Legalize / United Kingdom / Public General Act

Income Tax Act 2007

Type Public General Act

Publication 2007-03-20

Last updated 2026-01-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

“superseded enactment” means an earlier enactment which has been rewritten by this Act for certain tax purposes (whether it applied only for those purposes or for those and other tax purposes).

(2) References in this Part to the repeal of a provision include references to its revocation and to its express or implied disapplication for income tax purposes of this Act.

(3) References in this Part to tax purposes are not limited to income tax purposes.

Part 2 — Changes in the law

10

(1) This paragraph applies if, in the case of any person—

(a) a thing is done or an event occurs before 6 April 2007, and

(b) because of a change in the law made by this Act, the tax consequences of that thing or event for the relevant period are different from what they would otherwise have been.

(2) If that person so elects, this Act applies with such modifications as may be necessary to secure that the tax consequences for the relevant period are the same as they would have been if the change in the law had not been made.

(3) In sub-paragraphs (1) and (2) “the relevant period” means—

(a) for income tax purposes, any period of account beginning before and ending on or after 6 April 2007, and

(b) for corporation tax purposes, any accounting period beginning before and ending on or after 6 April 2007.

(4) If this paragraph applies in the case of two or more persons in relation to the same thing or event, an election made under this paragraph by any one of those persons is of no effect unless a corresponding election is made by the other or each of the others.

(5) An election under this paragraph must be made—

(a) for income tax purposes, on or before the first anniversary of the normal self-assessment filing date for the tax year in which the period of account ends, and

(b) for corporation tax purposes, not later than two years after the end of the accounting period.

Part 3 — Rates at which income tax is charged

11

In relation to a tax year before 2007-08—

(a) references in this Act, another enactment or an instrument or document to the savings rate are to be read as references to the lower rate, and

(b) references in this Act, another enactment or an instrument or document to the trust rate are to be read as references to the rate applicable to trusts.

12

In relation to the tax year 2007-08 or any subsequent tax year—

(a) references in an enactment, instrument or document to the lower rate are to be read as references to the savings rate, and

(b) references in an enactment, instrument or document to the rate applicable to trusts are to be read as references to the trust rate.

13

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

Part 4 — Personal reliefs

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Part 5 — Losses (except losses on disposal of shares)

General: carry forward loss reliefs

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(1) The repeal by this Act of the superseded carry forward provisions does not alter the effect of those provisions so far as they determine—

(a) whether, and

(b) to what extent,

relief for any loss made (or treated as made) in a tax year before the tax year 2007-08 is to be given for the tax year 2007-08 or any subsequent tax year.

(2) But any relief for the loss (or any part of the loss) which is given for the tax year 2007-08 or any subsequent tax year is to be given in accordance with the relevant provisions of Part 4 of this Act.

(3) In this paragraph “the superseded carry forward provisions” means—

(a) sections 379A and 379B of ICTA (carry forward of loss in Schedule A business or overseas property business),

(b) sections 385, 387, 390 and 391 (so far as applying to section 385) of ICTA (carry forward of loss in trade, profession or vocation),

(d) any provision inserting or amending, or affecting the application of, any of the above provisions.

Trade loss relief against general income

19

(1) This paragraph applies for the purposes of section 64 if the loss is made in the tax year 2007-08.

(2) Relief for the loss can be given for the tax year 2006-07.

(3) Sub-paragraphs (4) and (5) apply if relief for the loss is claimed for the tax year 2006-07.

(4) If relief is to be given, the relief is given in the way it would have been given had it been given under section 380(1)(b) of ICTA ignoring this Act (and section 65 of this Act is to be read accordingly).

(5) Section 72 of FA 1991 applies as if the relief had been claimed under section 380(1)(b) of ICTA.

20

(1) This paragraph applies if—

(a) a person makes a loss (“the 2006-07 loss”) in a trade in the tax year 2006-07,

(b) relief under section 380 of ICTA is not available for the 2006-07 loss because of section 384(1) of that Act,

(d) (apart from this paragraph) relief under section 64 of this Act is not available for the 2007-08 loss because of section 66 of this Act,

(e) the basis period for the tax year 2007-08 overlaps with the tax year 2006-07, and

(f) ignoring this Act, section 384(1) of ICTA would not have prevented relief under section 380 of that Act being available for the 2007-08 loss.

(2) Section 66 of this Act is not to apply in relation to the 2007-08 loss.

(3) This paragraph applies to professions and vocations as it applies to trades.

Early trade losses relief

21

(1) This paragraph applies for the purposes of section 72 if the loss is made in the tax year 2007-08, 2008-09 or 2009-10.

(2) Relief for the loss can be given for one or more of the tax years 2004-05, 2005-06 and 2006-07 (depending on the tax year in which the loss is made).

(3) If relief for the loss is to be given for one or more of those tax years, the relief is given in the way in which it would have been given had it been given under section 381 of ICTA ignoring this Act (and section 73 of this Act is to be read accordingly).

22

(1) This paragraph applies if—

(a) a person makes a loss (“the 2006-07 loss”) in a trade in the tax year 2006-07,

(b) relief under section 381 of ICTA is not available for the 2006-07 loss because of subsection (4) of that section,

(d) (apart from this paragraph) relief under section 72 of this Act is not available for the 2007-08 loss because of section 74(1) of this Act,

(e) the basis period for the tax year 2007-08 overlaps with the tax year 2006-07, and

(f) ignoring this Act, subsection (4) of section 381 of ICTA would not have prevented relief under that section being available for the 2007-08 loss.

(2) Section 74(1) of this Act is not to apply in relation to the 2007-08 loss.

(3) This paragraph applies to professions and vocations as it applies to trades.

Sideways relief: trade leasing allowances given to individuals

23

(1) This paragraph applies if—

(a) a person makes a loss (“the 2006-07 loss”) in a trade in the tax year 2006-07,

(b) relief under section 380 or 381 of ICTA is not available for the 2006-07 loss (or for part of it) because of section 384(6) of that Act,

(d) (apart from this paragraph) relief under section 64 or 72 of this Act is not available for the 2007-08 loss (or for part of it) because of section 75 of this Act,

(e) the basis period for the tax year 2007-08 overlaps with the tax year 2006-07, and

(f) ignoring this Act, section 384(6) of ICTA would not have prevented relief under section 380 or 381 of that Act being available for the 2007-08 loss (or for the part).

(2) Section 75 of this Act is not to apply in relation to the 2007-08 loss (or to the part).

Sideways relief: dealings in commodity futures

24

Section 81 does not apply if the arrangements mentioned in that section were made wholly before 6 April 1976.

Terminal trade loss relief

25

(1) This paragraph applies for the purposes of section 89 if the final tax year is the tax year 2007-08, 2008-09 or 2009-10.

(2) Relief for the terminal losses in question can be given for one or more of the tax years 2004-05, 2005-06 and 2006-07 (depending on which tax year is the final tax year).

(3) If relief for the terminal losses is to be given for one or more of those tax years, the relief is given in the way in which it would have been given had it been given under section 388 of ICTA ignoring this Act (and section 91 of this Act is to be read accordingly).

Post-cessation trade loss relief and post-cessation property relief

26

The events covered by section 98(5) (including as applied by section 125(6)(b)) include events—

(a) which occur before the tax year 2007-08, and

(b) in relation to which no claim is made under section 109A of ICTA.

Reliefs for limited partners not to exceed contribution to the firm

27

(1) The relief covered by section 104(5) includes—

(a) relief given for a loss as a result of section 380 or 381 of ICTA,

(b) any amount that, ignoring this Act, would have been included in the individual's aggregate amount in relation to the trade for the purposes of section 117 of ICTA as a result of paragraph 22(3) of Schedule 2 to CAA 2001, and

(2) The income covered by section 104(6) includes amounts treated as received as a result of the application of section 74 of FA 2005.

Reliefs for members of LLPs not to exceed contribution to the LLP

28

(1) The relief covered by section 107(6) includes—

(a) relief given for a loss as a result of section 380 or 381 of ICTA, and

(b) the treatment of a loss as an allowable loss by virtue of section 72 of FA 1991.

(2) The income covered by section 107(7) includes amounts treated as received as a result of the application of section 74 of FA 2005.

Members of LLPs: carry-forward of losses

29

(1) The amounts of loss covered by section 109(1)(b) include amounts of loss which, as a result of section 117 of ICTA (as applied by section 118ZB of that Act), are not—

(a) relieved under section 380 or 381 of ICTA, or

(b) treated as an allowable loss by virtue of section 72 of FA 1991.

(2) In section 109(3)—

(a) references to section 109 include references to section 118ZD of ICTA,

(b) references to sideways relief include references to relief under section 380 or 381 of ICTA, and

(c) references to capital gains relief include references to the treatment of a loss as an allowable loss by virtue of section 72 of FA 1991.

Reliefs for non-active partners not to exceed contribution to the firm

30

(1) The relief covered by section 110(5) includes—

(a) relief given for a loss as a result of section 380 or 381 of ICTA, and

(b) the treatment of a loss as an allowable loss by virtue of section 72 of FA 1991.

(2) Sub-paragraph (1) is subject to paragraph 33.

(3) The income covered by section 110(6) includes amounts treated as received as a result of the application of section 74 of FA 2005.

Non-active partners: carry-forward of losses

31

(1) The amounts of loss covered by section 113(1)(b) include amounts of loss which, as a result of section 118ZE of ICTA, are not—

(a) relieved under section 380 or 381 of ICTA, or

(b) treated as an allowable loss by virtue of section 72 of FA 1991.

(2) In section 113(4)—

(a) references to section 113 include references to section 118ZI of ICTA,

(b) references to sideways relief include references to relief under section 380 or 381 of ICTA, and

(c) references to capital gains relief include references to the treatment of a loss as an allowable loss by virtue of section 72 of FA 1991.

(3) In section 113(8) the reference to section 109 includes a reference to section 118ZD of ICTA.

Restriction on reliefs for non-active partners: pre-10 February 2004 events

32

In Chapter 3 of Part 4 any reference to an early tax year in relation to an individual carrying on a trade does not include a tax year the basis period for which ends before 10 February 2004.

33

(1) Sub-paragraphs (2) to (9) set out relief which is not covered by section 110(5) (relevant relief).

(2) Relief is not covered if it is given for a loss made in a trade in a tax year the basis period for which ends before 10 February 2004.

(3) Sub-paragraphs (4) to (9) apply if the individual carried on a trade in a tax year the basis period for which includes 10 February 2004.

(4) Relief given for a loss made in the trade is not covered so far as the loss derives from an allowance or deduction within sub-paragraph (5).

(5) An allowance or deduction is within this sub-paragraph if it is—

(a) a capital allowance in respect of expenditure incurred before 10 February 2004 which is treated as an expense of the trade, or

(b) a deduction in respect of expenditure incurred before 10 February 2004 under section 42(1) of F(No.2)A 1992 or any of sections 138 to 140 of ITTOIA 2005.

(6) For the purposes of sub-paragraph (4) the amount of a loss that derives from an allowance or deduction within sub-paragraph (5) is determined on a just and reasonable basis.

(7) Relief given for a loss made in the trade is not covered so far as it is given for the pre-announcement allowance in relation to the trade.

(8) “Pre-announcement allowance” is to be read in accordance with section 118ZJ(4) and (6) to (8) of ICTA.

(9) For that purpose, references to the first restricted year are to be read as references to the tax year mentioned in sub-paragraph (3).

If sub-paragraph (3) covers more than one tax year, the first restricted year is the first of the tax years covered.

(10) Sub-paragraph (11) applies for the purpose of applying the restriction in section 110(4) (relevant relief not to exceed contribution to the firm) in relation to an individual if before 10 February 2004 the individual contributed an amount of capital to the firm.

(11) That amount of capital is reduced (but not below nil)—

(a) by the amount of relief (if any) to be left out of account for the purposes of section 110(5) as a result of paragraph 32 or this paragraph (ignoring sub-paragraph (4)), and

(b) by any pre-announcement allowance so far as—

(i) relief has not been given for the allowance, and

(ii) had relief been given for the allowance, the relief would have to be left out of account for the purposes of section 110(5)(b) as mentioned in paragraph (a).

Regulations under section 114

34

(1) The provision which may be made in regulations under section 114 does not include provision affecting the amount of relief that may be given for a loss made in a trade that is not a post-1 December 2004 loss (as determined in accordance with section 795).

(2) The repeal by this Act of sections 118ZN and 118ZO of ICTA (or any provision inserting or amending, or affecting the application of, those sections) does not affect the power of the Commissioners for Her Majesty's Revenue and Customs to make regulations under section 118ZN having effect before the tax year 2007-08.

Application of existing regulations under sections 114 and 802

35

(1) After the commencement of sections 114 and 802, the Partnerships (Restrictions on Contributions to a Trade) Regulations 2005 (S.I. 2005/2017) have effect as if made under those sections.

(2) The Regulations so have effect subject to the following modifications.

(3) They have effect as if in regulation 2—

(a) in the definition of “bank” for “section 840A of ICTA” there were substituted “ section 991 of ITA 2007 ”,

(b) for the definition of “contribution to the relevant trade” there were substituted—

“capital contribution”— (a) for the purposes of section 114 of ITA 2007, means the contribution to the firm for the purposes of section 104 or 110 of that Act or the contribution to the LLP for the purposes of section 107 of that Act, and (b) for the purposes of section 802 of ITA 2007, has the meaning given by section 801(3) of that Act;

, and

“ITA 2007” means the Income Tax Act 2007;

(4) They have effect as if in regulations 3 to 6 for “contribution to the relevant trade”, wherever occurring, there were substituted “ capital contribution ”.

(5) They have effect as if—

(a) in regulation 3(a) for “section 118ZN of ICTA” there were substituted “ section 114(1)(a) and (b) of ITA 2007 ”, and

(b) in regulation 3(b) for the words from “section 119” to the end there were substituted “ section 797 of ITA 2007 as mentioned in section 802(2) of that Act ”.

(6) They have effect as if in regulation 6(c) for “the trade” there were substituted “ a trade ”.

Losses in an employment or office

36

(1) This paragraph applies for the purposes of section 128 if the loss is made in the tax year 2007-08.

(2) Relief for the loss can be given for the tax year 2006-07.

(3) Sub-paragraphs (4) and (5) apply if relief for the loss is claimed for the tax year 2006-07.

(4) If relief is to be given, the relief is given in the way it would have been given had it been given under section 380(1)(b) of ICTA ignoring this Act (and section 129 of this Act is to be read accordingly).

(5) Section 72 of FA 1991 applies as if the relief had been claimed under section 380(1)(b) of ICTA.

Loss relief against miscellaneous income: Case VI losses

37

(1) This paragraph applies if a person makes a loss in any transaction—

(a) which was of such a nature that, if any profits had arisen from it, the person would have been liable to income tax under Case VI of Schedule D for any tax year before the tax year 2005-06, and

(b) which did not fall within section 34, 35 or 36 of ICTA.

(2) So far as relief for the loss has not previously been given, the loss (or the unused part of it) is to be treated as a loss available for deduction in accordance with section 153.

Part 6 — Losses on disposal of shares

Qualifying trading companies

38

(1) In relation to shares issued before 17 March 2004, section 134(2)(a) applies with the omission of sub-paragraph (iv) and the “and” immediately before it.

(2) In relation to shares issued before 6 April 1998, section 134 applies with the substitution for subsections (2) to (4) of—

(2) Condition A is that the company either— (a) is a trading company on the date of the disposal, or (b) has ceased to be a trading company at a time which is not more than 3 years before that date and has not since that time been an excluded company or an investment company. (3) Condition B is that the company either— (a) has been a trading company for a continuous period of 6 years ending on that date or at that time, or (b) has been a trading company for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company or an investment company. (4) Condition C is that none of the shares in the company has been listed on a recognised stock exchange at any time in the period— (a) beginning with the incorporation of the company or, if later, 12 months before the date on which the shares in question were subscribed for, and (b) ending with the date on which the shares are disposed of. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In relation to shares issued before 7 March 2001, section 134(4)(b) applies with the substitution for “at the relevant time” of “throughout the relevant period”.

(4) For the purposes of sub-paragraph (3), shares that were issued—

(a) ... after 5 April 1998, but

(b) before 7 March 2001,

are treated as having been issued ... after 7 March 2001 in respect of any part of the relevant period which falls ... after that date.

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

Disposals of new shares

39

(1) In relation to new shares issued before 6 April 2007, section 136(2) applies with the omission of “This is subject to section 145(3).”

(2) In this paragraph “new shares” is to be read in accordance with section 145.

The trading requirement

40

(1) In relation to shares issued before 6 April 2007, section 137 applies with the following modifications—

(a) the omission of subsection (2),

(b) in subsection (5), the omission of paragraph (d)(ii) and the “or” immediately before it, and

(2) In relation to shares issued before 6 April 2000, section 137 applies with the substitution for the definition of “research and development” in subsection (7) of—

“research and development” means any activity which is intended to result in a patentable invention (within the meaning of the Patents Act 1977) or in a computer program.

(3) Section 137 does not apply in relation to shares issued before 6 April 1998.

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

Ceasing to meet trading requirement because of administration or receivership

41

(1) In relation to shares issued before 17 March 2004, section 138 applies with the following modifications—

(a) in subsection (1), the omission of “merely” and the substitution for “the company or any of its subsidiaries” of “its”,

(b) in subsection (2)(b), the omission of “concerned”,

(d) in subsection (3)(b), the omission of “or any of its subsidiaries”, and

(e) in subsection (4), the omission of “is”, in the second place where it occurs.

(2) In relation to an administration order the petition for which was presented before 15 September 2003, section 138(2) applies with the substitution for paragraph (a) of—

(a) the making of the order in question, and

(3) In relation to shares issued before 21 March 2000, section 138 applies with the omission of subsections (1) and (2).

(4) In the application of sub-paragraph (3) on or after 21 March 2000, shares—

(a) that were issued on or after 6 April 1998 but before 21 March 2000, and

(b) to which EIS relief or relief under Schedule 5B to TCGA 1992 was attributable immediately before 21 March 2000,

are treated as having been issued on or after 21 March 2000.

(5) Section 138 does not apply in relation to shares issued before 6 April 1998.

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

The control and independence requirement

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(1) In relation to shares issued before 6 April 2007, section 139(1)(a) applies with the omission of “of the company”.

(2) In relation to shares issued before 21 March 2000, section 139 applies with the following modifications—

(a) the substitution for subsections (1) to (3) of—

(1) The control element of the requirement is that— (a) the company must not control (or together with any person connected with it control) another company or have a 51% subsidiary, and (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a). (2) The independence element of the requirement is that— (a) the company must not be under the control of another company (or another company and any other person connected with that company) or be a 51% subsidiary of another company, and (b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a). (3) This section is subject to section 145(3); and nothing in subsection (1) prevents the company having one or more qualifying subsidiaries.

, and

(b) in subsection (4) the omission of the definition of “arrangements” and, in the definition of “control”, the omission of “in subsection (1)(a)”.

(3) In the application of sub-paragraph (2) on or after 21 March 2000, shares—

(a) that were issued on or after 6 April 1998 but before 21 March 2000, and

(b) to which EIS relief or relief under Schedule 5B to TCGA 1992 was attributable immediately before 21 March 2000,

are treated as having been issued on or after 21 March 2000.

(4) Section 139 does not apply in relation to shares issued before 6 April 1998.

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

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

The qualifying subsidiaries requirement

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(1) Section 140 does not apply in relation to shares issued before 6 April 1998.

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

The property managing subsidiaries requirement

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(1) Section 141 does not apply in relation to shares issued before 17 March 2004.

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

The gross assets requirement

45

(1) In relation to shares issued before 6 April 2006, section 142 applies with the substitution in subsections (1) and (2)—

(a) of “£15 million” for “£7 million”, and

(b) of “£16 million” for “£8 million”.

(2) For the purposes of sub-paragraph (1) shares issued on or after 6 April 2006 to a person who subscribed for them before 22 March 2006 are treated as having been issued before 6 April 2006.

(3) Section 142 does not apply in relation to shares issued before 6 April 1998.

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

The unquoted status requirement

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(1) In relation to shares issued before 7 March 2001, section 143 applies with the following modifications—

(a) the substitution for subsection (1) of—

(1) The unquoted status requirement is that the company must be an unquoted company throughout the relevant period.

(b) the substitution for subsection (2) of—

(2) If the company is an unquoted company at the time when any shares are issued, it is not treated for the purposes of this section as ceasing to be an unquoted company in relation to those shares at any subsequent time merely because any shares, stocks, debentures or other securities of the company are at that time— (a) listed on an exchange designated by an order made for the purposes of section 184(3)(b), or (b) dealt in by any means designated by an order made for the purposes of section 184(3)(c), if the order was made after the shares were issued.

, and

“the relevant period” means the period— (a) beginning with the incorporation of the company or, if later, the date one year before the issue of the shares in question, and (b) ending with the date of the disposal.

(2) For the purposes of sub-paragraph (1)(a) and (c), shares that were issued—

(a) ...after 5 April 1998, but

(b) before 7 March 2001,

are treated as having been issued on or after 7 March 2001 in respect of any part of the relevant period which falls on or after that date.

(3) In the application of sub-paragraph (1)(b) on or after 7 March 2001, shares—

(a) that were issued ... after 5 April 1998 but before 7 March 2001, and

(b) to which EIS relief or relief under Schedule 5B to TCGA 1992 was attributable immediately before 7 March 2001,

are treated as having been issued on or after 7 March 2001.

(4) Section 143 does not apply in relation to shares issued before 6 April 1998.

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

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

Power to amend requirements by Treasury order

47

(1) Section 144 does not apply in relation to shares issued before 6 April 1998.

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

Relief after an exchange of shares for shares in another company

48

(1) In relation to new shares issued before 6 April 2007, section 145 applies with—

(a) the substitution for subsection (1)(e) of—

(e) before the issue of the new shares, the Commissioners for Her Majesty's Revenue and Customs have, on the application of the new company or the old company, notified that company that the exchange of shares— (i) will be effected for genuine commercial reasons, and (ii) will not form part of any such scheme or arrangement as is mentioned in section 137(1) of TCGA 1992.

, and

(b) the omission of subsection (3)(a).

(2) Section 145 does not apply in relation to shares issued before 6 April 1998.

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

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

Substitution of new shares for old shares

49

(1) Section 146 does not apply in relation to shares issued before 6 April 1998.

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

Interpretation of Chapter

50

(1) In relation to shares issued before 6 April 1998, section 151 applies with the following modifications—

(a) in the definition of “excluded company” in subsection (1), the substitution for “in land, in commodities or futures or in shares, securities or other financial instruments” of “in shares, securities, land, trades or commodity futures”,

(b) in subsection (7), the insertion after “excluded company” of “or is a non-UK resident”.

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

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

Meaning of “qualifying subsidiary”

51

(1) In relation to shares issued before 17 March 2004, section 191 (as applied by sections 137(7), 139(4), 140(2) and 142(4)) applies with the following modifications—

(a) in subsection (1), the insertion at the end of “and, except as provided by subsection (3), continue to be met until the time that is relevant for the purposes of section 134(2)”,

(b) in subsection (2), the substitution for paragraph (a) of—

(a) the relevant company, or another of its subsidiaries, possesses at least 75% of the issued share capital of, and at least 75% of the voting power in, the subsidiary, (aa) the relevant company, or another of its subsidiaries, would in the event of a winding up of the subsidiary, or in any other circumstances, be beneficially entitled to receive at least 75% of the assets of the subsidiary which would then be available for distribution to the equity holders of the subsidiary, (ab) the relevant company, or another of its subsidiaries, is beneficially entitled to at least 75% of any profits of the subsidiary which are available for distribution to the equity holders of the subsidiary,

(c) in paragraph (c) of subsection (2), the substitution for “either of the conditions in paragraphs (a) and (b)” of “any of the conditions in paragraphs (a), (aa), (ab) and (b)”,

(d) in subsection (3), the substitution for “any other company” of “the relevant company” and the substitution for the words from “the winding up or dissolution” to the end of that subsection of—

(a) the winding up or dissolution is for genuine commercial reasons, and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, (b) the net assets, if any, of the subsidiary or, as the case may be, the relevant company are distributed to its members, or dealt with as bona vacantia, before the time that is relevant for the purposes of section 134(2) or, in the case of a winding up, the end (if later) of 3 years from the commencement of the winding up.

(e) the omission of subsection (4),

(f) in subsection (5), the substitution for “arrangements are in existence for” of “of” and the insertion after “another subsidiary” of “within the continuous period that is relevant for the purposes of section 134(3)”,

(g) in subsection (5)(a), the omission of “to be”,

(h) in subsection (5)(b), the substitution for “is not to be” of “not”, and

(i) after subsection (5), the insertion of—

(6) The persons who are equity holders of a subsidiary, and the percentage of the assets of a subsidiary to which an equity holder would be entitled, is to be determined in accordance with Chapter 6 of Part 5 of CTA 2010 , taking— (a) references in section 166 of that Act to company A as references to an equity holder, and (b) references to a winding up as including references to any other circumstances in which assets of the subsidiary are available for distribution to its equity holders.

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

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

Meaning of “excluded activities”

52

(1) In relation to shares issued before 7 March 2001, section 192(1) (as applied by section 137(7)) applies with the insertion after paragraph (c) of—

(ca) oil extraction activities (within the meaning of Chapter 5 of Part 12 of ICTA),

(2) In the application of sub-paragraph (1) on or after 7 March 2001, shares—

(a) that were issued on or after 6 April 1998 but before 7 March 2001, and

(b) to which EIS relief or relief under Schedule 5B to TCGA 1992 was attributable immediately before 7 March 2001,

are treated as having been issued on or after 7 March 2001.

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

Excluded activities: wholesale and retail distribution

53

(1) In relation to shares issued before 6 April 2007, section 193(5)(b) (as applied by section 137(7)) applies with the following modifications—

(a) the insertion after “held” of “by the company”, and

(b) the substitution for “the trader” of “a vendor”.

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

Excluded activities: leasing of ships

54

(1) In relation to shares issued before 6 April 2007, section 194 (as applied by the definition of “non-qualifying activities” in section 137(7)) applies with the omission of subsection (7).

(2) In relation to shares issued before 6 April 2004, section 194 (as applied by section 137(7)) applies with the following modifications—

(a) in subsection (1), the substitution for “offshore installations” of “oil rigs”,

(b) in subsection (2), the substitution for “offshore installation” of “oil rig”, and

“oil rig” means any ship which is an offshore installation for the purposes of the Mineral Workings (Offshore Installations) Act 1971,

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

Excluded activities: receipt of royalties and licence fees

55

(1) In relation to shares issued before 6 April 2000, Chapter 6 of Part 4 applies with the substitution for section 195 (as applied by section 137(7)) of—

(195) (1) This section supplements section 192(1)(e) (receipt of royalties and licence fees). (2) A trade is not to be regarded as consisting in the carrying on of excluded activities within section 192(1)(e) as a result only of it consisting to a substantial extent in the receiving of royalties or licence fees if— (a) the company carrying on the trade is engaged throughout the relevant period in— (i) the production of films, or (ii) the production of films and the distribution of films produced by it in the relevant period, and (b) all royalties and licence fees received by it in the relevant period are in respect of films produced by it in that period or sound recordings in relation to such films or other products arising from such films. (3) A trade is not to be regarded as consisting in the carrying on of excluded activities within section 192(1)(e) as a result only of it consisting to a substantial extent in the receiving of royalties or licence fees if— (a) the company carrying on the trade is engaged in research and development throughout the relevant period, and (b) all royalties and licence fees received by it in the relevant period are attributable to research and development which it has carried out. (4) In this section “the relevant period” means the continuous period that is relevant for the purposes of section 134(3).

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

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

Excluded activities: provision of services or facilities for another business

56

(1) In relation to shares issued before 6 April 2007, section 199 (as applied by section 137(7)) applies with the following modifications—

(a) in subsections (1) to (4), the substitution of “trade” for “business”, wherever it occurs, and

(b) in subsection (5) the substitution for paragraph (b) of—

(b) references to a trade, in relation to the provider of the services or facilities, are to be read without regard to the definition of “trade” in section 989, and (c) “trade”, in relation to the other person, includes any business, profession or vocation

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

Meaning of a company being “in administration”

57

(1) Sub-paragraph (2) applies in relation to—

(a) an administration order under Part 3 of the Insolvency (Northern Ireland) Order 1989 the petition for which was presented before 6 April 2007, or

(b) any corresponding order under the law of a country or territory outside the United Kingdom the proceedings for which were instituted before that date.

(2) Section 252 (as it applies for the purposes of Chapter 6 of Part 4) applies with the substitution for subsection (2) of—

(2) A company is “in administration” if— (a) it is in administration within the meaning of Schedule B1 to the Insolvency Act 1986, or (b) there is in force in relation to it— (i) an administration order under Part 3 of the Insolvency (Northern Ireland) Order 1989, or (ii) any corresponding order under the law of a country or territory outside the United Kingdom.

(3) For the purposes of sub-paragraph (2), section 252 applies for the purposes of Chapter 6 of Part 4 in any case where—

(a) it is applied by section 138(5),

(b) it applies for the purposes of section 190 as applied by section 141(2), or

(4) In relation to an administration order under Part 2 of the Insolvency Act 1986 the petition for which was presented before 15 September 2003, section 252 (as applied by section 138(5)) applies with the substitution for subsection (2) of—

(2) A company is “in administration” if there is in force in relation to it— (a) an administration order under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989, or (b) any corresponding order under the law of a country or territory outside the United Kingdom.

(5) Section 252 (as applied by section 138(5)) does not apply in relation to shares issued before 21 March 2000.

(6) In the application of sub-paragraph (5) on or after 21 March 2000, shares—

(a) that were issued on or after 6 April 1998 but before 21 March 2000, and

(b) to which EIS relief or relief under Schedule 5B to TCGA 1992 was attributable immediately before 21 March 2000,

are treated as having been issued on or after 21 March 2000.

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

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

Part 7 — Enterprise investment scheme

The gross assets requirement

58

(1) In relation to shares to which sub-paragraph (2) or (3) applies, section 186 applies with the substitution in subsections (1) and (2)—

(a) of “£15 million” for “£7 million”, and

(b) of “£16 million” for “£8 million”.

(2) This sub-paragraph applies to shares issued to a person who subscribed for them before 22 March 2006.

(3) This sub-paragraph applies to shares issued to the managers of an investment fund approved for the purposes of section 251 by the Commissioners for Her Majesty's Revenue and Customs if—

(a) the fund was approved before 22 March 2006,

(b) investments in the fund have been accepted before 6 April 2006, and

(c) the shares are issued to the managers as nominee for an individual who has (whether or not before 6 April 2006) invested in the fund.

Part 8 — Venture capital trusts

Eligibility for relief

59

Section 261(4) does not apply in relation to shares acquired by a company before 1 December 2003.

Form and amount of relief

60

(1) In relation to shares issued before 6 April 2006, section 263(2) applies with the substitution of “tax at the higher rate for the tax year on” for “30% of”.

(2) In relation to shares issued before 6 April 2004, section 263(2) applies with the substitution of “the savings rate” for “the higher rate”.

No entitlement to relief if there is a linked loan

61

In relation to shares issued before 6 April 2006, section 264(3) applies with the substitution, in paragraph (b) of the definition of “the relevant period”, of “the third anniversary” for “the fifth anniversary”.

Loss of relief if shares disposed of within 5 years

62

(1) In relation to shares issued before 6 April 2006—

(a) subsection (1) of section 266 applies with the substitution of “3 years” for “5 years”, and

(b) subsection (4) of that section applies with the omission of “30% of” and the insertion at the end of “multiplied by the higher rate for the tax year in which the shares were issued”.

(2) In relation to shares issued before 6 April 2004, section 266(4) applies with the substitution of “the savings rate” for “the higher rate”.

Interpretation of Chapter 2

63

(1) In relation to shares issued before 6 April 2007, section 273(1) applies as if it gave “eligible shares” the same meaning as that given by paragraph 6(1) of Schedule 15B to ICTA at the time of the issue of the shares.

(2) In relation to shares issued before 6 April 2006, section 273(1) applies with the substitution of “3 years” for “5 years”.

The 15% holding limit condition

64

In relation to shares or securities issued before 17 April 2002, section 277(5) applies with the following modifications—

(a) the insertion after “reconstruction”, in the first place where it occurs, of “or amalgamation”, and

(b) the omission of the words from “In this subsection” to the end.

Conditions relating to value of investments

65

(1) Sub-paragraph (2) applies if any question arises which—

(a) would otherwise fall to be determined in accordance with section 278, and

(b) is a question whether, in a case where a company (“company A”) holds investments in a company (“company B”) immediately before 6 April 2007, the 15% holding condition is met if there is an addition to the holding on or after that date.

(2) Any such question is to be determined in accordance with—

(a) section 842AA(11)(c) of ICTA, and

(b) section 842(3) and (4) of that Act as applied by that provision,

until such time as company A ceases to hold investments in company B.

(3) Except in a case to which sub-paragraph (2) applies, section 278(5) applies in relation to investments issued before 17 April 2002 with the following modifications—

(a) the insertion after “reconstruction”, in the first place where it occurs, of “or amalgamation”, and

(b) the omission of the words from “In this subsection” to the end.

Conditions relating to qualifying holdings and eligible shares: supplementary

66

Section 280(3) does not apply in relation to shares issued before 17 April 2002.

Interpretation of Chapter 3

67

Section 285 applies with the omission of subsections (4) to (6) for the purposes of determining whether, at any time before 6 April 2007, the conditions mentioned in section 274(2) are, will be or were met with respect to a company.

The maximum qualifying investment requirement

68

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 287(3)(b) does not apply in relation to shares or securities issued before 6 April 2007.

The no guaranteed loan requirement

69

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 288 does not apply in relation to shares or securities acquired before 6 April 2018 by a company by means of the investment of—

(a) money raised by the issue before 2 July 1997 of shares in or securities of the investing company, or

(b) money derived from the investment by that company of any such money.

The proportion of eligible shares requirement

70

(1) If at any time the requirement of section 289—

(a) would be met in relation to a relevant holding and a company if none of the old investments were held by the investing company at that time, but

(b) would not otherwise be met,

that section applies in relation to that holding as if the old investments were not held by the investing company at that time.

(2) In sub-paragraph (1) “old investments” means shares in or securities of the relevant company acquired before 6 April 2018 by means of the investment of—

(a) money raised by the issue before 2 July 1997 of shares in or securities of the investing company, or

(b) money derived from the investment by that company of any such money.

The trading requirement

71

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 290 applies in relation to shares or securities issued before 6 April 2007 with the following modifications—

(a) the omission of subsections (2) and (6), and

(b) in subsection (5)(d), the omission of sub-paragraph (ii) and the “or” immediately before it.

The carrying on of a qualifying activity requirement

72

(1) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 291 applies in relation to shares or securities issued before 6 April 2007 with the omission of subsection (8).

(2) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 291 applies in relation to shares or securities issued before 17 March 2004 with the following modifications—

(a) in subsection (1), the substitution for “a qualifying company (whether or not the same such company at every such time)” of “the qualifying company”,

(b) in subsection (3), the substitution for “was intended to be carried on” of “it intended to carry on” and the omission of “by a qualifying company”,

(d) in subsection (4)(b), the substitution for “at all times since the end of that period, a qualifying company (whether or not the same such company at every such time) has” of “the qualifying company has at all times since the end of that period”, and

(e) the omission of subsection (6).

Ceasing to meet the requirement because of administration or receivership

73

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 292(1) applies in relation to shares or securities issued before 17 March 2004 with the omission of “merely”.

The use of the money raised requirement

74

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 293 applies in relation to shares or securities issued before 17 March 2004 with the following modifications—

(a) in subsection (2), the substitution for “has been or is intended to be employed” of “is money which the qualifying company has employed or intends to employ”, and

(b) in subsection (5)(b), the substitution for “a qualifying company” of “the qualifying company”.

The relevant company to carry on the relevant qualifying activity requirement

75

(1) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 294 applies in relation to shares or securities issued before 6 April 2007 with the following modifications—

(a) in subsections (1) and (6) the substitution for “relevant qualifying activity” of “qualifying activity”,

(b) in subsection (1) the substitution for “section 293” of “section 291”, and

(2) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, Chapter 4 of Part 6 of this Act applies in relation to shares or securities issued before 17 March 2004 with the substitution for section 294 of—

(294) (1) If— (a) the relevant company is a parent company, and (b) the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities, the requirements of this section are not met unless one or more of the following conditions is met. (2) Condition A is that the trader company meets the requirement of section 290(1)(a). (3) Condition B is that the trader company would meet that requirement if its purposes were ignored so far as they consist in the carrying on of activities in section 290(5). (4) Condition C is that the trader company is a qualifying 90% subsidiary of the relevant company and— (a) apart from incidental purposes, it exists wholly for the purposes of carrying on activities such as those in section 290(5)(c) and (d), or (b) it has no profits for the purposes of corporation tax and no part of its business consists in the making of investments. (5) In this section— - “the business of the group” has the same meaning as it has for the purposes of subsection (1)(b) of section 290, - “incidental purposes” and “non-qualifying activities” have the same meaning as in that section, - “the trader company” means the company (whether the relevant company or a qualifying subsidiary of the relevant company) carrying on the qualifying activity which meets the requirement of section 291.

The gross assets requirement

76

(1) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 297 applies in relation to shares or securities issued on or after 6 April 1998 and before 6 April 2006 with the substitution in subsections (1) and (2)—

(a) of “£15 million” for “£7 million”, and

(b) of “£16 million” for “£8 million”.

(2) For the purposes of sub-paragraph (1) any shares or securities acquired by a company at any time by means of the investment of—

(a) money raised by the issue before 6 April 2006 of shares in or securities of the investing company, or

(b) money derived from the investment by that company of any such money,

are treated as having been issued before 6 April 2006.

(3) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 297 applies in relation to shares or securities issued before 6 April 1998 with the substitution in subsections (1) and (2)—

(a) of “£10 million” for “£7 million”, and

(b) of “£11 million” for “£8 million”.

The property managing subsidiaries requirement

77

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 299 does not apply in relation to shares or securities issued before 17 March 2004.

Meaning of “qualifying trade”

78

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 300 applies in relation to shares or securities issued before 6 April 2007 with the following modifications—

(a) in subsection (2), the omission of paragraph (b) and the “or” immediately before it, and

(b) the omission of subsection (3).

Meaning of “qualifying 90% subsidiary”

79

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 301 does not apply in relation to shares or securities issued before 17 March 2004.

Meaning of “qualifying subsidiary”

80

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 302 applies in relation to shares or securities issued before 17 March 2004 with the following modifications—

(a) the substitution for subsection (2)(a) of—

(a) the relevant company, or another of its subsidiaries, possesses at least 75% of the issued share capital of, and at least 75% of the voting power in, the subsidiary, (aa) the relevant company, or another of its subsidiaries, would in the event of a winding up of the subsidiary, or in any other circumstances, be beneficially entitled to receive at least 75% of the assets of the subsidiary which would then be available for distribution to the equity holders of the subsidiary, (ab) the relevant company, or another of its subsidiaries, is beneficially entitled to at least 75% of any profits of the subsidiary which are available for distribution to the equity holders of the subsidiary,

(b) in subsection (2)(c), the substitution for “either of the conditions in paragraphs (a) and (b)” of “any of the conditions in paragraphs (a), (aa), (ab) and (b)”,

(c) in subsection (3), the omission of “or any other company” and the substitution for paragraphs (a) and (b) of “is for genuine commercial reasons, and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax”,

(d) the omission of subsection (4),

(e) in subsection (5), the substitution for paragraphs (a) and (b) of “is to be for genuine commercial reasons, and not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax”,

(f) after subsection (5) the insertion of—

(6) For the purposes of this section the persons who are equity holders of a subsidiary, and the percentage of the assets of the subsidiary to which an equity holder would be entitled, is to be determined in accordance with Chapter 6 of Part 5 of CTA 2010, taking— (a) references in section 166 of that Act to company A as references to the equity holder, and (b) references to a winding up as including references to any other circumstances in which assets of the subsidiary are available for distribution to its equity holders.

Meaning of “excluded activities”

81

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings at any time, section 303(1)(g) to (k) (and accordingly sections 307 to 309) do not apply in relation to shares or securities acquired before 6 April 2018 by the company by means of the investment of—

(a) money raised by the issue before 17 March 1998 of shares in or securities of the investing company, or

(b) money derived from the investment by that company of any such money.

Excluded activities: wholesale and retail distribution

82

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 304 applies in relation to shares or securities issued before 6 April 2007 with the following modifications—

(a) in subsection (5)(b), the insertion after “held” of “by the company” and the substitution for “the trader” of “a vendor”, and

(b) in subsection (6), the substitution for “of wholesale or retail distribution”, in the first place where it occurs, of “carried on by any person” and the substitution for “the trader”, in each place where it occurs, of “that person”.

Excluded activities: leasing of ships

83

(1) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 305 as applied by the definition of “non-qualifying activities” in section 290(8) applies in relation to shares or securities issued before 6 April 2007 with the omission of subsection (7).

(2) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 305 applies in relation to shares or securities issued before 6 April 2004 with the following modifications—

(a) in subsection (1), the substitution for “offshore installations” of “oil rigs”,

(b) in subsection (2), the substitution for “offshore installation” of “oil rig”,

“oil rig” means any ship which is an offshore installation for the purposes of the Mineral Workings (Offshore Installations) Act 1971,

Excluded activities: receipt of royalties and licence fees

84

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 306 applies in relation to shares or securities issued before 6 April 2000 with the substitution for subsections (2) to (6) of—

(2) If the requirement of subsection (3) or (4) is met, a trade is not to be regarded as consisting in the carrying on of excluded activities within section 303(1)(e) as a result only of its consisting to a substantial extent in the receiving of royalties of licence fees. (3) The requirement of this subsection is that— (a) the company carrying on the trade is engaged in— (i) the production of films, or (ii) the production of films and the distribution of films produced by it since the issue of the relevant holding, and (b) all royalties and licence fees received by it are in respect of— (i) films produced by it since the issue of the relevant holding, (ii) sound recordings in relation to such films, or (iii) other products arising from such films. (4) The requirement of this subsection is that— (a) the company carrying on the trade is engaged in research and development, and (b) all royalties and licence fees received by it are attributable to research and development which it has carried out.

Excluded activities: provision of services or facilities for another business

85

(1) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 310 applies in relation to shares or securities issued before 6 April 2007 with the following modifications—

(a) in subsections (1) to (4), the substitution of “trade” for “business”, wherever it occurs, and

(b) in subsection (5) the substitution for paragraph (b) of—

(b) “trade” includes business, profession or vocation where what is carried on is carried on by a person other than a company.

(2) For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings at any time, section 310(1)(a) applies in relation to shares or securities acquired by the company by means of the investment of—

(a) money raised by the issue before 17 March 1998 of shares in or securities of the investing company, or

(b) money derived from the investment by that company of any such money,

with the substitution for “paragraphs (a) to (k)” of “paragraphs (a) to (f)”.

Winding up of the relevant company

86

For the purpose of determining whether shares or securities are to be regarded as comprised in a company's qualifying holdings, section 312(b) applies in relation to shares or securities issued before 17 March 2004 with the substitution for “is not” of “not”.

Acquisitions for restructuring purposes etc

87

Sections 326 to 329 do not apply in relation to arrangements made, or rights of conversion exercised, before 16 June 1999.

Power to facilitate company reorganisations

88

Section 330 does not apply in relation to exchanges of shares or securities taking effect before 21 March 2000.

Meaning of a company being “in administration”

89

(1) Sub-paragraph (2) applies in relation to—

(a) an administration order under Part 3 of the Insolvency (Northern Ireland) Order 1989 the petition for which was presented before 6 April 2007, or

(b) any corresponding order under the law of a country or territory outside the United Kingdom the proceedings for which were instituted before that date.

(2) Section 331 applies with the substitution for subsection (2) of—

(2) A company is “in administration” if— (a) it is in administration within the meaning of Schedule B1 to the Insolvency Act 1986, or (b) there is in force in relation to it— (i) an administration order under Part 3 of the Insolvency (Northern Ireland) Order 1989, or (ii) any corresponding order under the law of a country or territory outside the United Kingdom.

(3) In relation to an administration order under Part 2 of the Insolvency Act 1986 the petition for which was presented before 15 September 2003, section 331 applies with the substitution for subsection (2) of—

(2) A company is “in administration” if there is in force in relation to it— (a) an administration order under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989, or (b) any corresponding order under the law of a country or territory outside the United Kingdom.

Meaning of “company”, “shares” and “research and development” in Part 6

90

(1) This paragraph applies in relation to the meaning of “company”, “shares” and “research and development” in Part 6 (see section 332).

(2) If—

(a) a company holds investments of any description in an entity immediately before 6 April 2007, and

(b) the entity is a company for any purposes of the Part 6 provisions but not for the corresponding purposes of the ICTA provisions,

any question whether the entity is a company for those purposes of the Part 6 provisions is to be determined in accordance with the ICTA provisions until such time as the company ceases to hold investments of that description.

(3) If—

(a) a company holds investments of any description in an entity immediately before 6 April 2007, and

(b) the investments are shares for any purposes of either of the following—

(i) the Part 6 provisions, and

(ii) the ICTA provisions,

but not for the corresponding purposes of the other set of provisions,

any question whether the investments are shares for those purposes of the Part 6 provisions is to be determined in accordance with the ICTA provisions until such time as the company ceases to hold investments of that description.

(4) In sub-paragraphs (2) and (3)—

“the ICTA provisions” means section 842AA of ICTA (VCT approvals) and Schedule 28B to that Act (qualifying holdings),

“the Part 6 provisions” means Chapter 3 of Part 6 (VCT approvals) and Chapter 4 of that Part (qualifying holdings).

(5) For the purpose of determining whether any shares or securities are to be regarded as comprised in a company's qualifying holdings, section 332 applies in relation to shares issued before 6 April 2000 with the substitution for the definition of “research and development” of—

“research and development” means any activity which is intended to result in a patentable invention (within the meaning of the Patents Act 1977) or in a computer program.

Part 9 — Other reliefs

Interest: loans for interests in close companies

91

Section 392(3)(a) does not apply if the shares were acquired before 14 March 1989.

92

Section 392(3)(b) does not apply if the shares were acquired before 6 April 1989.

93

(1) In relation to a loan made before 14 November 1986—

(a) section 395(1)(c) applies with the substitution for “the trustees of” of “any person (other than the individual) interested in”, and

(b) section 395(1)(d) applies with the substitution for “the personal representatives” of “any person (other than the individual) interested in the estate”.

(2) No individual is an associate because of sub-paragraph (1)(a) if the trust relates exclusively to a registered pension scheme.

(3) No individual is an associate because of sub-paragraph (1)(a) if —

(a) the trust—

(i) is exclusively for the benefit of the employees, or the employees and directors, of the company or their dependants, and

(ii) is not wholly or mainly for the benefit of the directors or their relatives, and

(b) the individual—

(i) is not (either alone or with relatives) the beneficial owner of more than 5% of the company's ordinary share capital, and

(ii) could not become so as a result of the operation of the trust.

(4) For the purposes of sub-paragraph (3)(b), charitable trusts that may arise on the failure or determination of other trusts are ignored.

(5) In relation to any time before 6 April 2006, sub-paragraph (2) applies as if the reference to a registered pension scheme were a reference to an exempt approved scheme, as defined in section 592 of ICTA.

94

Section 395(2) does not apply in relation to a loan made before 26 July 1989, and, for the purposes of that section, section 550 of ITEPA 2003 (which defines “employee benefit trust” and is applied for the purposes of section 395 by section 395(6)) has effect as if section 550 of ITEPA 2003 referred to that day instead of 13 March 1989.

Interest: loans for interests in employee-controlled companies

95

(1) In relation to a loan used before 6 April 1990 in one or more of the ways specified in section 396(2)—

(a) section 396 applies as if—

(i) the reference in subsection (3) to full-time employees included a reference to full-time employees' spouses,

(ii) the references in subsection (4) to an individual included a reference to an individual's spouse, unless the individual and the individual's spouse are both full-time employees of the company within the meaning of section 396(5), and

(b) section 397(4) applies as if references to the individual included references to the individual's spouse.

(2) If a loan within section 396(2)(b) was made on or after that date, interest on the loan is eligible for relief under section 383 only if interest on the original loan would have been allowable under section 353 of ICTA after that date.

Interest relief: film partnerships

96

Section 399(4) (restriction on relief for interest on loans for purchasing interest in some film partnerships) only applies if the interest accrued on or after 10 March 2006.

Interest: loans for investing in co-operatives

97

Section 401 applies in relation to a loan used in one or more of the ways specified in subsection (2)(a) or (b) of that section only if the loan was made after 10 March 1981, but subsection (2)(c) of that section applies whenever the original loan was made.

Gift aid: gifts of money for relief in poor countries

98

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

Gift aid: restrictions on associated benefits

99

(1) This paragraph applies if—

(a) a gift is made on or after 6 April 2007, and

(b) a benefit associated with the gift is received before that date or relates (wholly or partly) to a period falling before that date.

(2) Step 2 of the calculation in section 419(8) is to be read as if the words “(and neither condition C nor condition D is met in relation to it)” were omitted.

Gift aid: election to carry back relief

100

(1) This paragraph applies if in the tax year 2007-08 an individual makes a gift to a charity that is a qualifying donation for the purposes of Chapter 2 of Part 8.

(2) Section 426 has effect with the substitution for subsections (2) and (3) of—

(2) The condition is that in year P the grossed up amount of the gift would, if made in year P, be payable out of profits or gains brought into charge to income tax or capital gains tax. (3) If an election is made, section 25(6) to (9A) of FA 1990 have effect in relation to the individual as if the gift were a qualifying donation (within the meaning of section 25 of FA 1990) made in year P.

(3) Section 426 has effect with the omission of subsections (4) and (5).

Qualifying maintenance payments: maintenance assessments

101

(1) This paragraph applies for the purposes for which, on the day on which this Act comes into force, the amendments to section 347B of ICTA made by paragraph 8(1) and (2) of Schedule 3 to the Child Support, Pensions and Social Security Act 2000 (c. 19) (maintenance assessments superseded by maintenance calculations) do not have effect.

(2) Until a day is appointed for any of those purposes under this paragraph, section 454 and 455 have effect for that purpose as if—

(a) in section 454(7) and section 455(1)(a), (b), (c) and (3) for “calculation” there were substituted “ assessment ”, and

(b) for section 454(8) there were substituted—

(8) In this section “maintenance assessment” means a maintenance assessment made under the Child Support Act 1991 or the Child Support (Northern Ireland) Order 1991.

(3) The power to appoint a day under this paragraph is exercisable by the Secretary of State by order made by statutory instrument and different days may be appointed for different purposes (including different days for different areas).

Part 10 — Special rules about settlements and trustees

Trustees' expenses to be set against trustees' trust rate income

102

(1) This paragraph applies if the trustees of a settlement incur an allowable expense (see section 484) in a tax year prior to the tax year 2007-08.

(2) So far as the trustees have not paid the expense, the expense cannot, under Chapter 4 of Part 9, be set against the trustees' trust rate income for any tax year.

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