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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

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(c) carrying on commercial trades is all or substantially all of what it does (or of what it is reasonably expected to do once it begins trading).

(3) A company is an “eligible stakeholder company” if—

(a) it is a private limited company,

(b) it exists wholly for the purpose of making investments in eligible trading companies (ignoring any minor or incidental purposes), and

(3A) A company is an “eligible hybrid company” if—

(a) it is a private limited company,

(b) it is not an eligible trading company or an eligible stakeholder company,

(d) it holds one or more investments in eligible trading companies or is preparing to do so within the next 5 years, and

(e) carrying on commercial trades and making investments in eligible trading companies are all or substantially all of what it does (or of what it is reasonably expected to do once it begins operating).

(4) The references in subsections (3) and (3A) to making investments is to be read in accordance with section 809VC.

(5) A company is an “eligible holding company” if—

(a) it is a member of an eligible trading group or of an eligible group that is reasonably expected to become an eligible trading group within the next 5 years,

(b) an eligible trading company in the group is a 51% subsidiary of it, and

(c) if the ordinary share capital that it owns in the eligible trading company is owned indirectly, each intermediary in the series is also a member of the group.

(6) “Group” means a parent company and its 51% subsidiaries.

(7) “Parent company” means a company that—

(a) has one or more 51% subsidiaries, but

(b) is not itself a 51% subsidiary of any company.

(8) A group is an “eligible group” if the parent company and each of its 51% subsidiaries are private limited companies.

(9) A group is an “eligible trading group” if—

(a) it is an eligible group, and

(b) carrying on commercial trades is all or substantially all of what the group does (taking the activities of its members as a whole).

(10) The reference in subsection (5) to owning ordinary share capital indirectly is to be read in accordance with section 1155 of CTA 2010.

(11) A company is a “private limited company” if—

(a) it is a body corporate whose liability is limited,

(b) it is not a limited liability partnership, and

809VE

(1) Section 809VD is to be read in accordance with this section.

(2) A reference to a “trade” also includes—

(a) anything that is treated for corporation tax purposes as if it were a trade, and

(b) a business carried on for generating income from land (as defined in section 207 of CTA 2009).

(3) A trade is a “commercial trade” if it is conducted on a commercial basis and with a view to the realisation of profits.

(4) The carrying on of activities of research and development from which it is intended that a commercial trade will be derived, or will benefit, is to be treated as the carrying on of a commercial trade.

(5) But preparing to carry on activities within subsection (4) is not to be treated as the carrying on of a commercial trade.

(6) A company which is a partner in a partnership is not to be regarded as carrying on a trade carried on by the partnership.

809VF

(1) Condition B is that no relevant person has (directly or indirectly) obtained or become entitled to obtain any related benefit, and no relevant person expects to obtain any such benefit.

(2) A “benefit”—

(a) includes the provision of anything that would not be provided to the relevant person in the ordinary course of business, or would be provided but on less favourable terms, but

(b) does not include the provision of anything provided to the relevant person in the ordinary course of business and on arm's length terms.

(3) A benefit is “related” if—

(a) it is directly or indirectly attributable to the making of the investment (whether it is obtained before or after the investment is made), or

(b) it is reasonable to assume that the benefit would not be available in the absence of the investment.

(4) For the purposes of subsection (2)—

(a) a reference to the provision of anything is to the provision of anything in money or money's worth, including property, capital, goods or services of any kind, and

(b) “provision” includes any arrangement that allows a person to enjoy or benefit from the thing in question (whether temporarily or permanently).

809VG

(1) Subsection (2) applies if—

(a) income or chargeable gains are treated under section 809VA(2) as not remitted to the United Kingdom as a result of a qualifying investment,

(b) a potentially chargeable event occurs after the investment is made, and

(2) The affected income or gains are to be treated as having been remitted to the United Kingdom immediately after the end of the relevant grace period.

(3) Where the step required by section 809VI(2)(a) is not taken within the grace period allowed for that step, “the relevant grace period” is the grace period allowed for that step.

(4) Otherwise, “the relevant grace period” is the grace period allowed for the step required by section 809VI(1) or (2)(b).

(5) “The affected income or gains” means such portion of the income or gains mentioned in subsection (1)(a) as reflects the portion of the investment affected by the potentially chargeable event.

(6) The portion of the investment affected is—

(a) if the potentially chargeable event is a disposal of a part of the holding (or a part of the remaining holding), a portion equal to the portion of the holding (or remaining holding) being disposed of, and

(b) otherwise, the whole of the investment.

(6A) Where—

(a) the income or gains mentioned in subsection (1)(a) include amounts designated as TRF capital (in a tax year after the tax year in which the investment is made), and

(b) the portion of the investment affected is less than the whole of the investment,

so much of the affected income or gains as does not exceed the amounts designated is to be treated as being comprised of the TRF capital.

(6B) Where section 809VO (investments made from mixed funds) applies, subsection (8) of that section applies for the purposes of determining the composition of the amount of the affected income or gains that is not treated as being comprised of TRF capital (referred to as the “relevant affected income and gains” in that subsection) as a result of—

(a) subsection (6A) of this section not applying, or

(b) that subsection only applying to a part of the affected income or gains.

(7) Section 809VN (order of disposals etc) makes further provision for the purposes of this section.

(8) If a qualifying investment is made using the money or other property mentioned in section 809VA(3) together with other funds—

(a) that investment is to be treated as two separate investments, one made using the money or other property mentioned in section 809VA(3) and one made using the other funds, and

(b) references in the business investment provisions to “the investment” and “the holding” relate only to the investment made using the money or other property mentioned in section 809VA(3).

(9) If the potentially chargeable event mentioned in subsection (1)(b) is not the first such event to affect the investment, the income or gains mentioned in subsection (1)(a) do not include, as respects that investment—

(a) any part already treated under subsection (2) as remitted to the United Kingdom as a result of an earlier event,

(aa) any part contained in amounts already treated as remitted under section 809VIA(4) following an earlier event,

(b) any part contained in amounts already taken offshore or re-invested by way of appropriate mitigation steps following an earlier event, or

(c) any part contained in amounts already used to make a tax deposit without which an amount mentioned in paragraph (b) would not have been enough to satisfy section 809VI(1) or (2)(b) (see section 809VK).

809VH

(1) For the purposes of section 809VG, a “potentially chargeable event” occurs if—

(a) the target company is for the first time neither an eligible trading company nor an eligible stakeholder company nor an eligible hybrid company nor an eligible holding company,

(b) the relevant person who made the investment (“P”) disposes of all or part of the holding,

(d) the 5-year start-up rule is breached.

(2) The extraction of value rule is breached if—

(a) value (in money or money's worth) is received by or for the benefit of P or another relevant person,

(b) the value is received from any person in circumstances that are directly or indirectly attributable to the investment, and

(3) But the extraction of value rule is not breached merely because a relevant person receives value that—

(a) is treated for income tax or corporation tax purposes as the receipt of income or would be so treated if that person were liable to such tax, and

(b) is paid or provided to the person in the ordinary course of business and on arm's length terms.

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

(5) The 5-year start-up rule is breached if—

(a) immediately after the end of the period of 5 years beginning with the day on which the investment was made, the target company is non-operational, or

(b) at any time after the end of that period, the target company becomes non-operational.

(6) The target company is “non-operational” at any time when—

(a) it is an eligible trading company but is not trading,

(b) it is an eligible stakeholder company but—

(i) it holds no investments in eligible trading companies, or

(ii) none of the eligible trading companies in which it holds investments is trading, ...

(ba) it is an eligible hybrid company but is not trading and—

(i) it holds no investments in eligible trading companies, or

(ii) none of the eligible trading companies in which it holds investments is trading, or

(i) the group of which it is a member is not an eligible trading group, or

(ii) none of its 51% subsidiaries in the eligible trading group of which it is a member is an eligible trading company that is trading.

(7) In subsection (6), “trading” means carrying on one or more commercial trades (including the carrying on of any activities treated under section 809VE(4) as the carrying on of a commercial trade).

(8) If consideration for a disposal of all or part of the holding is or is to be paid in instalments, the disposal is to be treated for the purposes of this section as if it were separate disposals, one for each instalment (and each giving rise to a separate potentially chargeable event).

(9) An event listed in subsection (1) does not count as a potentially chargeable event if it is due to an insolvency step taken for genuine commercial reasons (but this does not prevent the extraction of any value in connection with the insolvency step from counting as a potentially chargeable event).

(10) For the purposes of subsection (9), an insolvency step is taken if—

(a) the target company enters into administration or receivership or is wound up or dissolved,

(b) the target company is an eligible stakeholder company or an eligible hybrid company and any eligible trading company in which it holds an investment enters into administration or receivership or is wound up or dissolved,

(c) the target company is an eligible holding company and any eligible trading company in the group that is a 51% subsidiary of it enters into administration or receivership or is wound up or dissolved, or

(d) a similar step is taken in relation to a company mentioned in paragraph (a), (b) or (c) under the law of a country or territory outside the United Kingdom.

809VI

(1) If the potentially chargeable event is a disposal of all or part of the holding, the appropriate mitigation steps are regarded as taken if the whole of the disposal proceeds have been taken offshore or re-invested.

(2) For any other case, the appropriate mitigation steps are regarded as taken if—

(a) P has disposed of the entire holding (or so much of it as P retains when the potentially chargeable event occurs), and

(b) the whole of the disposal proceeds have been taken offshore or re-invested.

(3) But —

(a) see also section 809VIA (which makes provision treating the disposal proceeds as reduced where TRF capital is involved), and

(b) if the disposal proceeds exceed X, subsections (1) and (2)(b) apply only to so much of the proceeds as is equal to X.

(4) “X” is—

(a) the sum originally invested, less

(b) so much of that sum as has, on previous occasions involving the same investment—

(i) been taken into account in determining the affected income or gains under section 809VG(2),

(ii) been taken offshore or re-invested in order to avoid the application of that section, or

(iii) been used to make a tax deposit without which the amount actually taken offshore or re-invested would not have been enough to satisfy subsection (1) or (2)(b) (see section 809VK).

(5) “The sum originally invested” means the amount of the money, or the market value of the other property, used to make the investment.

(6) Market value is to be assessed for these purposes as at the date of the relevant event (see section 809VA).

(7) Proceeds are “re-invested” if a relevant person uses them to make another qualifying investment (or the proceeds are themselves a qualifying investment) whether in the same or a different company.

(8) In cases where a breach of the extraction of value rule occurs in connection with the winding-up or dissolution of the target company—

(a) subsection (2)(a) does not apply,

(b) the reference in subsection (2)(b) to the disposal proceeds is to the value received, and

(c) references in this section and in succeeding provisions of the business investment provisions to the disposal proceeds are to be read as references to the value received.

809VJ

(1) The grace period allowed for the step mentioned in section 809VI(2)(a) is the period of 90 days beginning—

(a) if the potentially chargeable event is a breach of the extraction of value rule, with the day on which the value is received, and

(b) otherwise, with the day on which a relevant person first became aware or ought reasonably to have become aware of the potentially chargeable event.

(2) The grace period allowed for the step mentioned in section 809VI(1) and (2)(b) is the period of 45 days beginning with the day on which the disposal proceeds first became available for use by or for the benefit of P or any other relevant person.

(2A) But subsection (2B) applies instead of subsections (1) and (2) where the potentially chargeable event is a breach of the 5-year start-up rule by virtue of section 809VH(5)(b).

(2B) The grace period allowed for the steps mentioned in section 809VI(2)(a) and (2)(b) is the period of 2 years beginning with the day on which a relevant person first became aware or ought reasonably to have become aware of the potentially chargeable event referred to in subsection (2A).

(3) An officer of Revenue and Customs may agree in a particular case to extend the grace period allowed for an appropriate mitigation step in exceptional circumstances.

(4) An officer of Revenue and Customs may agree in a particular case to extend the grace period allowed for an appropriate mitigation step in circumstances specified in regulations made by the Commissioners.

(5) Regulations under subsection (4) may have effect in relation to investments made before the day on which the regulations are made.

(6) Nothing in subsection (4) or in regulations made under it limits the power conferred by subsection (3).

(7) The powers conferred on officers of Revenue and Customs by subsections (3) and (4) include power to agree to extend a grace period for a length of time that is indefinite but is capable of becoming definite by means identified in the agreement (such as the satisfaction of conditions).

809VK

(1) This section applies if—

(a) there is a disposal of all or part of the holding,

(b) the disposal counts as a potentially chargeable event or is part of the appropriate mitigation steps taken in consequence of a potentially chargeable event,

(d) P is chargeable to capital gains tax (but not corporation tax) in respect of that gain, and

(e) the actual disposal proceeds are less than Y.

(2) The difference between the actual disposal proceeds and Y is referred to in this section as “the shortfall”.

(3) “The actual disposal proceeds” means the disposal proceeds but disregarding section 809Z8(4).

(4) “Y” is the sum of—

(a) the amount (if any) that would, but for this section, be required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b), and

(b) the amount found by applying the highest potential CGT rate to the amount (computed in accordance with TCGA 1992) of the chargeable gain accruing to P on the disposal.

(5) The highest potential CGT rate is the highest rate specified in section 1H of TCGA 1992 (regardless of the type of the chargeable gain or, if P is an individual, the rate of income tax at which P's income is chargeable).

(6) If this section applies, the amount that is required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b) is reduced by the permitted amount.

(7) “The permitted amount” is so much of the shortfall as is used, within the grace period allowed for taking the disposal proceeds offshore or re-investing them, to make a deposit in respect of which a certificate of tax deposit is issued to P under section 12 of the National Loans Act 1968.

(8) A reduction may not be made under subsection (6) unless—

(a) when details of the deposit are confirmed to Her Majesty's Revenue and Customs, the confirmation letter states that this section is intended to apply to the deposit, and

(b) the amount of the deposit is no greater than the shortfall.

809VL

(1) This section explains the effect for the purposes of this Chapter in cases where section 809VG(2) does not apply because the appropriate mitigation steps were taken within the grace period allowed for each step.

(2) If disposal proceeds were taken offshore as part of those steps, nothing in section 809VA(2) prevents anything subsequently done in relation to those proceeds (or anything deriving from them) from counting as a remittance of the underlying income or gains to the United Kingdom at the time when the thing is subsequently done.

(3) If disposal proceeds were re-invested as part of those steps—

(a) the underlying income or gains continue to be treated under section 809VA(2) as not remitted to the United Kingdom, and

(b) the business investment provisions apply to the re-investment as they apply to the original investment.

(4) In the application of the business investment provisions to the re-investment—

(a) treat the potentially chargeable event mentioned in section 809VG(1)(b) as the relevant event,

(b) treat the underlying income or gains as the income or gains treated under section 809VA(2) as not remitted to the United Kingdom as a result of the re-investment, and

(5) If the re-investment is made using more than the minimum amount of disposal proceeds required to satisfy section 809VI(1) or (2)(b)—

(a) that investment is to be treated as two separate investments, one made using the minimum amount of disposal proceeds and one made using the excess, and

(b) references in the business investment provisions to “the investment” and “the holding” relate only to the investment made using the minimum amount of disposal proceeds.

(6) “The underlying income or gains” means the affected income or gains (within the meaning of section 809VG) or, if one part of the disposal proceeds is taken offshore and the other part re-invested, a corresponding proportion of the affected income or gains.

(7) A further claim must be made in accordance with section 809VA in respect of the re-investment and, if no such claim is made on or before the first anniversary of the 31 January following the tax year in which the re-investment was made, section 809VG(2) applies, as respects the original investment, as if the appropriate mitigation steps had not been taken within the grace period allowed for each step.

(8) Section 809VM makes further provision in cases involving a tax deposit.

809VM

(1) This section applies in cases where—

(a) section 809VG(2) did not apply because the appropriate mitigation steps were taken within the grace period allowed for each step,

(b) the amount required to be taken offshore or re-invested in order to satisfy section 809VI(1) or (2)(b) had been reduced under section 809VK, and

(c) but for that reduction, the amount that was actually taken offshore or re-invested would not have been enough to satisfy section 809VI(1) or (2)(b).

(2) The tax deposit that gave rise to the reduction is referred to in this section as “the tax deposit”.

(3) Use of the tax deposit to pay the relevant tax liability does not count as remitting the underlying income or gains to the United Kingdom (and, accordingly, section 809VA(2) continues to apply to the income or gains).

(4) If any of the CTD conditions is breached, the underlying income or gains are to be treated as having been remitted to the United Kingdom immediately after the day on which the breach occurs.

(5) “The underlying income or gains” means such portion of the affected income or gains (within the meaning of section 809VG) as is—

(a) represented by the payment, in the case of subsection (3), or

(b) affected by the breach, in the case of subsection (4).

(6) The CTD conditions are as follows—

(a) the tax deposit must not be used to pay a tax liability other than the relevant tax liability,

(b) if any of the tax deposit is withdrawn by the depositor, the amount withdrawn must be taken offshore or re-invested within the period of 45 days beginning with the day on which the withdrawal was made, and

(c) any part of the tax deposit that has been neither used to pay a tax liability nor withdrawn by the due date must be withdrawn by the depositor and taken offshore or re-invested within the period of 45 days beginning with that date.

(7) Where the CTD conditions were not breached because the requisite amount was taken offshore or re-invested within the 45-day period mentioned in subsection (6)(b) or (c)—

(a) section 809VL applies to the amount taken offshore or re-invested as it applies to disposal proceeds, but

(b) read the reference in section 809VL(4)(a) to the potentially chargeable event as a reference to—

(i) the withdrawal, in a case within subsection (6)(b), and

(ii) the due date, in a case within subsection (6)(c).

(8) For the purposes of this section—

(a) “the relevant tax liability” means P's liability to capital gains tax for the tax year in which the disposal took place,

(b) “the due date” means the date by which the relevant tax liability is required to be paid,

(d) references to withdrawal include repayment for whatever reason.

809VN

(1) Subsection (2) applies if at any time income or chargeable gains of an individual are treated under section 809VA as not remitted to the United Kingdom as a result of—

(a) more than one qualifying investment made in the same target company,

(b) more than one qualifying investment made in companies in the same eligible trading group, or

(c) qualifying investments made in an eligible trading company and in an eligible stakeholder company or eligible hybrid company that holds investments in that trading company.

(2) In the application of section 809VG at that time—

(a) treat the investments and holdings as if they were a single qualifying investment and a single holding, and

(b) assume that a disposal of all or part of that deemed single holding affects the deemed single investment in the following order.

(2A) The order is—

(a) so much of the qualifying investments as were made using money or other property that is designated as TRF capital (in a tax year after the tax year in which the investment is made) to the extent those qualifying investments were made using that money or other property, and then

(b) in relation to whatever remains, the order in which the qualifying investments were made (that is to say, on a first in, first out basis).

(3) Subsection (4) applies if at any time—

(a) income or chargeable gains of an individual are treated under section 809VA as not remitted to the United Kingdom as a result of one or more qualifying investments,

(b) in addition to that investment or those investments, a relevant person holds at least one other investment in the same target company, the same eligible trading group or a related eligible company, and

(4) In the application of section 809VG at that time—

(a) treat the investments and holdings as if they were a single investment and a single holding, and

(b) assume that a disposal of all or part of that deemed single holding is—

(i) a disposal of so much of the deemed single holding as is from any qualifying investments that were made using money or other property that is designated as TRF capital (in a tax year after the tax year in which the investment is made) to the extent those qualifying investments were made using that money or other property, and

(ii) if any of the deemed single holding remains after the disposal referred to in sub-paragraph (i), a disposal of a holding from qualifying investments until the holdings from all the qualifying investments have been disposed of.

(5) The reference to a “related eligible company”—

(a) in relation to an eligible trading company, is to an eligible stakeholder company or eligible hybrid company that holds investments in that company, and

(b) in relation to an eligible stakeholder company or eligible hybrid company, is to an eligible trading company in which that company holds investments.

(6) Subsections (2) and (4) apply whether the investments in question are held by the same relevant person or different ones.

809VO

(1) This section applies if—

(a) but for section 809VA(2), income or gains would have been remitted to the United Kingdom by virtue of a relevant event, and

(b) section 809Q (transfers from mixed funds) would have applied in determining the amount that would have been so remitted.

(2) The relevant event counts as an offshore transfer for the purposes of section 809R(4).

(3) The holding is to be treated as containing a proportion of each kind of income and capital contained in the invested property equal to the fixed proportion.

(4) The “fixed proportion” is, unless subsection (4B) applies, the proportion of that kind of income or capital contained in the invested property by virtue of subsection (2).

(4A) Subsection (4B) applies, instead of subsection (3), for determining the composition of the holding in connection with the application of subsections (7) and (8) where the holding contains TRF capital (as a result of the designation of income or capital in the holding as TRF capital in the tax year after the tax year in which the relevant event occurred).

(4B) Where this subsection applies, take the following steps to determine the composition of the holding in connection with the application of those subsections—

Step 1Determine the amounts of each kind of income and capital that the holding was treated as containing by virtue of subsection (3).

Step 2Reduce the amount of each kind of income and capital by the amount (if any) of that income or capital as is TRF capital.

(4C) Where subsection (4B) applies, the “fixed proportion” is the proportion of that kind of income or capital treated as contained in the invested property by virtue of that subsection (instead of subsection (2)).

(5) “The invested property” means the money or other property used to make the investment.

(6) Subsection (7) applies in cases where—

(a) section 809VG(2) does not apply because an amount is taken offshore, re-invested or used to make a tax deposit, or

(b) section 809VM(4) does not apply because an amount is taken offshore or re-invested.

(7) The amount taken offshore, re-invested or used to make a tax deposit is treated, immediately after that step, as containing the fixed proportion (determined under subsection (4) or (4C) as the case may be) of each kind of income and capital contained in the holding.

(8) In cases where section 809VG(2) applies—

(a) the relevant affected income or gains are so much of the fixed amount of each kind of income or gain mentioned in subsection (1)(a) as reflects the relevant proportion of the portion of the investment affected by the potentially chargeable event (see section 809VG(6)),

(b) “the fixed amount” is the amount of that kind of income or gain that the holding is treated as containing by virtue of subsection (3) or (4B) (as the case may be), and

(8A) For the purposes of subsection (8)(a)—

(a) the “relevant affected income or gains” means—

(i) in a case where section 809VG(6A) applies to treat some of the affected income or gains as being comprised of TRF capital, so much of the affected income or gains as is not treated as being comprised of TRF capital, or

(ii) otherwise, all of the affected income or gains, and

(b) the “relevant proportion” of the portion of the investment means—

(i) in a case where section 809VG(6A) applies to treat some of the affected income or gains as being comprised of TRF capital, the proportion of the portion of the investment that is equal to the proportion of the affected income or gains as is not treated as being comprised of TRF capital, or

(ii) otherwise, the whole of the portion of the investment.

(9) Section 809R(2) and (3) and section 809S apply for the purposes of this section.

Relief for certain UK services

Exempt property relief

809YA

(1) Section 809Y(1) does not apply to property if—

(a) it ceases to be exempt property because the whole of it is sold whilst it is in the United Kingdom, and

(b) conditions A to F are met.

(2) Condition A is that the sale is to a person other than a relevant person.

(3) Condition B is that the sale is by way of a bargain made at arm's length.

(4) Condition C is that, once the sale is completed, no relevant person—

(a) has any interest in the property,

(b) is able or entitled to benefit from the property by virtue of any interest, right or arrangement, or

(c) has any right (whether conditional or unconditional) to acquire any interest mentioned in paragraph (a) or ability or entitlement mentioned in paragraph (b).

(5) Condition D is that the whole of the disposal proceeds are released (whether in one go or in instalments) on or before the final deadline.

(6) “The final deadline” is the first anniversary of the 5 January following the tax year in which the property ceases to be exempt property (within the meaning of section 809Y).

(7) Condition E is that—

(a) the whole of the disposal proceeds are taken offshore or used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which the proceeds are released, or

(b) if the disposal proceeds are paid in instalments, each instalment is taken offshore or used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which the instalment is released.

(8) But if any of the disposal proceeds are released in the period of 45 days ending with the final deadline, Condition E is satisfied, as respects those proceeds, only if they are taken offshore or used by a relevant person to make a qualifying investment on or before the final deadline.

(9) Condition F is that, if Condition E is satisfied wholly or in part by using disposal proceeds to make a qualifying investment, the remittance basis user makes a claim for relief under section 809YC(2) on or before the first anniversary of the 31 January following the tax year in which the property is sold.

(10) For the purposes of this section, proceeds or instalments are “released” on the day on which they first become available for use by or for the benefit of any relevant person.

(11) This section does not apply if the sale is made as part of or as a result of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.

809YB

(1) An officer of Revenue and Customs may agree in a particular case to extend any period within which disposal proceeds (or instalments) must be taken offshore or used by a relevant person to make a qualifying investment in order to satisfy Condition E.

(2) The power to agree to an extension is exercisable only in exceptional circumstances and only if the remittance basis user requests such an extension.

809YC

(1) This section has effect if section 809Y(1) does not apply to property by virtue of section 809YA.

(2) The income and gains treated under section 809X as not remitted to the United Kingdom continue to be treated after the sale as not remitted to the United Kingdom even though the property has ceased to be exempt property.

(3) But nothing in subsection (2) prevents anything done in relation to any part of the disposal proceeds after that part is taken offshore (or used to make a qualifying investment) from counting as a remittance of the underlying income or gains to the United Kingdom at the time when the thing is done.

(4) Treat the disposal proceeds as containing or deriving from an amount of each kind of income and gain mentioned in section 809Q(4)(a) to (h) equal to the amount of that kind of income or gain contained in the exempt property when it was brought to, or received or used in, the United Kingdom (as mentioned in section 809X).

(5) Where Condition E was met by using the disposal proceeds to make a qualifying investment—

(a) the business investment provisions apply to the income and gains that continue, by virtue of subsection (2), to be treated as not remitted as they apply to income or gains that are treated under section 809VA(2) as not remitted, and

(b) if the investment was made using more than just the disposal proceeds, treat only the part of the investment made using the disposal proceeds as “the investment” for the purposes of those provisions.

809YD

(1) This section applies to an individual (“P”) if—

(a) a chargeable gain (but not a loss) accrues to a person on a sale of exempt property,

(b) but for section 809YA, section 809Y(1) would have applied to the property by virtue of the sale, and

(i) the person to whom the gain accrues, or

(ii) a person to whom a part of the gain is treated as accruing under section 3 of TCGA 1992 (members of non-resident companies).

(2) The relevant UK gain is to be treated for the purposes of this Chapter as if—

(a) it were a foreign chargeable gain of P, and

(b) in the case of section 809E, it were not part of P's UK income and gains.

(3) Accordingly, if section 809F applies to P for the applicable tax year ..., the relevant UK gain is charged in accordance with paragraph 1 of Schedule 1 to TCGA 1992 as if it were a foreign chargeable gain.

(4) The relevant UK gain is—

(a) in a case falling within subsection (1)(c)(i), the gain accruing to P,

(b) in a case falling within subsection (1)(c)(ii), the part of the gain treated as accruing to P.

(5) The applicable tax year is —

(a) if section 1M of TCGA 1992 (temporary non-residents) applies in P's case and the relevant UK gain is within subsection (2) of that section, the tax year that consists of or includes the period of return as defined in that section,

(b) otherwise, the tax year in which the relevant UK gain accrues.

(6) In applying this Chapter to the relevant UK gain—

(a) treat the amount of any gains mentioned in section 809Q(4)(e) contained in the disposal proceeds by virtue of section 809YC(4) as increased by the amount of the relevant UK gain,

(b) disregard section 809U, and

(c) anything done in relation to any part of the disposal proceeds before the part is taken offshore or used to make a qualifying investment (or both) does not count as a remittance to the United Kingdom of any of the relevant UK gain.

(7) The relevant UK gain is to be treated for the purposes of the following provisions of TCGA 1992 as if it accrued on the disposal of a foreign asset (within the meaning of Schedule 1 to TCGA 1992) —

(a) section 1M,

(b) section 3D, and

(8) This section has effect despite section 3D(2) of TCGA 1992.

(9) This section does not apply with respect to a chargeable gain if P gives notice to Her Majesty's Revenue and Customs under this subsection.

(10) A notice under subsection (9)—

(a) must be in writing and must identify the gain in question,

(b) must be given on or before the first anniversary of the 31 January following the applicable tax year, and

809YE

(1) Section 809Y(1) does not apply to property if—

(a) it ceases to be exempt property in the second case mentioned in that section, and

(b) by no later than the time when it ceases to be exempt property, it has been donated in the circumstances described in paragraph 1 of Schedule 14 to FA 2012 (gifts to the nation).

(2) Where section 809Y(1) does not apply to property by virtue of this section, the property is to continue to be treated as not remitted to the United Kingdom even though it no longer meets any of the relevant rules.

Acquisition value of qualifying investments

Subsequent recovery of peer-to-peer loans

809Z8

(1) In this Chapter, in relation to a sale or other disposal, “the disposal proceeds” means—

(a) the consideration for the disposal, less

(b) any agency fees that are deducted before the consideration is paid or otherwise made available to or for the benefit of the person making the disposal (“the transferor”) or any other relevant person.

(2) The following rules apply in determining the consideration for the disposal.

(3) If the consideration is provided in the form of anything other than money, the amount of the consideration is the market value of the thing at the time of the disposal.

(4) If the disposal is made other than by way of a bargain made at arm's length, the disposal is deemed to be made for a consideration equal to the market value, immediately before the disposal, of the thing being disposed of.

(5) Without limiting the generality of subsection (4), a disposal made to another relevant person or to a person connected with a relevant person is treated in all cases as made other than by way of a bargain at arm's length.

(6) In subsection (1), “agency fees” means fees and other incidental costs of the disposal that are charged to the transferor by any person by or through whom the disposal is effected, but excluding any such fees or costs that—

(a) are charged to the transferor by another relevant person, or

(b) are to be passed on to or otherwise applied for the benefit of a relevant person.

(7) The exclusion mentioned in subsection (6) does not apply to the extent that the fees or costs—

(a) relate to a service actually provided by the relevant person to the transferor in connection with effecting the disposal, and

(b) do not exceed the amount that would be charged for that service if it were provided in the ordinary course of business and on arm's length terms.

809Z9

(1) This section applies to a provision of this Chapter that is satisfied if something (for example, disposal proceeds) is taken offshore or used by a relevant person to make a qualifying investment.

(2) Things are to be regarded as “taken offshore” if (and only if) they are taken outside the United Kingdom such that, on leaving the United Kingdom, they cease to be available—

(a) to be used or enjoyed in the United Kingdom by or for the benefit of a relevant person, or

(b) to be used or enjoyed in any other way that would count as remitting income or gains to the United Kingdom.

(3) If—

(a) the thing required to be taken offshore or invested is money, and

(b) it is paid temporarily into an account pending satisfaction of the provision,

the provision is satisfied only if the money actually taken offshore or invested is taken from the same account.

(4) If the thing required to be taken offshore or invested is something in money's worth, the provision may be satisfied—

(a) by taking the thing offshore or investing it, or

(b) by taking offshore or investing money or other property of the equivalent value.

(5) “The equivalent value” is the market value of the thing in money's worth, assessed as at the date of the sale or other disposal in relation to which the provision is triggered.

(6) If the consideration for a disposal is deemed under section 809Z8(4), the provision may be satisfied by taking offshore or investing money or other property of a value equal to—

(a) the amount of the deemed consideration, less

(b) any agency fees (within the meaning of section 809Z8) that are deducted before the actual consideration is paid or otherwise made available to or for the benefit of a relevant person.

(7) Subsections (4)(b) and (6) do not apply in the case of other property of the equivalent value if the other property is—

(a) exempt property under section 809X,

(b) consideration for the disposal of any such exempt property, or

(c) consideration for the disposal of all or part of the holding (see section 809VC) relating to a qualifying investment.

(8) Money or other property taken offshore or invested in accordance with subsection (4)(b) or (6) is to be treated for the purposes of this Chapter—

(a) as deriving from the thing required to be taken offshore or invested, and

(b) as having the same composition of kinds of income and capital as that thing.

(9) A provision to which this section applies may be satisfied—

(a) by taking the whole thing offshore or investing the whole thing, or

(b) by taking one part offshore and investing the other part.

(10) References in this section to something being “invested” are to something being used by a relevant person to make a qualifying investment.

(11) The provisions to which this section applies include sections 809UA(2) and 809VB(2), but in those cases—

(a) disregard references in this section to investment, and

(b) in the case of section 809VB(2), the assessment date for the purposes of subsection (5) is the date of the relevant event (see section 809VA(3)(b)).

809Z10

In this Chapter—

“the business investment provisions” means sections 809VA to 809VO;

“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

“market value” has the same meaning as in TCGA 1992 (see in particular sections 272 and 273 of that Act);

“qualifying investment” has the meaning given by section 809VC (and references to making a qualifying investment are to be read in accordance with that section);

“relevant person” has the meaning given by section 809M;

“the remittance basis user”, in relation to income or chargeable gains of an individual, means that individual;

“TRF capital” has the meaning given by section 809Q(9).

The unquoted status requirement

Spreading of patent royalty receipts

Condition as to trading and miscellaneous incoming resources

Other amounts to be charged at special rates for trustees

Calculation of trustees' tax pool

Exemption from charges under provisions to which section 1016 applies

Payment on transfer of variable rate securities

Transfers without accrued interest to makers of manufactured payments

24A

(1) If the taxpayer is an individual, there is a limit on certain deductions which may be made for the tax year at Step 2.

(2) The limit is determined as follows.

(3) Amount A must not exceed amount B.

(4) Amount A is—

(a) the deductions for the tax year at Step 2 for the reliefs listed in subsection (6) taken together, less

(b) so much of those deductions as fall within subsection (7).

(5) Amount B is—

(a) £50,000, or

(b) if more, 25% of the taxpayer's adjusted total income for the tax year (see subsection (8)).

(6) The reliefs are—

(a) relief under section 64 (trade loss relief against general income);

(b) relief under section 72 (early trade losses relief);

(d) relief under section 120 (property loss relief against general income);

(e) relief under section 125 (post-cessation property relief);

(f) relief under section 128 (employment loss relief against general income);

(g) relief under Chapter 6 of Part 4 (share loss relief);

(h) relief under Chapter 1 of Part 8 (interest payments);

(i) relief under section 555 of ITEPA 2003 (deduction for liabilities relating to former employment);

(j) relief under section 446 of ITTOIA 2005 (strips of government securities: relief for losses);

(k) relief under section 454(4) of ITTOIA 2005 (listed securities held since 26 March 2003: relief for losses: persons other than trustees).

(7) The deductions falling within this subsection are—

(a) deductions for amounts of relief so far as attributable to allowances under Part 3A of CAA 2001 (business premises renovation allowances);

(b) deductions for amounts of relief under a provision mentioned in subsection (6)(a) to (e) so far as made from profits of the trade or business to which the relief in question relates;

(d) deductions for amounts of relief under the provision mentioned in subsection (6)(g)—

(i) where the shares in question fall within section 131(2)(a) (qualifying shares to which EIS relief is attributable), or

(ii) where SEIS relief is attributable to the shares in question as determined in accordance with Part 5A (seed enterprise investment scheme), or

(iii) where SI relief is attributable to the shares in question as determined in accordance with Part 5B (income tax relief for social investments).

(8) The taxpayer's “adjusted total income” for the tax year is calculated as follows.

Step 1 Take the amount of the taxpayer's total income for the tax year.

Step 2 Add back the amounts of any deductions allowed under Part 12 of ITEPA 2003 (payroll giving) in calculating the taxpayer's income which is charged to tax for the tax year.

Step 3 If the taxpayer is given relief in accordance with section 192 of FA 2004 (pension schemes: relief at source) in respect of any contribution paid in the tax year under a pension scheme, deduct the gross amount of the contribution. The “gross” amount of a contribution is the amount of the contribution before deduction of tax under section 192(1) of FA 2004.

Step 4 If the taxpayer is entitled to a deduction for relief under section 193(4) or 194(1) of FA 2004 (pension schemes: excess relief under net payment arrangements or relief on making a claim) for the tax year, deduct the amount of the excess or contribution (as the case may be). The result is the taxpayer's adjusted total income for the tax year.

...

74E

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335A

(1) This section applies if—

(a) the investor is entitled to a tax reduction for a relevant tax year under section 335 in respect of the investment, but

(b) the amount of the tax reduction is not fully deducted at Step 6 for that relevant tax year.

(2) The amount (“the excess amount”) not deducted is treated as follows.

(3) For each subsequent relevant tax year for which the investor—

(a) is entitled to a tax reduction under section 335 in respect of the investment, and

(b) makes a claim under this subsection,

the investor is also entitled to a tax reduction under this subsection which is given effect at Step 6.

(4) The amount of the tax reduction under subsection (3) for any relevant tax year is the excess amount so far as it has not been deducted at Step 6 for any earlier relevant tax year by virtue of that subsection.

(5) In this section “Step 6” means Step 6 of the calculation in section 23.

384B

(1) Relief is not to be given under this Chapter for a tax year for interest paid by a person on a relevant loan if the partnership to which the loan relates carried on a UK property business or overseas property business the profits of which are calculated on the cash basis for the tax year (see section 271D of ITTOIA 2005).

(2) A loan is a “relevant loan” if—

(a) it is a loan to which section 388 applies (loan to buy plant or machinery for partnership use), or

(b) it is a loan to which section 398 applies (loan to invest in partnership) and which is not used for purchasing a share in a partnership.

PART 11ZA — Manufactured payments

614ZA

This Part deals with the application of the Income Tax Acts to manufactured payment relationships and payments representative of dividends or interest.

614ZB

(1) For the purposes of the Income Tax Acts a person has a manufactured payment relationship if conditions A to C are met.

(2) Condition A is that under any arrangements—

(a) an amount is payable by or to the person, or

(b) any other benefit is given by or to the person (including the release of the whole or part of any liability to pay an amount).

(3) Condition B is that the arrangements relate to the transfer of securities.

(4) Condition C is that the amount or value of the other benefit—

(a) is representative of a dividend or interest on the securities, or

(b) will fall to be treated as representative of such a dividend or interest when it is paid or given.

(5) In subsection (2) the reference to an amount being payable, or other benefit being given, by the person includes a reference to an amount being payable, or other benefit being given, by another person on behalf of the person in question.

(6) In this Part—

“manufactured payment”, in relation to a manufactured payment relationship, means an amount, or the value of a benefit, within subsection (2), and

“securities” means—shares in a company, andloan stock or any similar security (whether the security is of the government of the United Kingdom, any other government, any public or local authority in the United Kingdom or elsewhere, or any other company or body).

614ZC

(1) This section applies where a person has a manufactured payment relationship under which a manufactured payment is paid by or on behalf of the person.

(2) No deduction is allowed in respect of the manufactured payment in calculating any profits or other income of the person for income tax purposes (subject to subsection (3)).

(3) Subsection (2) does not apply in relation to the person so far as the manufactured payment is brought into account under Part 2 of ITTOIA 2005 in calculating the profits of a trade carried on by the person.

(4) But nothing in subsection (3) affects the question whether (apart from that provision) a deduction in calculating the profits of a trade carried on by the person is allowed.

614ZD

(1) Subsection (2) applies if a person has a manufactured payment relationship under which a manufactured payment is payable to the person.

(2) For the purposes of the charge to income tax on the person's income, the Income Tax Acts apply to the person as if the manufactured payment were a dividend or interest on the securities (as the case may require).

(3) Subsection (2) is subject to subsections (4) and (5).

(4) Subsection (2) does not apply in relation to the person so far as the manufactured payment is brought into account under Part 2 of ITTOIA 2005 in calculating the profits of a trade carried on by the person.

(5) Subsection (2) does not apply in relation to the person for the purposes of determining entitlement to double taxation relief in respect of any dividend or interest.

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

(7) For the purposes of this section “double taxation relief” means any relief given under or as a result of Part 2 of TIOPA 2010.

742A

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

Market value of qualifying investments

“Charity” to include exempt bodies

809RA

(1) This section applies if—

(a) an individual has general earnings from an employment for a tax year,

(b) those earnings include both general earnings within section 15(1) of ITEPA 2003 (“section 15(1) earnings”) and general earnings within section 26(1) of that Act (“section 26(1) earnings”),

(c) at least some of the section 15(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 15(1) earnings, are paid into an account in that tax year at a time (a “relevant time”) when the account is a qualifying account of the individual, and

(d) at least some of the section 26(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 26(1) earnings, are also paid into the account in that tax year at a relevant time.

(2) If this section applies, the composition of each transfer made from the account in that tax year at a relevant time is to be determined as follows—

Step 1 Suppose that all the condition A transfers made from the account in the tax year at a relevant time had been a single transfer made from the account at the end of the tax year.

Step 2 Suppose that all the other transfers made from the account in the tax year at a relevant time had been a single offshore transfer made at the end of the tax year immediately after the single transfer mentioned in step 1.

Step 3 Applying those suppositions—find under section 809Q(3) the extent to which the single transfer mentioned in step 1 is of the individual's income or chargeable gains, andfind under section 809R(4) the content of the single offshore transfer mentioned in step 2.

Step 4 Each transfer made from the account in the tax year at a relevant time is to be treated as containing the specified proportion of each kind of income or capital contained in the relevant deemed transfer.“The specified proportion” is the amount of the transfer divided by the amount of the relevant deemed transfer.“The relevant deemed transfer” is—if the transfer is a condition A transfer, the single transfer mentioned in step 1, andotherwise, the single offshore transfer mentioned in step 2.

(3) Subsection (2) applies in determining the composition of a transfer for the purposes of sections 809Q and 809R but it does not otherwise affect the date on which a transfer is considered to occur for the purposes of this Chapter.

(4) If the tax year is the tax year in which the account becomes a qualifying account, for the purpose of applying section 809Q(3) in relation to the single transfer mentioned in step 1 of subsection (2), treat the part of the tax year falling before the qualifying date for the account as a separate tax year.

(5) If the account ceases to be a qualifying account of the individual during the tax year other than as a result of a breach of the deposit rule—

(a) subsection (2) has effect as if references to the end of the tax year were to the end of the day on which the account ceases to be a qualifying account, and

(b) for the purpose of applying section 809Q(3) in relation to the single transfer mentioned in step 1 of subsection (2), treat the part of the tax year falling after the day mentioned in paragraph (a) as a separate tax year.

(6) A transfer from the account is a “condition A transfer” if and to the extent that—

(a) condition A in section 809L is met, and

(b) either—

(i) the property or consideration for the service is (wholly or in part), or derives (wholly or in part, and directly or indirectly) from, the transfer, or

(ii) the transfer, or anything deriving (wholly or in part, and directly or indirectly) from the transfer, is used as mentioned in section 809L(3)(c).

(7) A transfer from the account is an “other transfer” if and to the extent that it is not a condition A transfer.

(8) Treat a transfer as an “other transfer” if and to the extent that, at the end of the tax year—

(a) it is not a condition A transfer, and

(b) on the basis of the best estimate that can reasonably be made at that time, it will not become a condition A transfer.

(9) If the account ceases to be a qualifying account of the individual during the tax year other than as a result of a breach of the deposit rule, subsection (8) has effect as if the reference to the end of the tax year were to the end of the day on which the account ceases to be a qualifying account.

(10) “Qualifying account” and “the qualifying date” for an account are defined in section 809RB.

(11) For the purposes of this section and sections 809RB to 809RD—

(a) “employment” is to be read in accordance with section 4(1) of ITEPA 2003, and includes an office (as read in accordance with section 5(3) of that Act),

(b) whether general earnings are “for” a tax year is to be determined as for the purposes of the employment income Parts of ITEPA 2003 (see section 3(2) of that Act),

(d) references to a breach of the deposit rule are to be read in accordance with section 809RC.

Restrictions on exemptions

809RB

(1) An individual may by notice to the Commissioners nominate an account to be a qualifying account of the individual for the purposes of section 809RA.

(2) The notice must specify the qualifying date for the account.

(3) “The qualifying date” for the account is the first date on which there is paid into the account sums falling within subsection (4) which (in total) are more than £10.

(4) A sum falls within this subsection if it is, or derives wholly (whether directly or indirectly) from, general earnings of the individual from an employment for a tax year which is a relevant tax year in relation to the employment.

(5) A tax year is a “relevant” tax year in relation to an employment if the general earnings which the individual has for the tax year from the employment include both general earnings within section 15(1) of ITEPA 2003 and general earnings within section 26(1) of that Act.

(6) The individual may withdraw the nomination by giving a further notice to the Commissioners, specifying the date with effect from which the nomination is withdrawn.

(7) A notice under subsection (1) or (6) must be in writing and include such information as the Commissioners may reasonably require.

(8) A notice under subsection (1) or (6) must be given no later than—

(a) 31 January in the tax year following the tax year in which falls, as the case may be—

(i) the qualifying date for the account, or

(ii) the date with effect from which the nomination is withdrawn, or

(b) such later date as the Commissioners may allow.

(9) If an individual nominates an account under this section, the account is a “qualifying account” of the individual throughout the period—

(a) beginning with the qualifying date, and

(b) ending with the date before the earliest of the following dates—

(i) the date on which the account is closed or ceases to be an ordinary bank account held by and for the benefit of the individual (alone or jointly with others);

(ii) the date with effect from which the nomination is withdrawn under this section;

(iii) the qualifying date for another qualifying account of the individual;

(iv) 6 April in a tax year in which there is a breach of the deposit rule which is not remedied or cannot be remedied;

(v) 6 April in a tax year for which the individual has no general earnings within section 26(1) of ITEPA 2003.

(10) The account is not to be a qualifying account at all if—

(a) at any time on the qualifying date, the account is not an ordinary bank account held by and for the benefit of the individual (alone or jointly with others), or

(b) immediately before the qualifying date, the account has a credit balance of more than £10.

(11) The account is not to be a qualifying account at all if the qualifying date falls in a tax year—

(a) for which the individual has no general earnings within section 26(1) of ITEPA 2003, or

(b) in which there is a breach of the deposit rule which is not remedied or cannot be remedied.

(12) Subsection (9)(b)(iv) or (11)(b) (as relevant) is to be ignored if the breach occurs on or after a date falling within subsection (9)(b)(i) to (iii).

(13) If, apart from this subsection, an individual might have nominated two or more accounts for which the qualifying date would be the same, the individual may nominate only one of those accounts.

(14) If, apart from this subsection, an account would be a qualifying account of two or more individuals at any time, it is not to be a qualifying account of either or any of them at that time or any other time.

(15) For the purposes of this section an account is an “ordinary bank account” if it is a cash account in a bank (whether a current or savings account) where sums standing to the credit of the account from time to time represent a debt owed by the bank to the account-holder.

809RC

(1) There is a breach of the deposit rule if a prohibited sum is paid into the account on or after the qualifying date.

(2) A breach of the deposit rule is remedied if, within 30 days beginning with the day on which the individual became or ought reasonably to have become aware of the payment of the prohibited sum, the required amount is transferred out of the account by way of a single one-off transfer.

(3) “The required amount” is an amount equal to—

(a) the prohibited sum, plus

(b) all the other prohibited sums (if any) that have been paid into the account since that sum was paid in.

(4) If there are 3 breaches of the deposit rule in any 12 month period, subsection (2) does not apply to the third breach and, accordingly, the third breach cannot be remedied.

(5) The payment of a prohibited sum (“the later prohibited sum”) into the account does not result in a breach of the deposit rule if—

(a) a breach resulting from an earlier payment of a prohibited sum into the account is remedied, and

(b) the later prohibited sum is represented by the required amount in relation to that breach.

(6) A “prohibited sum” is anything other than a sum that is, or derives wholly (whether directly or indirectly) from, any of the following kinds of income or capital—

(a) general earnings of the individual from an employment for a tax year which is a relevant tax year in relation to the employment,

(b) general earnings of the individual from an employment which consist of money and are paid in a tax year which is a relevant tax year in relation to the employment,

(c) an amount of specific employment income which, by virtue of Part 6, 7 or 7A of ITEPA 2003 or any other enactment, counts as employment income of the individual in respect of an employment for a tax year which is a relevant tax year in relation to the employment,

(d) interest on the account, or

(e) consideration for the disposal of employment-related securities or employment-related securities options in the circumstances described in subsection (7).

(7) The circumstances are—

(a) the securities or options were acquired pursuant to a right or opportunity available by reason of an employment of the individual,

(b) the disposal is or occurs in conjunction with, or as soon as reasonably practicable after, a relevant event involving those securities or options, and

(8) For the purposes of subsection (7) each of the following is a “relevant event”—

(a) the acquisition mentioned in subsection (7)(a), and

(b) any event on the occurrence of which an amount (if positive) counts as employment income by virtue of Part 7 of ITEPA 2003 or would do so but for—

(i) section 421E or 474 of that Act (exclusions: residence etc), or

(ii) an election under section 430 or 431 of that Act.

(9) For the purposes of this section a tax year is a “relevant” tax year in relation to an employment if—

(a) the individual has general earnings from the employment for the tax year,

(b) those earnings include both general earnings within section 15(1) of ITEPA 2003 (“section 15(1) earnings”) and general earnings within section 26(1) of that Act (“section 26(1) earnings”),

(c) at least some of the section 15(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 15(1) earnings, are paid into the account in the tax year, and

(d) at least some of the section 26(1) earnings, or sums deriving (wholly or in part, and directly or indirectly) from at least some of the section 26(1) earnings, are also paid into the account in the tax year.

(10) For the purposes of this section—

(a) “employment-related securities” has the meaning given in section 421B(8) of ITEPA 2003, and

(b) “employment-related securities options” has the meaning given in section 471(5) of that Act.

809RD

(1) This section applies if the required amount in relation to a breach of the deposit rule was transferred out of the account in accordance with section 809RC(2).

(2) Sections 809Q and 809R have effect as if—

(a) the intervening transactions had never taken place, and

(b) each prohibited sum represented by the required amount had instead been transferred directly (at the time that sum was paid into the qualifying account) into the account or other property into which the required amount was transferred by virtue of the single one-off transfer.

(3) Each of the following is an “intervening transaction”—

(a) each payment into the qualifying account of a prohibited sum represented by the required amount, and

(b) the single one-off transfer out of the qualifying account.

(4) If it is supposed under step 1 or 2 of section 809RA(2) that a single transfer had been made in the intervening period, re-apply section 809Q or 809R in relation to that transfer taking account of subsection (2).

(5) “The intervening period” is the period—

(a) beginning with the day on which the breach occurred, and

(b) ending with the day on which the single one-off transfer was made in accordance with section 809RC(2).

(6) If more than one transfer of a sum equal to the required amount was transferred out of the qualifying account within the 30-day grace period, the first of those transfers is assumed to be the single one-off transfer.

(7) “The 30-day grace period” is the period of 30 days mentioned in section 809RC(2).

809UA

(1) Subsection (2) applies to income or chargeable gains of an individual if—

(a) the income or gains would (but for subsection (2)) be regarded as remitted to the United Kingdom by virtue of the bringing of money to the United Kingdom,

(b) the money is brought to the United Kingdom by way of direct payments to the Commissioners on account of income tax,

(c) the tax year (“tax year 2”) in respect of which the payments on account are made is a tax year for which section 809H (remittance basis charge for long-term UK resident) does not apply as respects the individual, and

(d) that section applied as respects the individual for the previous tax year (“tax year 1”).

(2) The relevant amount of income or chargeable gains is to be treated as not remitted to the United Kingdom if money equal to the relevant amount is taken offshore by—

(a) the 15 March following the end of tax year 2, or

(b) such later date as the Commissioners may allow on a claim made by the individual.

(3) A claim under subsection (2)(b)—

(a) may be made only if the individual has made and delivered a return under section 8 of TMA 1970 for tax year 2 and reasonably expects to receive from the Commissioners a repayment of tax paid in respect of that tax year, and

(b) may be made no later than the 5 April following the end of tax year 2.

(4) Money that is taken offshore in accordance with subsection (2) is to be treated as having the same composition of kinds of income and capital as the money used to make the payments on account.

(5) In this section “the relevant amount” means the lower of the following—

(a) the amount brought to the United Kingdom as mentioned in subsection (1)(b), and

(b) the applicable amount (as defined in section 809H) for tax year 1.

809YF

(1) Section 809Y(1) does not apply to property if—

(a) it ceases to be exempt property because a compensation payment in respect of it is released, and

(b) conditions A and B are met.

(2) Condition A is that the whole of the compensation payment is taken offshore or used by a relevant person to make a qualifying investment within the period of 45 days beginning with the day on which the payment is released.

(3) Condition B is that, if Condition A is satisfied wholly or in part by using the compensation payment to make a qualifying investment, the remittance basis user makes a claim for relief under subsection (4) on or before the first anniversary of the 31 January following the tax year in which the payment is released.

(4) If section 809Y(1) does not apply to property by virtue of subsection (1), the income and gains treated under section 809X as not remitted to the United Kingdom continue to be treated after the compensation payment is released as not remitted to the United Kingdom even though the property has ceased to be exempt property.

(5) But nothing in subsection (4) prevents anything done in relation to any part of the compensation payment after that payment is taken offshore (or used to make a qualifying investment) from counting as a remittance of the underlying income or gains to the United Kingdom at the time when the thing is done.

(6) Treat the compensation payment as containing or deriving from an amount of each kind of income and gain mentioned in section 809Q(4)(a) to (h) equal to the amount of that kind of income or gain contained in the exempt property when it was brought to, or received or used in, the United Kingdom (as mentioned in section 809X).

(7) Where Condition A was met by using the compensation payment to make a qualifying investment—

(a) the business investment provisions apply to the income and gains that continue, by virtue of subsection (4), to be treated as not remitted as they apply to income or gains that are treated under section 809VA(2) as not remitted, and

(b) if the investment was made using more than just the compensation payment, treat only the part of the investment made using the payment as “the investment” for the purposes of those provisions.

Section 543(1)(i) and (j): investments and loans

The gross assets requirement

812A

(1) This section applies if—

(a) an individual is temporarily non-resident,

(b) the individual's liability to income tax for a tax year is limited under section 811,

(d) the individual's income for that tax year includes relevant investment income.

(2) The total income (see Step 1 of the calculation in section 23) on which the individual is charged to income tax for the year of return is to be increased by an amount equal to the amount of that relevant investment income.

(3) But the notional UK tax on that relevant investment income is to be allowed as a credit against the individual's liability to income tax for the year of return under Step 6 of the calculation in section 23.

(4) Income is “relevant investment income” if—

(a) it is chargeable under Chapter 3 or 5 of Part 4 of ITTOIA 2005 (dividends etc from UK resident companies and stock dividends from UK resident companies),

(b) the distributing company is a close company, and

(i) a material participator in that company, or

(ii) an associate of a material participator in the company.

(5) But income within subsection (4) in the form of a cash or stock dividend is not “relevant investment income” to the extent that the dividend is paid, or the share capital is issued, in respect of post-departure trade profits.

(6) “Post-departure trade profits” are—

(a) trade profits of the distributing company arising in an accounting period that begins after the start of the temporary period of non-residence, and

(b) so much of any trade profits of the distributing company arising in an accounting period that straddles the start of that temporary period as is attributable (on a just and reasonable basis) to a time after the start of that temporary period.

(7) The “notional UK tax” on relevant investment income is—

(a) the total of any sums in respect of that income that were included within amount A in determining the limit under section 811, less

(b) any credit for foreign tax paid in respect of that income that was allowed under Chapter 2 of Part 2 of TIOPA 2010 against the individual's liability to income tax for the non-resident year.

(8) The following matters are to be determined on a just and reasonable basis—

(a) the extent to which a dividend is paid, or share capital is issued, in respect of post-departure trade profits, and

(b) the extent to which a sum included within amount A is a sum in respect of relevant investment income.

(9) Nothing in any double taxation arrangements is to be read as preventing the individual from being chargeable to income tax by virtue of this section (or as preventing a charge to that tax from arising as a result).

(10) Part 4 of Schedule 45 to FA 2013 (statutory residence test: anti-avoidance) explains—

(a) when an individual is to be regarded as “temporarily non-resident”, and

(b) what “the temporary period of non-residence”, “the year of departure” and “the period of return” mean.

(11) In this section—

“associate” and “participator” have the same meanings as in Part 10 of CTA 2010 (see sections 448 and 454);

“the distributing company” means the UK resident company mentioned in section 383(1) or, as the case may be, 410(1) of ITTOIA 2005;

“material participator” means a participator who has a material interest in the company, as defined in section 457 of CTA 2010;

“relevant time” means—any time in the year of departure or, if the year of departure is a split year as respects the individual, the UK part of that year, orany time in one or more of the 3 tax years preceding that year;

“trade profits of the distributing company” means the profits of any trade carried on by the distributing company, as calculated in accordance with Part 3 of CTA 2009 (trading income);

“year of return” means the tax year consisting of or including the period of return.

Repayment of loan capital during 5 year period

Regulations under Chapter

Film partnerships

Deduction from earnings not to exceed commercial rent

Receipt of consideration in connection with relevant company distribution (circumstance D)

Market value of qualifying investments

975A

(1) Subsection (2) applies if a person makes a payment of interest of which the whole or part is in the form of goods or services or a voucher.

(2) The person must provide the recipient of the payment with a statement showing—

(a) the gross amount of the payment,

(b) the amount of the sum deducted under any provision of Chapters 2 to 7 or under section 919 or 928 (if any),

(d) the date on which the payment was made.

(3) The amounts mentioned in paragraphs (a) to (c) of subsection (2) are to be calculated in accordance with section 370A of ITTOIA 2005.

(4) Subsection (5) applies where a person—

(a) is treated as making a payment of an amount of interest (“the deemed interest”) by virtue of section 413 of CTA 2009 or section 380 of ITTOIA 2005 (funding bonds), and

(b) is under a duty under section 939(2) to retain funding bonds equal in value to income tax on the deemed interest at the basic rate.

(5) The person must provide the recipient of the funding bonds with a statement showing—

(a) the gross amount of the deemed interest,

(b) the sum representing income tax which the person is treated under section 939(3) as having deducted by retaining funding bonds,

(d) the date on which the deemed interest is treated as being paid.

(6) The amount of the deemed interest is to be calculated in accordance with section 413 of CTA 2009 or section 380 of ITTOIA 2005, as the case may require.

(7) A statement under this section must be provided in writing to the recipient on the date that the payment is made or (as the case may be) the date that the deemed interest is treated as being paid.

(8) The duty to comply with this section is enforceable by the recipient.

(9) In this section—

(a) references to a voucher are to a voucher, stamp or similar document or token which is capable of being exchanged for money, goods or services, and

(b) “funding bonds” has the same meaning as in Chapter 12 (see section 939(6)).

Calculation of trustees' tax pool

Exemption from charges under provisions to which section 1016 applies

Carrying forward parts of payments

Commercial rent

Receipt of consideration representing company's assets, future receipts or trading stock (circumstance C)

Meaning of “charitable trade”

Long funding finance leases

6A

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

11A

(1A) Income tax is charged at Scottish rates on the non-savings income of a Scottish taxpayer.

(4) For the purposes of this section, “non-savings income” means income which is not savings income.

(5) This section is subject to—

section 13 (income charged at the dividend ordinary, upper and additional rates: individuals), and

any provisions of the Income Tax Acts (apart from section 10) which provide for income of an individual to be charged at different rates of income tax in some circumstances.

(6) Section 16 has effect for determining which part of a Scottish taxpayer’s income consists of savings income.

CHAPTER 3A — Transferable tax allowance for married couples and civil partners

Introduction

55A

(1) This Chapter contains provisions about the entitlement of a spouse or civil partner to a tax reduction in a case where the other party to the marriage or civil partnership has elected for a reduced personal allowance.

(2) A tax reduction under this Chapter is given effect at Step 6 of the calculation in section 23.

(3) See also—

(a) section 809G, in relation to tax years before 2025-26 where a claim for the remittance basis to apply is made, and

(b) section 845E of ITTIOA 2005, in relation to tax years from 2025-26 where a foreign income claim, a foreign employment election or a foreign gain claim is made.

Those sections provide that where an individual makes such a claim or election for a tax year, the individual is not entitled to any tax reduction under this Chapter for that tax year.

Tax reduction

55B

(1) An individual is entitled to a tax reduction for a tax year of the appropriate percentage of the transferable amount if the conditions in subsection (2) are met.

(2) The conditions are that—

(a) the individual is the gaining party (see section 55C(1)(a)) in the case of an election under section 55C which is in force for the tax year,

(b) the individual is not, for the tax year, liable to tax at a rate other than the basic rate, the default basic rate, the savings basic rate, the dividend nil rate, the Scottish basic rate, a Scottish rate below the Scottish basic rate, the Scottish intermediate rate, the Welsh basic rate, the dividend ordinary rate , the savings nil rate or the starting rate for savings,

(ba) if for the tax year the individual is liable to tax at the dividend nil rate, the individual would for that year neither be liable to tax at the dividend upper rate, nor be liable to tax at the dividend additional rate, if section 13A (dividend nil rate) were omitted,

(d) neither the individual nor the relinquishing spouse or civil partner makes a claim for the tax year under section 45 (married couple's allowance: marriages before 5 December 2005) or section 46 (married couple's allowance: marriages and civil partnerships on or after 5 December 2005).

(3) “The appropriate percentage” is the basic rate or default basic rate or, in the case of a Scottish taxpayer or Welsh taxpayer, the Scottish basic rate or Welsh basic rate at which the individual would be charged to income tax for the tax year to which the reduction relates.

(4) “The transferable amount”—

(a) for the tax year 2015-16, is £1,060, and

(b) for the tax year 2016-17 and subsequent tax years, is 10% of the amount of personal allowance specified in section 35(1) for the tax year to which the reduction relates.

(5) If the transferable amount calculated in accordance with subsection (4)(b) would otherwise not be a multiple of £10, it is to be rounded up to the nearest amount which is a multiple of £10.

(5A) In this section “the relinquishing spouse or civil partner”, in relation to an election under section 55C, means the individual mentioned in section 55C(1)(a) by whom, or by whose personal representatives, the election is made.

(6) If an individual is entitled to a tax reduction under subsection (1) by reference to an election under section 55C , the personal allowance to which the relinquishing spouse or civil partner is entitled under section 35 ... is reduced for the tax year by the transferable amount.

(7) If an individual who is entitled to a tax reduction for a tax year under subsection (1) dies during that tax year, subsection (6) is to be ignored (but this does not affect the individual's entitlement to the tax reduction).

Election to reduce personal allowance

55C

(1) An individual may make an election for the purposes of section 55B if—

(a) the individual is married to, or in a civil partnership with, the same person (“the gaining party”) —

(i) for the whole or part of the tax year concerned, and

(ii) when the election is made or, where the election is made after the death of one or each of them, when they were last both living,

(b) the individual is entitled to a personal allowance under section 35 ... for that tax year,

(c) assuming the individual's personal allowance was reduced as set out in section 55B(6), the individual would not for that year be liable to tax at a rate other than the basic rate, the default basic rate, the savings basic rate, the dividend nil rate, the Scottish basic rate, a Scottish rate below the Scottish basic rate, the Scottish intermediate rate, the Welsh basic rate, the dividend ordinary rate , the savings nil rate or the starting rate for savings,

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