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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

(1) Amend Schedule 2 (approved share incentive plans) as follows.

(2) In paragraph 49(3)—

(a) in paragraph (a) for “section 840A(1)(b) of ICTA” substitute “ section 991(2)(b) of ITA 2007 ”, and

(b) in paragraph (c) for “section 840A(1)(c) of ICTA” substitute “ section 991(2)(c) of ITA 2007 ”.

(3) In paragraph 100—

(a) in the entry for “building society”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”,

(b) in the entry for “child”, in the second column, for “section 832(5) of ICTA (and see section 721(6))” substitute “ section 721(6) ”,

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

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

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

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

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

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

(i) in the entry for “tax”, in the second column, at the end insert “ (as applied by section 989 of ITA 2007) ”, and

(j) 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) ”.

448

In paragraph 49 of Schedule 3 (approved SAYE Option Schemes)—

(a) in the entry for “child”, in the second column, for “section 832(5) of ICTA (and see section 721(6) of this Act)” substitute “ section 721(6) ”,

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

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

(d) omit the entry for “interest”,

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

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

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

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

(i) in the entry for “tax”, in the second column, at the end insert “ (as applied by section 989 of ITA 2007) ”, and

(j) omit the entry for “United Kingdom”.

449

In paragraph 37 of Schedule 4 (approved CSOP Schemes)—

(a) in the entry for “child”, in the second column, for “section 832(5) of ICTA (and see section 721(6) of this Act)” substitute “ section 721(6) ”,

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

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

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

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

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

(g) in the entry for “recognised stock exchange”, in the second column, for “section 841 of ICTA” substitute “ section 1005 of ITA 2007 ”, and

(h) omit the entry for “United Kingdom”.

450

(1) Amend Schedule 5 (enterprise management incentives) as follows.

(2) In paragraph 11(10) (meaning of “qualifying subsidiary”)—

(a) for “section 312(2A) of ICTA” substitute “ section 252 of ITA 2007 ”, and

(b) for “Chapter 3 of Part 7 of ICTA” substitute “ Part 5 of ITA 2007 ”.

(3) In paragraph 58, in the definition of “research and development”, for “section 837A of ICTA” substitute “ section 1006 of ITA 2007 ”.

(4) In paragraph 59—

(a) in the entry for “child”, in the second column, for “section 832(5) of ICTA (and see section 721(6) of this Act)” substitute “ section 721(6) ”,

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

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

(d) in the entry for “farming”, in the second column, for “section 832(1) of ICTA” substitute “ section 996 of ITA 2007 ”,

(e) in the entry for “generally accepted accounting practice”, in the second column, for “section 50(1) of the Finance Act 2004” substitute “ section 997 of ITA 2007 ”,

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

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

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

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

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

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

(l) 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) ”,

(m) in the entry for “trade”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”, and

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

Finance Act 2003 (c. 14)

451

The Finance Act 2003 is amended as follows.

452

Omit section 151 (non-resident companies: extent of charge to income tax).

453

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454

In section 153(2)(a) (general replacement of references to branch or agency of company) for “paragraphs 3 and 4” substitute “ paragraph 4 ”.

455

In paragraph 1(2) of Schedule 26 (non-resident companies: transactions through broker, investment manager or Lloyd's agent) omit paragraph (b) and the word “and” before it.

Finance Act 2004 (c. 12)

456

The Finance Act 2004 is amended as follows.

457

In section 50 (generally accepted accounting practice) for “the Tax Acts” wherever occurring substitute “ the Corporation Tax Acts ”.

458

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459

In section 59 (construction industry scheme: contractors) after subsection (7) insert—

(8) This section is subject to section 73A (designated international organisations: exemption from section 59).

460

In section 65 (change in control of company registered for gross payment) for subsection (3) substitute—

(3) In this section references to a change in the control of a company are references to such a change determined in accordance with section 995 of the Income Tax Act 2007.

461

After section 73 (regulations under this Chapter: supplementary) insert—

(73A) (1) The Treasury may by order designate for the purposes of this section any international organisation of which the United Kingdom is a member. (2) Section 59 does not apply to an organisation which is so designated.

462

(1) Amend section 83 (giving through the self-assessment return) as follows.

(2) Omit subsections (1) to (3).

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

463

Omit sections 101 (payment of royalties without deduction at source) and 102 (claim for tax deducted at source from exempt interest or royalty payments).

464

Omit sections 119 to 123 (individuals benefited by film relief).

465

Omit sections 126 to 130 (individuals in partnership: exit charge).

466

In section 155(6)(a) and (b) (persons by whom scheme may be established: supplementary) for “section 840A(1)(b) of ICTA” substitute “ section 991(2)(b) of ITA 2007 ”.

467

In section 161 (meaning of “payment” etc) for subsection (8) substitute—

(8) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

468

(1) Amend section 162 (meaning of “loan”) as follows.

(2) In subsection (2)(a) for “section 841 of ICTA” substitute “ section 1005 of ITA 2007 ”.

(3) For subsection (6) substitute—

(6) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

469

In section 172A (surrender) for subsection (11) substitute—

(11) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

470

In section 172B (increase in rights of connected person on death) for subsection (9) substitute—

(9) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

471

In section 172C (allocation of unallocated employer contributions) for subsection (7) substitute—

(7) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

472

In section 172D (limit on increase in benefits) for subsection (6) substitute—

(6) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

473

(1) Amend section 189 (relevant UK individual) as follows.

(2) In subsection (2)—

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

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

(c) income to which subsection (2A) applies.

(3) After subsection (2) insert—

(2A) This subsection applies to income if— (a) it is patent income, and (b) the individual, alone or jointly, devised the invention for which the patent in question was granted.

(4) After subsection (4) insert—

(5) “UK furnished holiday lettings business” means a UK property business so far as consisting of the commercial letting of furnished holiday accommodation (within the meaning of Chapter 6 of Part 3 of ITTOIA 2005). (6) If there is a letting of accommodation only part of which is holiday accommodation, just and reasonable apportionments are to be made for the purpose of determining what is comprised in a UK furnished holiday lettings business. (7) “Patent income” means— (a) royalties or other sums paid in respect of the use of a patent charged to tax under section 579 of ITTOIA 2005, (b) amounts on which tax is payable under section 587 or 593 of ITTOIA 2005, or (c) amounts on which tax is payable under— (i) section 472(5) of the Capital Allowances Act, or (ii) paragraph 100 of Schedule 3 to that Act.

474

In section 192 (relief at source) omit subsection (5).

475

In section 193(6) (relief under net pay arrangements)—

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

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

476

In section 194(1) (relief on making of claim)—

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

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

477

In section 266A (member's liability) for subsection (7) substitute—

(7) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

478

In section 273 (members liable as scheme administrator) for subsection (11) substitute—

(11) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

479

In section 278 (market value) for subsection (4) substitute—

(4) For the purposes of this section whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

480

(1) Amend section 279 (other definitions) as follows.

(2) In subsection (1)—

(a) omit the definition of “charity”,

(b) after the definitions of “pension credit” and “pension debit” insert “ and ”, and

(3) After that subsection insert—

(1A) In this Part, so far as it forms part of the Corporation Tax Acts, expressions which are defined for the purposes of the Income Tax Acts are to be given the same meaning as they have in the Income Tax Acts.

481

(1) Amend section 280 (abbreviations and general index) as follows.

(2) In subsection (1) omit the “and” immediately before the definition of “ITTOIA 2005” and after that definition insert

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

(3) In subsection (2)—

(a) 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) ”,

(b) in the entry for “basic rate limit”, in the second column, for “section 832(1) of ICTA” substitute “ section 20(2) of ITA 2007 (as applied by section 989 of that Act) ”,

(c) in the entry for “chargeable gain”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”,

(d) in the entry for “charity”, in the second column, for “section 279(1)” substitute “ section 989 of ITA 2007 ”,

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

(f) in the entry for “higher 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) ”,

(g) after the entry for “money purchase benefits” insert—

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

(h) in the entry for “period of account”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”,

(i) in the entry for “personal representatives”, in the second column, for “section 279(1)” substitute “ section 989 of ITA 2007 ”,

(j) in the entry for “property investment LLP”, in the second column, for “section 842B of ICTA” substitute “ section 1004 of ITA 2007 ”,

(k) in the entry for “retail prices index”, in the second column, for “section 279(1)” substitute “ section 989 of ITA 2007 ”,

(l) in the entry for “tax year”, in the second column, for “section 279(1)” substitute “ section 4(2) of ITA 2007 (as applied by section 989 of that Act) ”,

(m) in the entry for “the tax year 2006-07 etc”, in the second column, for “section 279(1)” substitute “ section 4(4) of ITA 2007 (as applied by section 989 of that Act) ”, and

(n) 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) ”.

482

(1) Amend Schedule 15 (charge to income tax on benefits received by former owner of property) as follows.

(2) For paragraph 2 substitute—

(2) (1) For the purposes of this Schedule whether a person is connected with another person is determined in accordance with section 993 of the Income Tax Act 2007. (2) But for those purposes sections 993 and 994 of that Act are to be read as if in those sections— (a) “relative” included uncle, aunt, nephew and niece, and (b) “settlement”, “settlor” and “trustee” had the same meanings as in IHTA 1984.

(3) In paragraph 9(1) for paragraph (c) substitute—

(c) sections 720 to 730 of the Income Tax Act 2007,

483

In paragraph 4 of Schedule 27 (meaning of “offshore installation”) for “sections 573 and 574” substitute “ section 573 ”.

484

In paragraph 4 of Schedule 29A (investment-regulated pension schemes) for sub-paragraph (2) substitute—

(2) For the purposes of sub-paragraph (1) whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

485

In paragraph 11D of Schedule 36 (transitional provisions) for sub-paragraph (5) substitute—

(5) For the purposes of this paragraph whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.

Pensions Act 2004 (c. 35)

486

The Pensions Act 2004 is amended as follows.

487

In Schedule 3 (restricted information held by the Regulator: certain permitted disclosures to facilitate exercise of functions), in the entry relating to the Commissioners of Inland Revenue or their officers—

(a) omit the “or” immediately after paragraph (f), and

(b) in the second column after paragraph (g) insert

or— (h) the Income Tax Act 2007 (so far as relating to functions previously exercised under the Income and Corporation Taxes Act 1988).

488

In Schedule 8 (restricted information held by the Board: certain permitted disclosures to facilitate exercise of functions), in the entry relating to the Commissioners of Inland Revenue or their officers—

(a) omit the “or” immediately after paragraph (e), and

(b) in the second column after paragraph (f) insert

or— (g) the Income Tax Act 2007 (so far as relating to functions previously exercised under the Income and Corporation Taxes Act 1988).

Constitutional Reform Act 2005 (c. 4)

489

The Constitutional Reform Act 2005 is amended as follows.

490

In paragraph 4 of Schedule 7 (protected functions of the Lord Chancellor) at the end of Part A (general) insert—

Income Tax Act 2007 Section 704(1)

491

In the table in Part 3 of Schedule 14 (appointments by the Lord Chancellor: offices to which paragraph 2(2)(d) of Schedule 12 to the Act applies) at the end add—

Chairman of section 704 tribunal	Section 704(1) of the Income Tax Act 2007
Member of section 704 tribunal

Income Tax (Trading and Other Income) Act 2005 (c. 5)

492

The Income Tax (Trading and Other Income) Act 2005 is amended as follows.

493

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

494

In section 12(3) (profits of mines etc) for “Chapter 1 of Part 10 of ICTA” substitute “ Part 4 of ITA 2007 ”.

495

(1) Amend section 13 (visiting performers) as follows.

(2) In subsection (8) omit the definitions of “payment” and “transfer”.

(3) After that subsection insert—

(9) In this section and section 14— (a) references to a payment include references to a payment by way of loan of money, and (b) references to a transfer do not include references to a transfer of money but, subject to that, include references to— (i) a temporary transfer (as by way of loan), and (ii) a transfer of a right (whether or not a right to receive money). (10) This section does not apply to payments or transfers of a kind prescribed in regulations under section 966(6) of ITA 2007.

496

In section 17(3) (effect of becoming or ceasing to be a UK resident) for “set off under section 385 of ICTA against” substitute “ deducted under section 83 of ITA 2007 from ”.

497

Omit section 51 (patent royalties).

498

(1) Amend section 52 (exclusion of double relief for interest) as follows.

(2) In subsections (1), (5) and (6) for “section 353 of ICTA” substitute “ section 383 of ITA 2007 ”.

(3) In subsection (6) for “section 368(3) of ICTA” substitute “ section 387(2) and (3) of that Act ”.

499

In section 87(5) (expenses of research and development) for “section 837A of ICTA” substitute “ section 1006 of ITA 2007 ”.

500

In section 108(4) (gifts of trading stock etc to charities) omit paragraphs (c) and (d).

501

In section 179(a) (connected persons) for “section 839 of ICTA” substitute “ section 993 of ITA 2007 ”.

502

(1) Amend section 232 (treatment of trading adjustment income) as follows.

(2) In subsection (3) for “Chapter 1 of Part 10 of ICTA” substitute “ Part 4 of ITA 2007 ”.

(3) In subsection (4) for the words from “the trade” to the end substitute “ the trade is relevant UK earnings within section 189(2)(b) of FA 2004, adjustment income is similarly relevant UK earnings. ”

503

In section 248(3) (debts paid after cessation)—

(a) for “section 109A(4) or (4A) of ICTA” substitute “ section 96 of ITA 2007 ”, and

(b) after “expenditure)” insert “ as a result of subsection (1)(b) of that section ”.

504

(1) Amend section 250 (receipts relating to post-cessation expenditure) as follows.

(2) In subsection (1) for “section 109A of ICTA” substitute “ section 96 of ITA 2007 ”.

(3) In subsection (2)—

(a) in paragraph (a) for “section 109A(2)(a) or (b) of ICTA” substitute “ section 97(2) or (3) of ITA 2007 ”,

(b) in paragraph (b) for “section 109A(2)(c) of ICTA” substitute “ section 97(4) of ITA 2007 ”, and

505

In section 254(3)(b) (allowable deductions) for “section 90(4) of FA 1995” substitute “ section 261D of TCGA 1992 ”.

506

(1) Amend section 256 (treatment of post-cessation receipts) as follows.

(2) In subsection (1)(b) omit “earned income within section 833(4)(c) of ICTA or”.

(3) In subsection (2) omit “earned income or”.

507

In section 272(2) (profits of a property business: application of trading income rules), omit the entry in the table relating to section 51.

508

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

509

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

510

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

511

In section 333(3) (treatment of property business adjustment income) for “Chapter 1 of Part 10 of ICTA” substitute “ Part 4 of ITA 2007 ”.

512

In section 354(2) (other rules about what counts as a “post-cessation receipt”)—

(a) after “section 248 (debts paid after cessation)” insert “ (reading the reference in subsection (3) to section 96 of ITA 2007 as a reference to section 125 of that Act) ”, and

(b) after “section 250 (receipts relating to post-cessation expenditure)” insert “ (reading the reference in subsection (1) to section 96 of ITA 2007 as a reference to section 125 of that Act) ”.

513

In section 369(4) (charge to tax on interest) for the words from “sections 714(5)” to the end substitute “ Chapter 3 of Part 12 of ITA 2007 (exemption for interest on securities to which Chapter 2 of that Part applies) ”.

514

In section 372(2) (building society dividends) for the words from “has” to the end substitute “ includes any distribution (whether or not described as a dividend) ”.

515

(1) Amend section 397 (tax credits for qualifying distributions: UK residents and eligible non-UK residents) as follows.

(2) In subsection (2) omit paragraph (b) and the “or” immediately before it.

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

(4) In subsection (6) for the words from “section 231AA” to “umbrella scheme),” substitute—

section 504(4) of ITA 2007 (disapplication of certain provisions for income of unauthorised unit trusts), section 592 of ITA 2007 (no tax credits for borrower under stock lending arrangement), section 593 of ITA 2007 (no tax credits for interim holder under repo), section 594 of ITA 2007 (no tax credits for original owner under repo),

516

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

517

(1) Amend section 400 (non-qualifying distributions) as follows.

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

(3) After subsection (6) insert—

(7) Subsection (2) is subject to section 504(4) of ITA 2007 (disapplication of certain provisions for income of unauthorised unit trusts).

518

In section 401 (relief: qualifying distribution after linked non-qualifying distribution) after subsection (6) insert—

(6A) The reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.

519

In section 410(3)(b) (stock dividend income arising to trustees) for the words from “income” to the end substitute “ accumulated or discretionary income (as defined in section 480 of ITA 2007 but excluding income arising under a trust established for charitable purposes only or an unauthorised unit trust in relation to which section 504 of that Act applies) ”.

520

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

521

In section 418(5) (loans to participator in close company: relief where borrowers liable as settlors) for “rate applicable to trusts” substitute “ trust rate ”.

522

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

523

(1) Amend section 426 (annuity payments received after deduction of tax) as follows.

(2) For “Income tax deducted under either of the following sections” substitute “ In accordance with section 848 of ITA 2007 a sum representing income tax deducted under section 901 of that Act ”.

(3) Omit the words after “recipient”.

524

In section 446 (strips of government securities: relief for losses) for subsection (2) substitute—

(2) If a person makes a claim under this section, the relief is given by deducting the loss in calculating the person's net income for the tax year in which the disposal occurs (see Step 2 of the calculation in section 23 of ITA 2007).

525

In section 454 (listed securities held since 26th March 2003: relief for losses) for subsection (4) substitute—

(4) If a claim under this section is made by a person other than a trustee, the relief is given by deducting the loss in calculating the person's net income for the tax year in which the disposal occurs (see Step 2 of the calculation in section 23 of ITA 2007).

526

(1) Amend section 457 (disposal of deeply discounted securities by trustees) as follows.

(2) Omit subsection (3).

(3) For subsection (5) substitute—

(5) If the trustees are trustees of a scheme in relation to which section 504 of ITA 2007 applies, subsection (2) does not apply to profits which are shown in the scheme's accounts as income available for payment to unit holders or for investment.

527

In section 459(2) (profits from deeply discounted securities: transfer of assets abroad) for “sections 739 and 740 of ICTA (transfer of assets abroad) have” substitute “ Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) has ”.

528

In section 460(2) (profits from deeply discounted securities: minor definitions) for “section 709(1)” substitute “ section 840ZA ”.

529

After section 465 insert—

(465A) (1) This section applies if— (a) an individual is liable for tax under this Chapter in respect of an amount, and (b) the individual is treated by section 530 as having paid income tax at the savings rate on the amount. (2) The amount is treated as the highest part of the individual's total income. (3) Subsection (2) has effect for all income tax purposes except the purposes of sections 535 to 537 (gains from contracts for life insurance etc: top slicing relief). (4) See section 1012 of ITA 2007 (relationship between highest part rules) for the relationship between— (a) the rule in subsection (2), and (b) other rules requiring particular income to be treated as the highest part of a person's total income.

530

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

531

(1) Amend section 467 (liability of trustees for tax on gains from contracts for life insurance etc) as follows.

(2) After subsection (1) insert—

(1A) If trustees are liable for tax under this Chapter, the gain is treated for income tax purposes as income of the trustees.

(3) For subsection (7) substitute—

(7) If trustees are liable for tax under this Chapter, it is charged at the savings rate if— (a) condition A is met, or (b) condition D is met and the trustees are trustees of a charitable trust.

532

In section 468 (gains from contracts for life insurance etc: non-UK resident trustees and foreign institutions)—

(a) in subsection (2) for “Sections 739 and 740”, “prevent” and “apply” substitute “ Chapter 2 of Part 13 of ITA 2007 ”, “prevents” and “applies” respectively, and

(b) in subsections (3) and (4) for “sections 739 and 740 apply” substitute “ Chapter 2 of Part 13 of ITA 2007 applies ”.

533

In section 482 (excepted group life policies: conditions about persons intended to benefit)—

(a) in subsection (6) omit the definition of “tax advantage”, and

(b) after that subsection insert—

(7) In this section “tax advantage” has the meaning given by section 840ZA of ICTA.

534

In section 520(4) (the property categories) after the definition of “internal linked fund” insert—

“investment trust” has the meaning given by section 842 of ICTA,

535

(1) Amend section 530 (income tax treated as paid) as follows.

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

(3) In subsection (4) after “fall to be made” insert “ at Step 2 or 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability) ”.

536

(1) Amend section 535 (top slicing relief) as follows.

(2) After subsection (2) insert—

(2A) If the relief is given by a reduction in income tax, it is given effect at Step 6 of the calculation in section 23 of ITA 2007.

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

(4) After subsection (6) insert—

(7) For the purposes of the calculations mentioned in subsection (1) any relief under Chapter 2 or 3 of Part 8 of ITA 2007 (which relate to gift aid and other gifts to charities) is ignored.

537

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

538

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

539

For section 539 (relief for deficiencies) substitute—

(539) (1) An individual is entitled to a tax reduction for a tax year in which a deficiency arises from a policy or contract on a chargeable event if— (a) the condition in subsection (2) is met, (b) the individual would (apart from this section) be liable to income tax at the higher rate or the dividend upper rate (or both) for the tax year, and (c) the individual makes a claim. (2) The condition is that, if a gain had arisen instead on the chargeable event— (a) the individual would have been liable to income tax on the gain for the year, or (b) the individual would have been so liable apart from the requirement in section 465(1) that the individual must be UK resident in the tax year in which the gain arises. (3) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007. (4) See section 540 for the cases in which a deficiency is treated as arising from a policy or contract on a chargeable event, section 541 for how the deficiency is calculated and section 469(5) for the apportionment of deficiencies in cases where two or more persons are interested in a policy or contract. (5) The amount of the tax reduction is calculated as follows. Step 1 Attribute to the amount of the deficiency an amount of the individual's income for the tax year which is liable at the dividend upper rate, so far as is possible. Step 2 If there is an amount of the deficiency remaining after Step 1, attribute to the remaining amount of the deficiency an amount of the individual's savings income for the tax year which is liable at the higher rate, so far as is possible. Step 3 If there is an amount of the deficiency remaining after Step 2, attribute to the remaining amount of the deficiency an amount of the individual's other income for the tax year which is liable at the higher rate, so far as is possible. Step 4 Calculate the amount of the individual's preliminary income tax liability for the tax year (see subsection (6)). Step 5 Calculate the amount of the individual's preliminary income tax liability for the tax year again, on these assumptions— Assume that any income attributed to the deficiency at Step 1 is liable at the dividend ordinary rate. Assume that any income attributed to the deficiency at Step 2 is liable at the savings rate. Assume that any income attributed to the deficiency at Step 3 is liable at the basic rate. Step 6 Deduct the amount found at Step 5 from the amount found at Step 4. The result is the amount of the tax reduction. (6) The individual's preliminary income tax liability is the amount found by calculating the individual's income tax liability in accordance with section 23 of ITA 2007, ignoring Steps 6 and 7 of that calculation.

540

In section 546(4) (table of provisions subject to special rules for older policies and contracts), in the first column of the table, for “Section 539(3)” substitute “ Section 539 ”.

541

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

542

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

543

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

544

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

545

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

546

(1) Amend section 595 (deduction of tax from payments to non-UK residents) as follows.

(2) In subsection (2) for the words after “which” substitute “ is to be deducted under section 910 of ITA 2007 ”.

(3) In subsection (3) for the words after “which” substitute “is to be deducted under section 910 of ITA 2007”.

547

In section 601 (how relief for patent expenses is given) after subsection (2) insert—

(2A) The deduction or set-off is given effect at Step 2 of the calculation in section 23 of ITA 2007.

548

(1) Amend section 602 (payments received after deduction of tax) as follows.

(2) For “Income tax deducted under either of the following sections” substitute “ In accordance with section 848 of ITA 2007, a sum representing income tax deducted under either of the following Chapters ”.

(3) For the words after “recipient” substitute

— Chapter 6 of Part 15 of ITA 2007 (deduction from annual payments and patent royalties), and Chapter 7 of that Part (deduction from other payments connected with intellectual property).

549

(1) Amend section 618 (payments received after deduction of tax) as follows.

(2) For “Income tax deducted under either of the following sections” substitute “ In accordance with section 848 of ITA 2007, a sum representing income tax deducted under Chapter 6 of Part 15 of that Act ”.

(3) Omit the words after “recipient”.

550

In section 619(2) (charge to tax on settlor)—

(a) for “sections 1 to 1B of ICTA” substitute “ Chapter 2 of Part 2 of ITA 2007 (rates at which income tax is charged) ”, and

(b) for “Tax Acts” substitute “ Income Tax Acts ”.

551

After section 619 insert—

(619A) (1) This section applies to income which is treated as income of a settlor as a result of section 624 (income where settlor retains an interest) or 629 (income paid to unmarried minor children of settlor). (2) The income is treated as the highest part of the settlor's total income for the purposes of section 619 (so far as it relates to the income). (3) See section 1012 of ITA 2007 (relationship between highest part rules) for the relationship between— (a) the rule in subsection (2), and (b) other rules requiring particular income to be treated as the highest part of a person's total income.

552

In section 620(5) (which contains various definitions) in the definition of “charity” for the words from “each” to the end substitute—

(a) the Trustees of the National Heritage Memorial Fund, (b) the Historic Buildings and Monuments Commission for England, and (c) the National Endowment for Science, Technology and the Arts

553

In section 624 (income where settlor retains an interest in the settlement) after subsection (1) insert—

(1A) If the settlement is a trust, expenses of the trustees are not to be used to reduce the income of the settlor.

554

In section 627(2) (income where settlor retains an interest: exceptions), in paragraph (b), for “section 25 of FA 1990 (donations to charity by individuals)” substitute “ Chapter 2 of Part 8 of ITA 2007 (gift aid) ”.

555

(1) Amend section 628 (exception for gifts to charities) as follows.

(2) In subsection (2)—

(a) in paragraph (a) for “is to” substitute “ must ”, and

(b) in paragraph (b) omit the words after “person”.

(3) After that subsection insert—

(2A) The cases covered by subsection (2)(b) include cases where the trustees have, or any other person has, any discretion over one or more of the following matters— (a) whether, or the extent to which, the income is to be accumulated, (b) the persons to whom the income is to be paid, and (c) how much of the income is to be paid to any person.

(4) In subsection (6)—

(a) in the definition of “charity” for the words from “each” to the end substitute—

(a) the Trustees of the National Heritage Memorial Fund, (b) the Historic Buildings and Monuments Commission for England, and (c) the National Endowment for Science, Technology and the Arts, and

, and

(b) omit the definition of “resident” and the “and” immediately after it.

556

In section 631(7) (retained and accumulated income) for “the total income” substitute “ the child's total income or net income at Step 2 or 3 of the calculation in section 23 of ITA 2007 ”.

557

In section 635(3)(d) (settlements: amounts treated as income of settlor: amount of available income) for “rate applicable to trusts” substitute “ trust rate ”.

558

(1) Amend section 636 (calculation of undistributed income) as follows.

(2) In subsection (6) for “section 505 of ICTA (charities: general)” substitute “ any provision to which subsection (7) applies ”.

(3) After that subsection insert—

(7) This subsection applies to the following provisions of ITA 2007— - section 521(4) (gifts entitling donor to gift-aid relief), - section 522(5) (gifts of money from companies), - section 523(5) (payments from other charities), - section 524 (profits etc of charitable trades), - section 529 (profits from fund-raising events), - section 530 (profits from lotteries), - section 531 (property income etc), - section 532 (savings and investment income), - section 533 (public revenue dividends), - section 536 (miscellaneous income), and - section 537 (income from estates in administration).

559

In section 640(1) and (3)(a) (settlements: amounts treated as income of settlor: grossing-up of deemed income) for “rate applicable to trusts” substitute “ trust rate ”.

560

After section 646 insert—

(646A) (1) This section applies if— (a) in a tax year qualifying income arises under a UK settlement, and (b) the qualifying income consists of charitable income and non-charitable income. (2) If expenses of the trustees are to be set against the charitable income by virtue of section 484 of ITA 2007, the amount of those expenses which can used for that purpose is limited to the amount allocated to the charitable income. (3) If— (a) Chapter 8 of Part 9 of ITA 2007 applies in relation to the charitable income, and (b) expenses of the trustees are to be used to reduce the charitable income for income tax purposes, the amount of those expenses which can used for that purpose is limited to the amount allocated to the charitable income. (4) For the purposes of subsections and (3) 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. (5) In this section— - “charitable income” means income within section 628(1) or 630(1), - “non-charitable income” means income which is not charitable income, and - “qualifying income” and “UK settlement” have the same meaning as in section 628.

561

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

562

In section 677 (relief where UK income tax borne by foreign estate: absolute interests) after subsection (2) insert—

(3) The tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.

563

In section 678 (relief where UK income tax borne by foreign estate: limited and discretionary interests) after subsection (2) insert—

(3) The tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.

564

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

565

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

566

After section 680 insert—

(680A) (1) Subsections (2) and (3) apply to income if it— (a) is treated under section 656(3) or 657(4) (gross amount of estate income treated as bearing tax at the applicable rate) as bearing tax at the savings rate or the dividend ordinary rate, and (b) is not paid through a trustee. (2) So far as the income is treated as bearing tax at the savings rate, it is treated as savings income. (3) So far as the income is treated as bearing tax at the dividend ordinary rate, it is treated as dividend income. (4) Subsections (5) and (6) apply to income if it— (a) is treated by section 662, read with section 656(3) or 657(4), as bearing tax at the savings rate or the dividend ordinary rate, and (b) is paid through a trustee. (5) So far as the income is treated as bearing tax at the savings rate, it is treated as savings income of the trustee. (6) So far as the income is treated as bearing tax at the dividend ordinary rate, it is treated as dividend income of the trustee.

567

In section 682 (assessments, adjustments and claims after the administration period) after subsection (4) insert—

(4A) The excess charged under subsection (4)(b) is treated as an amount of income for income tax purposes, except so far as it represents a tax reduction given effect at Step 6 of the calculation in section 23 of ITA 2007.

568

In section 684(3) (Chapter 7 of Part 5 subject to section 687 of ICTA) for “section 687 of ICTA” substitute “ section 494 of ITA 2007 ”.

569

(1) Amend section 685A (discretionary payments under settlor-interested settlements) as follows.

(2) In subsection (4) omit paragraph (c) and the “and” immediately before it.

(3) In subsection (6) for “Section 687 of ICTA” substitute “ Sections 494 and 495 of ITA 2007 ”.

570

(1) Amend section 686 (payments received after deduction of tax) as follows.

(2) In subsection (1)—

(a) for “Income tax deducted under either of the following sections” substitute “ In accordance with section 848 of ITA 2007, a sum representing income tax deducted under Chapter 6 of Part 15 of that Act ”, and

(b) omit the words after “recipient”.

(3) In subsection (2) for “section 687(2) of that Act” substitute “ section 494(3) of ITA 2007 ”.

571

In section 704(4)(a) (types of arrangements and providers) for “section 840A(1)(b) of ICTA” substitute “ section 991(2)(b) of ITA 2007 ”.

572

In section 714(6) (exemption of profits from FOTRA securities) for “Chapter 3 of Part 17 of ICTA” substitute “ Chapter 2 of Part 13 of ITA 2007 ”.

573

In section 724 (regulations) omit subsection (3).

574

In section 755(3) (exemption of interest on foreign currency securities etc owned by non-UK residents) for “Chapter 3 of Part 17 of ICTA” substitute “ Chapter 2 of Part 13 of ITA 2007 ”.

575

In section 756A(5) (interest on certain deposits of victims of National-Socialist persecution) for “meaning given by section 481(3) of ICTA” substitute “ same meaning as in Chapter 19 of Part 15 of ITA 2007 (see section 983 of that Act) ”.

576

In section 757 (interest and royalty payments: introduction) at the end insert—

(4) See section 914 of ITA 2007 for provision enabling a company to make a royalty payment gross if it reasonably believes that the payment is exempt from income tax as a result of section 758 of this Act.

577

In section 767(2) (power to amend references to the Directive by order)—

(a) for “section 101 of FA 2004” substitute “ sections 914 to 916 of ITA 2007 ”, and

(b) for “subsection (9) of that section” substitute “ section 917(2) of that Act ”.

578

In section 841 (unremittable income: introduction) for subsection (5) substitute—

(5) This Chapter does not apply to accrued income profits which a person is treated as making under Chapter 2 of Part 12 of ITA 2007, but see sections 668 and 669 of that Act (which make similar provision).

579

In section 852(7) (carrying on by partner of notional trade) for “carried forward under section 385 of ICTA and set against” substitute “ deducted under section 83 of ITA 2007 from ”.

580

In section 863(2) (limited liability partnerships)—

(a) in paragraph (a) after “firm” insert “ or partnership ”, and

(b) in paragraph (b)—

(i) after “members”, in the first place where it occurs, insert “ or partners ”, and

(ii) after “firm” insert “ or partnership ”.

581

In section 871 (apportionment etc of miscellaneous profits to tax year)—

(a) in subsection (1)(a) for “section 836B of ICTA” substitute “ section 1016 of ITA 2007 ”, and

(b) in subsection (2)—

(i) for “section 836B of ICTA” substitute “ section 1016 of ITA 2007 ”, and

(ii) for “subsection (4)(a)” substitute “ subsection (3)(a) ”.

582

In section 872(3)(a) (losses calculated on same basis as miscellaneous income) for “section 836B of ICTA” substitute “ section 1016 of ITA 2007 ”.

583

Omit section 876 (meaning of “farming” and related expressions).

584

Omit section 877 (meaning of “grossing up”).

585

(1) Amend section 878 (other definitions) as follows.

(2) In subsection (1)—

(a) omit the definition of “charity”,

(b) after the definition of “houseboat” insert “ and ”, and

(3) In subsection (5) for “Section 839 of ICTA” substitute “ Section 993 of ITA 2007 ”.

(4) In subsection (6) for “Section 840 of ICTA (meaning of control in relation to a body corporate)” substitute “ Section 995 of ITA 2007 (meaning of “control”) ”.

586

In section 879 (interpretation: Scotland)—

(a) in subsection (1) omit the definitions of “assignment” and “surrender” and the “and” immediately before the definition of “surrender”, and

(b) omit subsection (2).

587

In section 885(3)(c) (general index in Schedule 4) for “ICTA or ITEPA 2003” substitute “ another Act ”.

588

In Schedule 2 (transitionals and savings etc) omit paragraph 50(3).

589

(1) Amend paragraph 82 of Schedule 2 (transitionals and savings etc) as follows.

(2) In paragraph (a) for “section 505(1) of ICTA (exemption from income tax for certain income forming part of the income of a charity)” substitute “ any of sections 521(4), 522(5), 523(5), 524, 529 to 533, 536 and 537 of ITA 2007 (certain exemptions: special rules about charitable trusts) ”.

(3) In paragraph (b) for the words from “505(3)” to the end substitute “ 541 of that Act (restrictions on exemptions: attributing items of income to the non-exempt amount) ”.

590

In paragraph 109(4) of Schedule 2 (transitional provision: contracts in accounting periods beginning before 1st January 1992) for the words from “Section 539(3)” to the end substitute

Section 539 (relief for deficiencies) has effect as if for subsections (1) to (6) there were substituted— (1) A deficiency from a policy or contract arising on a chargeable event is allowable as a deduction in calculating an individual's net income for a tax year if, had a gain arisen instead on the chargeable event— (a) the individual would have been liable to income tax on the gain for that year, or (b) the individual would have been so liable apart from the requirement in section 465(1) that the individual must be UK resident in the tax year in which the gain arises. (2) See section 540 for the cases in which a deficiency is treated as arising from a policy or contract on a chargeable event, section 541 for how the deficiency is calculated and section 469(5) for the apportionment of deficiencies in cases where two or more persons are interested in a policy or contract.

591

In Part 1 of Schedule 4 (abbreviations) in the appropriate place insert—

ITA 2007	The Income Tax Act 2007

592

(1) Amend Part 2 of Schedule 4 (index of defined expressions) as follows.

(2) In the entry for “assignment (in the application of the Act to Scotland)”, in the second column, for “section 879(1)” substitute “ section 1008(1) of ITA 2007 ”.

(3) In the entry for “authorised unit trust”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

(4) 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) ”.

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

(6) In the entry for “building society”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

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

(8) Omit the entry for “chargeable period”.

(9) In the entry for “charity”, in the second column, for “section 878(1)” substitute “ section 989 of ITA 2007 ”.

(10) Omit the entry for “child”.

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

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

(13) In the entry for “control”—

(a) in the first column, omit “(in relation to a body corporate)”, and

(b) in the second column, for “section 840 of ICTA” substitute “ section 995 of ITA 2007 ”.

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

(15) In the entry for “the dividend ordinary rate”, in the second column, for “section 832(1) of ICTA” substitute “ section 8(1) of ITA 2007 (as applied by section 989 of that Act) ”.

(16) In the entry for “the dividend trust rate”, in the second column, for “section 832(1) of ICTA” substitute “ section 9(2) of ITA 2007 (as applied by section 989 of that Act) ”.

(17) In the entry for “the dividend upper rate”, in the second column, for “section 832(1) of ICTA” substitute “ section 8(2) of ITA 2007 (as applied by section 989 of that Act) ”.

(18) In the entry for “estate in land (in relation to any land in Scotland)”, in the second column, for “section 832(1) of ICTA” substitute “ section 1008(1) of ITA 2007 ”.

(19) In the entry for “farming”, in the second column, for “section 876” substitute “ section 996 of ITA 2007 ”.

(20) In the entry for “for accounting purposes”, in the second column, for “section 832(1) of ICTA” substitute “ section 997 of ITA 2007 ”.

(21) In the entry for “forestry”, in the second column, for “section 876(3)” substitute “ section 996(3) of ITA 2007 ”.

(22) In the entry for “generally accepted accounting practice”, in the second column, for “section 832(1) of ICTA and section 50 of FA 2004” substitute “ section 997 of ITA 2007 ”.

(23) In the entry for “grossing up”, in the second column, for “section 877” substitute “ section 998 of ITA 2007 ”.

(24) In the entry for “higher 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) ”.

(25) Omit the entry for “interest”.

(26) In the entry for “international accounting standards”, in the second column, for “section 832(1) of ICTA and section 50(2) of FA 2004” substitute “ section 997 of ITA 2007 ”.

(27) Omit the entry for “investment trust”.

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

(29) Omit the entry for “lower rate”.

(30) In the entry for “market gardening”, in the second column, for “section 876(5)” substitute “ section 996(5) of ITA 2007 ”.

(31) In the entry for “non-UK resident”, in the second column, for “section 878(1)” substitute “ section 989 of ITA 2007 ”.

(32) In the entry for “normal self-assessment filing date”, in the second column, for “section 878(1)” substitute “ section 989 of ITA 2007 ”.

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

(34) In the entry for “oil and gas exploration and appraisal”, in the second column, for “section 837B of ICTA” substitute “ section 1003 of ITA 2007 ”.

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

(36) In the entry for “period of account”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

(37) In the entry for “permanent establishment”, in the second column, for “section 832(1) of ICTA and section 148 of FA 2003” substitute “ section 148 of FA 2003 (as applied by section 989 of ITA 2007) ”.

(38) In the entry for “personal representatives”, in the second column, for “section 878(1)” substitute “ section 989 of ITA 2007 ”.

(39) In the entry for “profits or gains”, in the second column, for “section 833(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

(40) In the entry for “property or rights held on trust or on trusts (in the application of the Act to Scotland)”, in the second column, for “section 879(2)” substitute “ section 1008(2) of ITA 2007 ”.

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

(42) In the entry for “qualifying policy”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

(43) Omit the entry for “the rate applicable to trusts”.

(44) In the entry for “recognised stock exchange”, in the second column, for “section 841(1) of ICTA” substitute “ section 1005 of ITA 2007 ”.

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

(46) In the entry for “retail prices index”, in the second column, for “section 833(2) of ICTA” substitute “ section 989 of ITA 2007 ”.

(47) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(49) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(50) 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) ”.

(51) In the entry for “surrender (in the application of the Act to Scotland)”, in the second column, for “section 879(1)” substitute “ section 1008(1) of ITA 2007 ”.

(52) In the entry for “tax year”, in the second column, for “section 878(1)” substitute “ section 4(2) of ITA 2007 (as applied by section 989 of that Act) ”.

(53) In the entry for “the tax year 2005-06 etc”, in the second column, for “section 878(1)” substitute “ section 4(4) of ITA 2007 (as applied by section 989 of that Act) ”.

(54) In the entry for “total income” for “section 835(1) of ICTA” substitute “ section 23 of ITA 2007 (as applied by section 989 of that Act) ”.

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

(56) After the entry for “transfer of work in progress” insert—

trust rate	section 9(1) of ITA 2007 (as applied by section 989 of that Act)

(57) In the entry for “UK resident”, in the second column, for “section 878(1)” substitute “ section 989 of ITA 2007 ”.

(58) In the entry for “unit holder”, in the second column, for “section 832(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

(59) In the entry for “unit trust scheme”, in the second column, for “section 832(1) of ICTA” substitute “ section 1007 of ITA 2007 ”.

(60) In the entry for “United Kingdom”, in the second column, for “section 830(1) of ICTA” substitute “ section 1013 of ITA 2007 ”.

(61) In the entry for “venture capital trust”, in the second column, for “section 842AA(1) of ICTA” substitute “ section 989 of ITA 2007 ”.

(62) In the entry for “within the charge to tax”, in the second column, for “section 832(1) of ICTA” substitute “ section 1009 of ITA 2007 ”.

(63) In the entry for “woodlands”, in the second column, for “section 876(4)” substitute “ section 996(4) of ITA 2007 ”.

Finance Act 2005 (c. 7)

593

The Finance Act 2005 is amended as follows.

594

In section 26 (amount of relief for trustees of property held on trust for vulnerable persons) at the beginning insert “(1)” and at the end insert—

(2) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007.

595

(1) Amend section 27 (tax liability of trustees of property held on trust for vulnerable persons) as follows.

(2) In subsection (2)—

(a) in paragraph (b) for the words from “any expenses” to the end substitute “ allowable expenses ”, and

(b) for “management” substitute “ allowable ”.

(3) After that subsection insert—

(2A) References in subsection (2) to allowable expenses are to expenses which can be set against the total income in accordance with Chapter 4 of Part 9 of ITA 2007.

596

In section 41(1) (interpretation of Chapter 4 of Part 2) in the definition of “tax year” omit paragraph (a) and the “and” immediately after it.

597

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

598

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

599

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

600

Omit sections 74 to 78 (partners: recovery of excess relief).

601

In section 105 (interpretation) after the definition of “IHTA 1984” insert—

“ITA 2007” means the Income Tax Act 2007;

602

(1) Amend Schedule 2 (alternative finance arrangements: further provisions) as follows.

(2) Omit paragraphs 3, 5 and 6.

(3) After paragraph 10 insert—

(11) Chapter 2 of Part 15 of ITA 2007 (deduction of income tax at source: deduction by deposit-takers and building societies) (and Chapter 19 of that Part so far as it has effect for the purposes of Chapter 2) have effect as if— (a) relevant arrangements were a deposit, (b) for the purposes of section 866(2)(a) of that Act, relevant arrangements were a deposit consisting of a loan, and (c) alternative finance return or profit share return payable under relevant arrangements were interest. (12) Chapters 3 to 5 of Part 15 of ITA 2007 (and Chapter 19 of that Part so far as it has effect for the purposes of those Chapters) have effect in relation to alternative finance return or profit share return as they have effect in relation to interest. (13) In Chapter 12 of Part 15 of ITA 2007 (funding bonds) references to interest include references to alternative finance return or profit share return.

Finance (No. 2) Act 2005 (c. 22)

603

The Finance (No. 2) Act 2005 is amended as follows.

604

(1) Amend section 7 (charge to income tax on social security pension lump sum) as follows.

(2) In subsection (5) for “total income” in each place substitute “ Step 3 income ”.

(3) At the end insert—

(9) For the purposes of this section P's “Step 3 income” means P's net income less allowances deducted at Step 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability).

605

In section 18(3)(b)(i) (authorised investment funds etc: section 17(3): specific powers) for “506(1) of ICTA” substitute “ 989 of ITA 2007 ”.

606

In section 71 (interpretation) after the definition of “ICTA” insert—

“ITA 2007” means the Income Tax Act 2007;

Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1))

607

The Pensions (Northern Ireland) Order 2005 is amended as follows.

608

(a) omit the “or” immediately after paragraph (f), and

(b) after paragraph (g) insert

, or (h) the Income Tax Act 2007 (so far as relating to functions previously exercised under the Income and Corporation Taxes Act 1988).

609

In Schedule 7 (restricted information held by the Board: certain permitted disclosures to facilitate exercise of functions), in the entry relating to the Commissioners of Inland Revenue or their officers, in the second column—

(a) omit the “or” immediately after paragraph (e), and

(b) after paragraph (f) insert

, or (g) the Income Tax Act 2007 (so far as relating to functions previously exercised under the Income and Corporation Taxes Act 1988).

Finance Act 2006 (c. 25)

610

The Finance Act 2006 is amended as follows.

611

In section 34 (meaning of certain expressions for the purposes of Chapter 3 of Part 3) for subsection (4) substitute—

(4) For the purposes of subsection (3) whether a person is connected with another person is determined in accordance with section 839 of ICTA (connected persons).

612

In section 65(3) (London Organising Committee) for “Section 349(1) of ICTA (annual payments: deductions of tax)” substitute “ The duties to deduct under Chapters 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income tax at source) ”.

613

In section 67 (International Olympic Committee)—

(a) in subsection (1)(c), for “section 349(1) and (2) of ICTA (annual payments: deductions of tax)” substitute “ the duties to deduct under Chapters 3, 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income tax at source) ”, and

(b) in subsection (2)(c), for “section 349(1) and (2) of ICTA” substitute “ the duties to deduct under Chapters 3, 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income tax at source) ”.

614

In section 68(1)(d) (competitors and staff) for “section 349(1) of ICTA (annual payments: deductions of tax)” substitute “ the duties to deduct under Chapters 6, 7, 10 and 14 of Part 15 of ITA 2007 (deduction of income tax at source) ”.

615

Omit section 75 (tax avoidance: interest relief and film partnerships).

616

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

617

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

618

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

619

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

620

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

621

(1) Amend section 139 (manufactured dividends) as follows.

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

(3) In subsection (2)—

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

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

(d) omit the new sub-paragraphs (2C) to (2E) of paragraph 2 of that Schedule.

(4) Omit subsections (3) and (4).

622

In section 179 (interpretation) after the definition of “IHTA 1984” insert—

“ITA 2007” means the Income Tax Act 2007;

623

In Schedule 5 (film tax relief: further provisions) in paragraph 9(4)(b) for “555 of ICTA (foreign entertainers)” substitute “ 966 of ITA 2007 (visiting performers) ”.

624

In paragraph 27(1) of Schedule 8 (long funding leases of plant and machinery) for “section 840 of ICTA” in both places where it occurs substitute “ section 574 of CAA 2001 ”.

625

In Schedule 13 (settlements) omit paragraph 37.

626

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

Part 3 — Amendment having effect in relation to shares issued after 5 April 2007

Income and Corporation Taxes Act 1988 (c. 1)

627

Omit Chapter 3 of Part 7 of the Income and Corporation Taxes Act 1988 (Enterprise Investment Scheme), except section 305A.

SCHEDULE 2

Part 1 — General provisions

Continuity of the law: general

1

The repeal of provisions and their enactment in a rewritten form by this Act does not affect the continuity of the law.

2

Paragraph does not apply to any change made by this Act in the effect of the law.

3

Any subordinate legislation or other thing which—

(a) has been made or done, or has effect as if made or done, under or for the purposes of a superseded enactment so far as it applied for relevant tax purposes, and

(b) is in force or effective immediately before the commencement of the corresponding rewritten provision,

has effect after that commencement as if made or done under or for the purposes of the rewritten provision.

4

(1) Any reference (express or implied) in this Act, another enactment or an instrument or document to a rewritten provision is to be read as including, in relation to times, circumstances or purposes in relation to which any corresponding superseded enactment had effect for relevant tax purposes, a reference to the superseded enactment so far as applying for those relevant tax purposes.

(2) Any reference (express or implied) in this Act, another enactment or an instrument or document to—

(a) things done under or for the purposes of a rewritten provision, or

(b) things falling to be done under or for the purposes of a rewritten provision,

is to be read as including, in relation to times, circumstances or purposes in relation to which any corresponding superseded enactment had effect for relevant tax purposes, a reference to things done or falling to be done under or for the purposes of the superseded enactment so far as applying for those relevant tax purposes.

5

(1) Any reference (express or implied) in any enactment, instrument or document to a superseded enactment in its application for relevant tax purposes is to be read, so far as is required for those relevant tax purposes, as including, in relation to times, circumstances or purposes in relation to which any corresponding rewritten provision has effect, a reference to the rewritten provision.

(2) Any reference (express or implied) in any enactment, instrument or document to—

(a) things done under or for the purposes of a superseded enactment in its application for relevant tax purposes, or

(b) things falling to be done under or for the purposes of a superseded enactment in its application for relevant tax purposes,

is to be read, so far as is required for those relevant tax purposes, as including, in relation to times, circumstances or purposes in relation to which any corresponding rewritten provision has effect, a reference to things done or falling to be done under or for the purposes of the rewritten provision.

6

(1) Paragraphs 1 to 5 have effect instead of section 17(2) of the Interpretation Act 1978 (c. 30) (but are without prejudice to any other provision of that Act).

(2) Paragraphs 4 and 5 apply only so far as the context permits.

General saving for old transitional provisions and savings

7

(1) The repeal by this Act of a transitional or saving provision relating to the coming into force of a provision rewritten in this Act does not affect the operation of the transitional or saving provision, so far as it is not specifically rewritten in this Act but remains capable of having effect in relation to the corresponding provision of this Act.

(2) The repeal by this Act of an enactment previously repealed subject to savings does not affect the continued operation of those savings.

(3) The repeal by this Act of a saving on the previous repeal of an enactment does not affect the operation of the saving so far as it is not specifically rewritten in this Act but remains capable of having effect.

Partnerships involving companies

8

(1) References in this Act to any person are to be read, in the case of a person acting in partnership with other persons of whom at least one is a company chargeable to corporation tax, as references to all the partners so far as is required for the purposes of preserving the continuity of the law.

(2) References to a company or other person in any provision amended in its application for corporation tax purposes by this Act are to be read, in the case of a company acting in partnership with other persons of whom at least one is not a company, as references to all the partners so far as is required for the purposes of preserving the continuity of the law.

Interpretation

9

(1) In this Part—

“enactment” includes subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)),

“relevant tax purposes” means, in relation to a superseded enactment, tax purposes for which the enactment has been rewritten by this Act, and

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