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, (c) A is the spouse or civil partner of 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, (c) any close company whose participators include the trustees of the settlement, (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 574) by a company within paragraph or , (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 (c) a relative of any individual who is a partner in the partnership. 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, (c) A has control of one company and A together with persons connected with A have control of the other company, or (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. (575A) (1) In section 575 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 section 416 of ICTA (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 575— (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 575 “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) of ITA 2007 does not apply for the purposes of this subsection. (4) If any provision of section 575 provides that a person (“A”) is connected with another person (“B”), it also follows that B is connected with A.

412

In section 577(1) (other definitions)—

• (a) omit the definition of “tax year”, and

• (b) omit the definition of “the tax year 2001-02”.

413

• (1) Amend Schedule 1 (abbreviations and defined expressions) as follows.

• (2) In Part 1 in the appropriate place insert—

ITA 2007	The Income Tax Act 2007.

• (3) In Part 2—

• (a) in the entry for “body of persons”, in the second column, before “section 832(1) of ICTA” insert “ section 989 of ITA 2007 and ”,

• (b) in the entry for “connected persons (general meaning)”, in the second column, for “section 575(1)” substitute “ section 575 ”,

• (c) in the entry for “offshore installation”, in the second column, before “section 837C of ICTA” insert “ sections 1001 and 1002 of ITA 2007 and ”,

• (d) in the entry for “overseas property business”, in the second column, at the end insert “ (as applied by section 989 of ITA 2007) ”,

• (e) in the entry for “research and development”, in the second column, for “437(2) and section 837A of ICTA” substitute “ 437(2) and (3) ”,

• (f) in the entry for “Schedule A business”, in the second column, before “section 832(1) of ICTA” insert “ section 989 of ITA 2007 and ”,

• (g) in the entry for “tax year”, in the second column, for “section 577(1)” substitute “ section 4(2) of ITA 2007 (as applied by section 989 of that Act) ”,

• (h) in the entry for “UK property business”, in the second column, omit “section 832(1) of ICTA and” and at the end insert “ (as applied by section 989 of ITA 2007) ”,

• (i) in the entry for “United Kingdom”, in the second column, for “section 830 of ICTA and section 41 of ITEPA 2003” substitute “ section 1013 of ITA 2007 and section 830(1) of ICTA ”, and

• (j) in the entry for “within the charge to tax”, in the second column, before “section 832(1) of ICTA” insert “ section 1009 of ITA 2007 and ”.

Finance Act 2002 (c. 23)

414

The Finance Act 2002 is amended as follows.

415

Omit section 98.

416

In section 142 (interpretation) at the end insert “, and “ITA 2007” means the Income Tax Act 2007”.

417

In paragraph 19 of Schedule 12 (tax relief for expenditure on research and development) for sub-paragraph (2) substitute—

(2) For the purposes of this Schedule whether a person is connected with another is determined in accordance with section 839 of the Taxes Act 1988.

418

In paragraph 27 of Schedule 13 (tax relief for expenditure on vaccine research etc) for sub-paragraph (2) substitute—

(2) For the purposes of this Schedule whether a person is connected with another is determined in accordance with section 839 of the Taxes Act 1988.

419

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

420

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

421

In Schedule 25 (loan relationships), omit paragraph 57.

422

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

423

Omit Schedule 33 (venture capital trusts).

Proceeds of Crime Act 2002 (c. 29)

424

In paragraph 4 of Part 2 of Schedule 10 (tax) to the Proceeds of Crime Act 2002 for the words from “sections 711” to the end substitute “ Chapter 2 of Part 12 of the Income Tax Act 2007, that Part does not apply to the transfer ”.

Income Tax (Earnings and Pensions) Act 2003 (c. 1)

425

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

426

In section 1 (overview of contents of Act) omit subsection (2).

427

In section 11(3) (calculation of “net taxable earnings”) for “section 380(1) of ICTA” substitute “ section 128 of ITA 2007 ”.

428

In section 24(6)(a) (limit on chargeable overseas earnings where duties of associated employment performed in UK) for “section 840 of ICTA” substitute “ section 995 of ITA 2007 ”.

429

In section 48(2) (scope of Chapter) for “subject to deduction of tax under section 555 of ICTA (payments to non-resident entertainers and sportsmen)” substitute “ or transfers to which section 966(3) or (4) of ITA 2007 applies (visiting performers: duty to deduct and account for sums representing income tax) ”.

430

In section 69(1) (extended meaning of “control”) for “section 840 of ICTA” substitute “ section 995 of ITA 2007 ”.

431

In section 178 (exception for loans where interest qualifies for tax relief)—

• (a) in paragraph (a) for the words from “(general” to “MIRAS)” substitute “ or section 383 of ITA 2007 (relief for interest payments) ”, and

• (b) in paragraph (b) for “that section” substitute “ section 353 of ICTA ”.

432

In section 180(5) (threshold for benefit of loan to be treated as earnings)—

• (a) in paragraph (a) for the words from “(general” to “MIRAS)” substitute “ or section 383 of ITA 2007 (relief for interest payments) ”, and

• (b) in paragraph (b) for “that section” substitute “ section 353 of ICTA ”.

433

In section 230(5)(a) (the approved amount for mileage allowance payments) for “section 840 of ICTA” substitute “ section 995 of ITA 2007 ”.

434

In section 329(6) (deductions from earnings not to exceed earnings) for “section 380 of ICTA” substitute “ section 128 of ITA 2007 ”.

435

In section 347(2) (payments made after leaving an employment) for “from total income” substitute “ in calculating net income ”.

436

In section 357(2) after “section 505(1)(e) of ICTA” insert “ or section 524 of ITA 2007 ”.

437

After section 404 insert—

(404A) (1) A payment or other benefit which counts as a person's employment income as a result of section 403 is treated as the highest part of the person's total income. (2) Subsection (1) has effect for all income tax purposes except the purposes of sections 535 to 537 of ITTOIA 2005 (gains from contracts for life insurance etc: top slicing relief). (3) See section 1012 of ITA 2007 (relationship between highest part rules) for the relationship between— (a) the rule in subsection (1), and (b) other rules requiring particular income to be treated as the highest part of a person's total income.

438

In section 476 (charge on occurrence of chargeable event) after subsection (5) insert—

(5A) An amount charged under subsection (5)(a) is treated for income tax purposes as an amount of income.

439

• (1) Amend section 515 (tax advantages and charges relating to SIPs) as follows.

• (2) In subsection (1)—

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

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

• (3) In subsection (2)—

• (a) omit the “and” immediately after paragraph (b), and

• (b) after paragraph (c) insert

, and (d) Chapter 5 of Part 9 of ITA 2007 (which provides for section 479 of that Act not to apply to income of the trustees of an approved SIP in certain circumstances)

.

• (4) Omit subsection (3).

440

• (1) Amend section 555 (deduction for liabilities related to former employment) as follows.

• (2) In subsection (2)—

• (a) for “when computing the former employee's total income” substitute “ in calculating the former employee's net income ”, and

• (b) at the end insert “ (see Step 2 of the calculation in section 23 of ITA 2007) ”.

• (3) For subsection (6) substitute—

(6) See section 263ZA of TCGA 1992 for relief from capital gains tax where the amount of the deduction allowed under this section exceeds the remaining total income (as defined in that section).

• (4) In the sidenote for “from total income” substitute “ in calculating net income ”.

• (5) In the italic cross-heading before the section for “from total income” substitute “ in calculating net income ”.

441

In section 609(1) after “section 273 of ICTA” insert “ or section 459 of ITA 2007 ”.

442

In section 718 (connected persons) for “Section 839 of ICTA” substitute “ Section 993 of ITA 2007 ”.

443

In section 719 (control in relation to a body corporate)—

• (a) for “Section 840 of ICTA (meaning of control in relation to a body corporate)” substitute “ Section 995 of ITA 2007 (meaning of “control”) ”, and

• (b) for the sidenote substitute “ Meaning of “control” .

444

• (1) Amend section 721 (other definitions) as follows.

• (2) In subsection (1)—

• (a) after the definition of “foreign employer” insert “ and ”, and

• (b) omit the words after the definition of “non-cash voucher”.

• (3) Omit subsection (2).

445

In Part 1 of Schedule 1 (abbreviations) in the appropriate place insert—

ITA 2007	The Income Tax Act 2007.

446

• (1) Amend Part 2 of Schedule 1 (defined expressions) as follows.

• (2) In the entry for “assignment (in the application of the Act to Scotland)”, in the second column, for “section 721(2)” substitute “ section 1008(1) of ITA 2007 ”.

• (3) In the entry for “basic rate”, in the second column, for “section 832(1) of ICTA” substitute “ section 6(2) of ITA 2007 (as applied by section 989 of that Act) ”.

• (4) In the entry for “body of persons”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (5) In the entry for “capital allowance”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (6) In the entry for “child, children”, in the second column, omit “section 832(5) of ICTA, and see”.

• (7) In the entry for “close company”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (8) In the entry for “company”, in the second column, for “section 832(1) of ICTA” substitute “ section 992 of ITA 2007 ”.

• (9) In the entry for “connected”, in the second column, for “section 839 of ICTA” substitute “ section 993 of ITA 2007 ”.

• (10) In the entry for “control”, in the second column, for “section 840 of ICTA” substitute “ section 995 of ITA 2007 ”.

• (11) In the entry for “distribution”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (12) In the entry for “generally accepted accounting practice”, in the second column, for “section 832(1) of ICTA” substitute “ section 997 of ITA 2007 ”.

• (13) Omit the entry for “interest”.

• (14) In the entry for “local authority”, in the second column, for “section 842A of ICTA” substitute “ section 999 of ITA 2007 ”.

• (15) After the entry for “national insurance contributions” insert—

net income	section 23 of ITA 2007 (as applied by section 989 of that Act)

• (16) In the entry for “the normal self-assessment filing date”, in the second column, for “section 721(1)” substitute “ section 989 of ITA 2007 ”.

• (17) In the entry for “notice”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (18) In the entry for “offshore installation”, in the second column, for “section 837C of ICTA” substitute “ sections 1001 and 1002 of ITA 2007 ”.

• (19) In the entry for “ordinary share capital”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (20) In the entry for “personal representatives”, in the second column, for “section 721(1)” substitute “ section 989 of ITA 2007 ”.

• (21) In the entry for “recognised stock exchange”, in the second column, for “section 841 of ICTA” substitute “ section 1005 of ITA 2007 ”.

• (22) In the entry for “registered pension scheme”, in the second column, for “section 832(1) of ICTA” substitute “ section 150(2) of FA 2004 (as applied by section 989 of ITA 2007) ”.

• (23) In the entry for “Schedule A business”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (24) In the entry for “stepchild”, in the second column, for “section 832(1) of ICTA” substitute “ section 246 of the Civil Partnership Act 2004 (as applied by section 989 of ITA 2007) ”.

• (25) In the entry for “51% subsidiary”, in the second column, for “section 838(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (26) In the entry for “tax”, in the second column, at the end insert “ (as applied by section 989 of ITA 2007) ”.

• (27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (28) In the entry for “tax year”, in the second column, for “section 721(1)” substitute “ section 4(2) of ITA 2007 (as applied by section 989 of that Act) ”.

• (29) In the entry for “the tax year 2003-04 etc”, in the second column, for “section 721(1)” substitute “ section 4(4) of ITA 2007 (as applied by section 989 of that Act) ”.

• (30) In the entry for “total income” for “section 835 of ICTA” substitute “ section 23 of ITA 2007 (as applied by section 989 of that Act) ”.

• (31) In the entry for “trade”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

• (32) In the entry for “United Kingdom”, in the second column, for “section 830 of ICTA” substitute “ section 1013 of ITA 2007 ”.

• (33) In the entry for “UK property business”, in the second column, omit “section 832(1) of ICTA and” and at the end insert “ (as applied by section 989 of ITA 2007) ”.

447