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

(3) For the purposes of subsection (1) “relevant disposal” means a disposal which (apart from subsection (1)) has the effect that the venture capital fund has disposed of more than 80% of the greatest amount invested at any one time in the company for the purposes of the fund.

(4) In this Chapter, “venture capital fund” means an investment scheme in relation to which the condition in subsection (5) is met.

(5) The condition is that when the scheme starts to invest it is reasonable to suppose that over the investing life of the scheme—

(a) at least two-thirds of the total value invested for the purposes of the scheme will be invested in venture capital investments, and

(b) at least two-thirds of the total value invested for the purposes of the scheme will be invested in investments which are held for 40 months or more.

(6) In determining whether subsection (5)(b) is met in relation to an investment scheme, apply the rule in subsection (1) to the scheme.

(7) In this section, “venture capital investment”, in relation to an investment scheme, means an investment in a trading company or the holding company of a trading group where—

(a) at the time the investment is made the company is unlisted and is likely to remain so,

(b) at least 75%of the total value of the investment is invested in—

(i) newly issued shares or

(ii) newly issued securities convertible into shares,

(i) to support its growth, or

(ii) for the development of new products or services,

and is not used directly or indirectly to acquire shares in the company which are not newly issued,

(d) if the investment is the first investment made in the company for the purposes of the scheme, the trading company or group has not carried on that trade for more than 7 years, and

(e) the scheme director condition is met.

(8) In this Chapter, the scheme director condition, in relation to an investment scheme and a company, is that—

(a) the scheme (or the scheme and one or more investment schemes acting together) are entitled to appoint a director (“the scheme director”) of—

(i) the company, or

(ii) a company which controls the company, and

(b) the scheme director is entitled to exercise rights within subsection (9).

(9) Those rights are rights which—

(a) are rights conferred under contractual arrangements—

(i) to which some or all of the investors in the company are parties, and

(ii) which it would be reasonable to suppose would not otherwise be capable of being exercised by the scheme director,

(b) relate to the conduct of the business and affairs of the company, and

(c) are at least equivalent to the rights which it is reasonable to suppose a prudent investor would have obtained on making an investment in the company at arm's length of the same size and nature as that held in the company for the purposes of the investment scheme.

(10) In determining whether the condition in subsection (2)(a) or (b) is met in relation to a venture capital fund, any share capital of a company which is held for the purposes of an associated investment scheme is to be regarded as held for the purposes of the venture capital fund.

809FZL

(1) Where a significant equity stake fund has a significant equity stake investment in a trading company or the holding company of a trading group—

(a) any investment made for the purposes of the fund in that company made after the time the significant equity stake investment was acquired is to be regarded as having been made at that time, and

(b) any disposal for the purposes of the fund of an investment in the company after that time is to be regarded as not being made until—

(i) a relevant disposal is made, or

(ii) the scheme director condition ceases to be met.

(2) In subsection (1)(b) “relevant disposal” means a disposal which (apart from subsection (1)) has the effect that the significant equity stake fund ceases to have a 15% interest in the company.

(3) In this Chapter, “significant equity stake fund” means an investment scheme—

(a) which is not a venture capital fund, and

(b) in relation to which the condition in subsection (4) is met.

(4) The condition is that when the scheme starts to invest it is reasonable to suppose that over the investing life of the scheme—

(a) more than 50% of the total value invested for the purposes of the scheme will be invested in investments which are significant equity stake investments, and

(b) more than 50% of that value will be invested in investments which are held for 40 months or more.

(5) In determining whether subsection (4)(b) is met in relation to an investment scheme, apply the rule in subsection (1) to the scheme.

(6) In this section, “significant equity stake investment”, in relation to an investment scheme, means an investment in a trading company or the holding company of a trading group where—

(a) at the time the investment is made, the company is unlisted and likely to remain so,

(b) by virtue of the investment (on its own or with other investments) the scheme has a 20% interest in the company, and

(7) For the purposes of this section, in determining whether a significant equity stake fund has an interest of a particular percentage in a company, any share capital of the company which is held for the purposes of an associated investment scheme is to be regarded as held for the purposes of the significant equity stake fund.

809FZM

(1) Where a controlling equity stake fund has a 25% interest in a trading company or the holding company of a trading group—

(a) any investment made for the purposes of the controlling equity stake fund in the company after the time the 25% interest was acquired is to be regarded as having been made at that time, and

(b) any disposal for the purposes of the controlling equity stake fund of an investment in the company after that time is to be regarded as not being made until a relevant disposal is made.

(2) In subsection (1)(b), “relevant disposal”, in relation to a company, means a disposal which (apart from subsection (1)) has the effect that the controlling equity stake fund ceases to have a 25% interest in the company.

(3) In this Chapter, “controlling equity stake fund” means an investment scheme—

(a) which is not a venture capital fund or significant equity stake fund, and

(b) in relation to which the condition in subsection (4) is met.

(4) The condition is that when the scheme starts to invest it is reasonable to suppose that, over the investing life of the scheme—

(a) more than 50% of the total value invested for the purposes of the scheme will be invested in investments which are controlling interests in trading companies or holding companies of trading groups, and

(b) more than 50% of the total value invested for the purposes of the scheme will be invested in investments which are held for 40 months or more.

(5) In determining whether subsection (4)(b) is met in relation to an investment scheme, apply the rule in subsection (1) to the scheme.

(6) For the purposes of this section, in determining whether a controlling equity stake fund has a controlling interest or an interest of a particular percentage in a company, any share capital of the company which is held for the purposes of an associated investment scheme is to be regarded as held for the purposes of the controlling equity stake fund.

809FZN

(1) Where a real estate fund has a major interest in any land—

(a) any investment made for the purposes of the fund in that land after the time the major interest was acquired is to be regarded as having been made at that time, and

(b) any disposal for the purposes of the fund of an investment in the land after that time is to be regarded as not being made until a relevant disposal is made.

(2) In subsection (1)(b) “relevant disposal” means a disposal which (apart from subsection (1)) has the effect that the real estate fund has disposed of more than 50% of the greatest amount invested at any one time in the land for the purposes of the real estate fund.

(3) Where a real estate fund has a major interest in any land (“the original land”) and subsequently acquires a major interest in any adjacent land—

(a) the acquisition is an investment in the original land for the purposes of subsection (1)(a), and

(b) after the acquisition, the adjacent land is to be regarded as part of the original land for the purposes of subsections (1) and (2).

(4) In this Chapter, “real estate fund” means an investment scheme—

(a) which is not a venture capital fund, significant equity stake fund or controlling equity stake fund, and

(b) in relation to which the condition in subsection (5) is met.

(5) The condition is that when the scheme starts to invest it is reasonable to suppose that over the investing life of the scheme—

(a) more than 50% of the total value invested for the purposes of the scheme will be invested in land, and

(b) more than 50% of the total value invested for the purposes of the scheme will be invested in investments which are held for 40 months or more.

(6) In determining whether subsection (5)(b) is met in relation to an investment scheme, apply the rule in subsection (1) to the scheme.

809FZO

(1) Section 809FZC(5) (disregard of intermediate holdings and holding structures) does not apply to an investment made for the purposes of a fund of funds in a collective investment scheme (and, accordingly, such an investment is regarded as an investment in the collective investment scheme itself).

(2) Subsection (1) does not apply in relation to a fund of funds in relation to a collective investment scheme if it is reasonable to suppose that the main purpose or one of the main purposes of the making of any investment in any collective investment scheme for the purposes of the fund of funds is to reduce the proportion of carried interest arising to any person which is income-based carried interest.

(3) Where by virtue of subsection (1) a fund of funds has a significant investment in a collective investment scheme (“the underlying scheme”)—

(a) any qualifying investment made for the purposes of the fund in the underlying scheme after the time the significant investment was acquired is to be regarded as having been made at that time, and

(b) any disposal for the purposes of the fund of a qualifying investment in the underlying scheme after that time is to be regarded as not being made until a relevant disposal is made.

(4) In subsection (3)(b) “relevant disposal”, in relation to an underlying scheme, means a disposal which (apart from subsection (3)) has the effect that—

(a) the fund of funds has (by virtue of disposals of its interest in the underlying scheme) disposed of at least 50% of the greatest amount invested for its purposes at any one time in the underlying scheme, or

(b) the fund of fund's investment in the underlying scheme is worth less than whichever is the greater of—

(i) £1 million, or

(ii) 5% of the total value of the investments made before the disposal for the purposes of the fund of funds in the underlying scheme.

(5) In this Chapter, “fund of funds” means an investment scheme in relation to which the condition in subsection (6) is met.

(6) The condition is that when the scheme starts to invest it is reasonable to suppose that over the investing life of the scheme—

(a) substantially all of the total value invested for the purposes of the scheme will be invested in collective investment schemes of which the scheme holds less than 50% by value,

(b) more than 50% of the total value invested for the purposes of the scheme will be invested in investments which are held for 40 months or more, and

(7) In determining whether subsection (6)(b) is met in relation to an investment scheme, apply the rule in subsection (3) to the scheme.

(8) In this section, “significant investment”, in relation to a collective investment scheme, means—

(a) an investment of a least £1 million in the scheme, or

(b) an investment of at least 5% of the total amounts raised or to be raised from external investors in the scheme.

(9) In this section, “qualifying investment” means an investment made for the purposes of an investment scheme in a collective investment scheme (“the underlying scheme”) where—

(a) the investment is held on the same terms as other investments made by external investors in the underlying scheme,

(b) the fund of funds, together with any connected funds, does not hold more than 30% by value of the underlying scheme,

(d) no person providing investment management services to the underlying scheme provides investment management services to the fund of funds, and

(e) it is reasonable to suppose that the investment in the underlying scheme is not part of arrangements the main purpose or one of the main purposes of which is to reward any person involved in providing investment management services to the underlying scheme or a scheme connected with that underlying scheme.

809FZP

(1) Section 809FZC(5) (disregard of intermediate holdings and holding structures) does not apply to investments acquired for the purposes of a secondary fund in a collective investment scheme (and, accordingly, such an investment is regarded as an investment in the collective investment scheme itself).

(2) Subsection (1) does not apply in relation to a secondary fund in relation to a collective investment scheme if it is reasonable to suppose that the main purpose or one of the main purposes of the making of any investment in any collective investment scheme for the purposes of the secondary fund is to reduce the proportion of carried interest arising to any person which is income-based carried interest.

(3) Where by virtue of subsection (1) a secondary fund has a significant investment in a collective investment scheme (“the underlying scheme”)—

(a) any qualifying investment acquired for the purposes of the fund in the underlying scheme after the time when the significant investment is acquired is to be regarded as having been made at that time, and

(b) any disposal for the purposes of the fund of a qualifying investment in the underlying scheme after that time is to be regarded as not being made until a relevant disposal is made.

(4) In subsection (3)(b) “relevant disposal” means a disposal which (apart from subsection (3)) has the effect that—

(a) the secondary fund has (by virtue of disposals of its interest in the underlying scheme) disposed of at least 50% of the greatest amount invested for its purposes at any one time in the underlying scheme, or

(b) the secondary fund's investment in the underlying scheme is worth less than whichever is the greater of—

(i) £1 million, or

(ii) 5% of the total value of the investments held immediately before the disposal for the purposes of the secondary fund in the underlying scheme.

(5) In this Chapter, “secondary fund” means an investment scheme in relation to which the condition in subsection (6) is met.

(6) The condition is that when the scheme starts to invest it is reasonable to suppose that over the investing life of the scheme—

(a) substantially all of the total value invested for the purposes of the scheme will be in the acquisition of investments in, or the acquisition of portfolios of investments from, unconnected collective investment schemes,

(b) more than 50% of the total value invested for the purposes of the scheme will be invested in investments which are held for 40 months or more, and

(7) In determining whether subsection (6)(b) is met in relation to an investment scheme, apply the rule in subsection (3) to the scheme.

(8) In this section, “significant interest”, in relation to a collective investment scheme, means—

(a) an investment of at least £1 million in the scheme, or

(b) an investment of at least 5% of the total amounts raised or to be raised from external investors in the scheme.

(9) In this section, “qualifying investment” means an investment in a collective investment scheme (“the underlying scheme”) acquired for the purposes of a secondary fund where—

(a) the investment acquired was originally made on the same terms as investments in the underlying scheme made by external investors,

(b) the terms on which the investment was acquired or investments made in the underlying scheme were made by external investors have not significantly changed since the investment was acquired,

(c) the secondary fund, together with any connected funds, does not hold more than 30% by value of the underlying scheme,

(d) no person providing investment management services to the underlying scheme provides investment management services to the secondary fund, and

(e) it is reasonable to suppose that the investment in the underlying scheme is not part of arrangements the main purpose or one of the main purposes of which is to reward any person involved in providing investment management services to the underlying scheme or a scheme connected with that underlying scheme.

Direct lending funds

809FZQ

(1) Carried interest arising from an investment scheme which is a direct lending fund is income-based carried interest in its entirety.

Subsections (2) to (4) apply for the purposes of this Chapter.

(2) A direct lending fund is an investment scheme—

(a) which is not a venture capital fund, significant equity stake fund, controlling equity stake fund or real estate fund, and

(b) in relation to which it is reasonable to suppose that, when the scheme ceases to invest, a majority of the investments made for the purposes of the scheme (calculated by reference to value invested) will have been direct loans made by the scheme.

(3) An investment scheme makes a direct loan if for the purposes of the scheme money is advanced at interest or for any other return determined by reference to the time value of money.

(4) The acquisition of a direct loan is to be regarded as the making of a direct loan if the loan is acquired within the period of 120 days beginning with the day on which the money is first advanced.

809FZR

(1) Section 809FZQ does not apply to carried interest arising from a direct lending fund if—

(a) the fund is a limited partnership,

(b) the carried interest is a sum falling within section 809EZD(2) or (3), and

(c) it is reasonable to suppose that, when investments cease to be made for the purposes of the fund, at least 75% of the direct loans made by the fund (calculated by reference to value advanced) will have been qualifying loans.

(2) In this section “qualifying loan” means a direct loan made by an investment scheme where—

(a) the borrower is not connected with the investment scheme,

(b) the money is advanced under a genuine commercial loan agreement negotiated at arm's length,

(d) maturity is fixed,

(e) the scheme has the positive intention and ability to hold the loan to maturity, and

(f) the relevant term of the loan is at least four years.

(3) In this section “relevant term”, in relation to a loan, means the period which—

(a) begins with the time when the money is advanced, and

(b) ends with the time by which, under the terms of the loan, at least 75% of the principal due under the loan must be repaid.

(4) For the purposes of determining the average holding period of a scheme, where—

(a) a qualifying loan made by an investment scheme is repaid by the borrower to any extent before the end of 40 months from the time the loan is made, and

(b) it is reasonable to suppose that the borrower's decision to repay was not affected by considerations relating to the application of this Chapter,

the loan is, to the extent it is repaid by the borrower before the end of 40 months from the time it is made, to be treated as held for 40 months.

(5) In determining for the purposes of subsection (1)(b) whether a sum falls within section 809EZD(2) or (3), read section 809EZD(4)(b) as if the reference to 6% were to 4%.

(6) Section 809FZB applies to carried interest to which, by virtue of subsection (1), section 809FZQ does not apply.

Conditionally exempt carried interest

809FZS

(1) Carried interest which—

(a) arises to an individual from an investment scheme, and

(b) is conditionally exempt from income tax,

is to be treated as if it were not income-based carried interest to any extent.

(2) Carried interest is conditionally exempt from income tax if Conditions A to D are met.

(3) Condition A is that the carried interest arises to the individual in the period of—

(a) four years beginning with the day on which the scheme starts to invest, or

(b) ten years beginning with that day if the carried interest is calculated on the realisation model.

(4) Condition B is that the carried interest would, apart from this section, be income-based carried interest to any extent.

(5) Condition C is that it is reasonable to suppose that, were the carried interest to arise to the individual at the relevant time (but by reference to the same relevant investments), it would not be income-based carried interest to any extent.

(6) The “relevant time” is whichever is the earliest of—

(a) the time when it is reasonable to suppose that the investment scheme will be wound up;

(b) the end of the period of four years beginning with the time when it is reasonable to suppose that the scheme will cease to invest;

(i) four years beginning with the day on which the sum of carried interest arises to the individual, or

(ii) ten years beginning with that day if the carried interest was calculated on the realisation model;

(d) the end of the period of four years beginning with the end of the period by reference to which the amount of the carried interest was determined.

(7) Subsection (5) does not affect what would otherwise be the time at which an investment is disposed of for the purposes of this Chapter.

(8) Condition D is that the individual makes a claim under this section for the carried interest to be conditionally exempt from income tax.

809FZT

(1) Carried interest which is conditionally exempt from income tax ceases to be conditionally exempt from income tax at whichever is the earliest of—

(a) the time when the investment scheme is wound up;

(b) the end of the period of four years beginning with the time the scheme ceases to invest;

(i) four years beginning with the day on which the sum of carried interest arises to the individual, or

(ii) ten years beginning with that day if the carried interest was calculated on the realisation model;

(d) the end of the period of four years beginning with the end of the period by reference to which the amount of the carried interest is determined;

(e) the time at which Condition C in section 809FZS(5) ceases to be met.

(2) Carried interest which ceases to be conditionally exempt from income tax is to be treated as having been income-based carried interest at the time it arose to the individual if or to the extent that, had it arisen to the individual at the time it ceased to be conditionally exempt (but in relation to the same relevant investments) it would have been income-based carried interest.

(3) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (2).

(4) Any amount paid by way of capital gains tax in respect of carried interest which is conditionally exempt from income tax is to be treated as if it had been paid in respect of any income tax liability arising under subsection (2).

Supplementary

809FZU

This Chapter does not apply in relation to carried interest arising to an individual in respect of employment-related securities as defined by section 421B(8) of ITEPA 2003.

809FZV

(1) This section applies where—

(a) an investment scheme acquires a debt,

(b) the debt is to any extent uncollectable or otherwise impaired,

(i) owned by a company which is the debtor in respect of the debt, or

(ii) subject to a security interest in respect of the debt, and

(d) the fund acquires ownership of the assets within three months of the acquisition of the debt.

(2) For the purposes of this Chapter—

(a) the debt and the assets are to be treated as a single investment, and

(b) the value invested in that single investment is the amount paid for the debt.

(3) In this section “security interest” means an interest or right (other than a rentcharge) held for the purpose of securing the payment of money or the performance of any obligation.

809FZW

(1) For the purposes mentioned in subsection (2), no regard is to be had to any arrangements the main purpose of which, or one of the main purposes of which, is to reduce the proportion of carried interest which is income-based carried interest.

(2) The purposes referred to in subsection (1) are—

(a) determining the average holding period, or

(b) determining whether an investment scheme is a venture capital fund, significant equity stake fund, controlling equity stake fund, real estate fund, fund of funds or secondary fund.

(3) In determining to what extent carried interest is income-based carried interest, no regard is to be had to any arrangements the main purpose, or one of the main purposes, of which is to secure that section 809EZA(1) (charge to income tax) does not apply in relation to some or all of the carried interest.

809FZX

(1) The Treasury may by regulations make—

(a) provision relating to the calculation of the average holding period in some or all cases;

(b) provision repealing, or restricting the application of, section 809FZU (employment-related securities).

(2) The provision referred to in subsection (1)(a) includes in particular—

(a) provision for a method of calculating that period which is different from that in section 809FZC;

(b) provision as to what is and is not to be regarded as an investment;

(d) anti-avoidance provision.

(3) Regulations under this section may—

(a) amend this Chapter;

(b) make different provision for different purposes;

809FZY

(1) For the purposes of this Chapter, in determining what it is reasonable to suppose in relation to an investment scheme, regard is to be had to all the circumstances.

(2) Those circumstances include in particular any prospectus or other document which—

(a) is made available to external investors in the investment scheme, and

(b) on which external investors may reasonably be supposed to have relied or been able to rely.

Interpretation

809FZZ

(1) In this Chapter—

“5% interest”, “15% interest”, “20% interest”, “25% interest” and “40% interest” are to be construed in accordance with subsection (4);

“act together”: two or more investment schemes act together in relation to a company if—they enter into contractual arrangements (with or without other persons) in relation to the conduct of the company's affairs,the arrangements are negotiated on arm's length terms, andthe investment schemes act together to secure greater control or influence over the company's affairs than they would be able to secure individually;

“alternative finance arrangements” has the same meaning as in Part 6 of CTA 2009 (see section 501(2) of that Act);

“arrangements” has the same meaning as in Chapter 5E (see section 809EZE);

“associated”: two (or more) investment schemes are “associated if—the same or substantially the same individuals provide investment management services to both schemes;the investment schemes have the same or substantially the same investments, andthe schemes act together in relation to all or substantially all of the investments they acquire;

“carried interest” has the same meaning as in section 809EZB (see sections 809EZC and 809EZD);

“collective investment scheme” has the same meaning as in Chapter 5E (see section 809EZE);

“connected” and “unconnected” are to be construed in accordance with subsections (6) and (7);

“contract for differences” has the same meaning as in Part 7 of CTA 2009 (see section 582 of that Act);

“controlling equity stake fund” has the meaning given in section 809FZM;

“controlling interest” has the meaning given in subsection (3);

“derivative contract” has the same meaning as in Part 7 of CTA 2009 (but see below);

“designated” has the same meaning as for accounting purposes;

“direct lending fund” and “direct loan” have the meanings given in section 809FZQ;

“exchange gain or loss” is to be construed in accordance with section 475 of CTA 2009;

“external investor” has the same meaning as in Chapter 5E (see section 809EZE);

“fund of funds” has the meaning given in section 809FZO;

“future” has the same meaning as in Part 7 of CTA 2009 (see section 581 of that Act);

“interest rate contract” means—a derivative contract whose underlying subject-matter is, or includes, interest rates, ora swap contract in which payments fall to be made by reference to a rate of interest;

“investing life” is to be construed in accordance with subsection (2);

“investment” does not include—cash awaiting investment, orcash representing the proceeds of the disposal of an investment, where the cash is to be distributed as soon as reasonably practicable to investors in the scheme;

“investment scheme” has the same meaning as in Chapter 5E (see section 809EZA(6));

“limited partnership” means—a limited partnership registered under the Limited Partnerships Act 1907,a limited liability partnership formed under the Limited Liability Partnerships Act 2000 or the Limited Liability Partnerships Act (Northern Ireland) 2002 (c.12 (N.I.)), ora firm or entity of a similar character to any of those mentioned in paragraph (a) or (b) formed under the law of a country or territory outside the United Kingdom;

“loan relationship” has the meaning given by section 302 of CTA 2009 (but see below);

“major interest”, in relation to land, has the meaning given by section 96 of the Value Added Tax Act 1994;

“option” has the same meaning as in Part 7 of CTA 2009, disregarding section 580(2) of that Act;

“real estate fund” has the meaning given by section 809FZN;

“realisation model”: a sum of carried interest is calculated on the “realisation model” if it falls within section 809EZD(2) or (3) (disregarding section 809EZD(2)(b) and (3)(b));

“scheme director condition” has the meaning given by section 809FZK(8) and (9);

“secondary fund” has the meaning given by section 809FZP;

“significant equity stake fund” has the meaning given by section 809FZL;

“sum” has the same meaning as in Chapter 5E (see section 809EZB(3));

“trading company” and “trading group” have the meanings given by paragraphs 20 and 21 of Schedule 7AC to TCGA 1992;

“underlying subject matter” has the same meaning as in Part 7 of CTA 2009;

“unlisted”: a company is unlisted if—no shares of any class issued by the company are listed on any stock exchange, andthere are no other trading arrangements in place in respect of shares of any class issued by the company;

“venture capital fund” has the meaning given by section 809FZK.

(2) In this Chapter—

(a) references to when a scheme starts or ceases to invest are to the time when investments start or cease to be made for the purposes of the scheme, and

(b) references to the investing life of the scheme are to the time between when a scheme starts and ceases to invest.

(3) For the purposes of this Chapter, an investment scheme has a controlling interest in a company if share capital of the company is held for the purposes of the scheme which—

(a) amounts to more than 50% of the ordinary share capital of the company, and

(b) carries an entitlement to more than 50% of—

(i) voting rights in the company,

(ii) profits available for distribution to shareholders, and

(iii) assets of the company available for distribution to shareholders in a winding-up.

(4) For the purposes of this Chapter, an investment scheme has an interest of a particular percentage in a company (for example, a 40% interest) if share capital of the company is held for the purposes of the scheme which—

(a) amounts to at least that percentage of the ordinary share capital of the company, and

(b) carries an entitlement to at least that percentage of—

(i) voting rights in the company,

(ii) profits available for distribution to shareholders, and

(iii) assets of the company available for distribution to shareholders in a winding-up.

(5) For the purposes of subsections (3) and (4) any share capital held by a company controlled by an investment scheme is to be regarded as held for the purposes of the investment scheme.

(6) For the purposes of this Chapter, an investment scheme (A) is connected with another investment scheme or person (B) if—

(a) A directly or indirectly has control of B, or

(b) the same person, directly or indirectly, has control of A and B.

(7) For the purposes of subsection (6) “control”—

(a) in the case of control of a company, is to be read in accordance with sections 450 and 451 of CTA 2010;

(b) in the case of control of a partnership, has the meaning given in section 995(3);

(c) in the case of control of an investment scheme which is not a company or partnership, or of any other person which is not a company or partnership, means the ability to secure that the affairs of that scheme or other person are conducted in accordance with one's wishes.

(8) For the purposes of the definition of “derivative contract”, read Part 7 of CTA 2009 as if—

(a) references to a company were references to an investment scheme, and

(b) references to a contract of a company were references to a contract for the purposes of an investment scheme.

(9) For the purposes of the definition of “loan relationship”, read Part 5 of CTA 2009 as if—

(a) references to a company were references to an investment scheme, and

(b) references to a loan relationship of a company were references to a loan relationship for the purposes of an investment scheme.

809ZFA

(1) This section applies where under any arrangements—

(a) a person within the charge to income tax (P) agrees to take over obligations of another person (Q) as lessee under a lease of plant or machinery,

(b) as a result of that agreement P, or a person connected with P, becomes entitled to income deductions (whether deductions in calculating income or from total profits), and

(2) The payment is treated for the purposes of income tax as income received by P in the tax year in which P takes over the obligations mentioned in subsection (1)(a).

(3) Subsection (2) does not apply if and to the extent that the consideration is (apart from this section)—

(a) charged to tax on P, or a person connected with P, as an amount of income,

(b) brought into account in calculating for tax purposes any income of P or a person connected with P, or

(c) brought into account for the purposes of any provision of CAA 2001 as a disposal receipt, or proceeds from a balancing event or disposal event, of P or a person connected with P.

(4) It does not matter how P takes over the obligations of Q (whether by assignment, novation, variation or replacement of the contract, by operation of law or otherwise).

(5) In this section—

“arrangements” include any scheme, arrangement, understanding, transaction or series of transactions (whether or not legally enforceable);

“lease of plant or machinery” means any kind of agreement or arrangement under which sums are paid for the use of, or otherwise in respect of, plant or machinery;

“payment” includes the provision of any benefit, the assumption of any liability or the transfer of money or money's worth (and “payable” is to be construed accordingly),;

“payment by way of consideration” includes a payment made, directly or indirectly, in consequence of or otherwise in connection with, the agreement mentioned in subsection (1)(a), where it is reasonable to assume the agreement would not have been made unless the arrangements included provision for the payment.

(6) Any priority rule (other than section 212(1) of FA 2013 (general anti-abuse rule to have priority over other rules)) has effect subject to this section, despite the terms of the priority rule.

(7) For that purpose “priority rule” is a rule (however expressed) to the effect that particular provisions have effect to the exclusion of, or otherwise in priority to, anything else.

(8) An example of a priority rule is section 6(1) of TIOPA 2010 (effect to be given to double taxation arrangements despite anything in any enactment).

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

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

Meaning of “protected foreign-source income” in section 721

Meaning of “remitted to the United Kingdom”

Sections 809L and 809P: transfers from mixed funds

Tax avoidance

917A

(1) This section applies if and to the extent that—

(a) a person (“the payer”) makes an intellectual property royalty payment,

(b) the payment is received by a person (“the payee”) who is connected with the payer, and

(2) Any duty under Chapter 6 or 7 to deduct a sum representing income tax at any rate applies without regard to any double taxation arrangements.

(3) Any income tax deducted by virtue of subsection (2) may not be set off under section 967 or 968 of CTA 2010.

(4) In this section—

“arrangements” (except in the phrase “double taxation arrangements”) includes any agreement, understanding, scheme, transaction or series of transactions, whether or not legally enforceable;

“DTA tax avoidance arrangements” means arrangements where, having regard to all the circumstances, it is reasonable to conclude that—the main purpose, or one of the main purposes, of the arrangements was to obtain a tax advantage by virtue of any provisions of a double taxation arrangement, andobtaining that tax advantage is contrary to the object and purpose of those provisions;

“intellectual property royalty payment” means a payment referred to in section 906(2)(a) or (3)(a);

“receive” means receive—directly or indirectly;by one payment or by a series of payments;

“tax advantage” is to be construed in accordance with section 208 of FA 2013.

(5) For the purposes of this section the payer is connected with the payee if the participation condition is met as between them.

(6) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (5) as for the purposes of section 147(1)(b) of that Act, but as if references to the actual provision were to the provision made or imposed between the payer and the payee in respect of the arrangements under which the payment is made.

Section 809Q: composition of mixed fund

Non-UK domiciled individuals to whom remittance basis applies

Transfers into TRF capital account

Qualifying accounts

Meaning of “foreign income and gains” etc

9A

The general effect of sections 10 to 15 is outlined in the following table—

Type of taxpayer	Rates payable on savings income	Rates payable on most dividend income	Rates payable on other income
UK resident individual who is neither a Scottish taxpayer nor a Welsh taxpayer	Savings rates	Dividend rates	Main rates
Scottish taxpayer	Savings rates	Dividend rates	Scottish rates
Welsh taxpayer	Savings rates	Dividend rates	Main rates while section 11B is not in force; Welsh rates if that section is in force
Non-UK resident individual	Savings rates	Dividend rates	Default rates
Non-individual, except that some trustees in some circumstances are subject instead to the trust rate or the dividend trust rate	Default basic rate	Dividend ordinary rate	Default basic rate

Note: the table does not address the effect of some exceptions referred to in sections 10 to 15.

11C

(1) Income tax on a non-UK resident individual’s income up to the basic rate limit is charged at the default basic rate.

(2) Income tax is charged at the default higher rate on a non-UK resident individual’s income above the basic rate limit and up to the higher rate limit.

(3) Income tax is charged at the default additional rate on a non-UK resident individual’s income above the higher rate limit.

(4) Subsections (1) to (3) are subject to—

section 11D (savings income charged at the savings basic, higher and additional rates),

section 12 (savings income charged at the starting rate for savings),

section 12A (savings income charged at the savings nil rate),

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

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

11D

(1) Income tax is charged at the savings basic rate on an individual’s income which—

(a) is saving income, and

(b) would otherwise be charged at the basic rate or the default basic rate.

(2) Income tax is charged at the savings higher rate on an individual’s income which—

(a) is savings income, and

(b) would otherwise be charged at the higher rate or the default higher rate.

(3) Income tax is charged at the savings additional rate on an individual’s income which—

(a) is savings income, and

(b) would otherwise be charged at the additional rate or the default additional rate.

(4) Subsections (1) to (3)—

(a) have effect after sections 12 and 12A have been applied (so that any reference in subsections (1) to (3) to income which would otherwise be charged at a particular rate does not include income charged at the starting rate for savings or at the savings nil rate), and

(b) are subject to any other provisions of the Income Tax Acts (apart from sections 10 and 11C) which provide for income to be charged at different rates of income tax in some circumstances.

(5) Section 16 has effect for determining the extent to which an individual’s savings income above the starting rate limit for savings would otherwise be charged at the basic, higher or additional rate or the default basic, default higher or default additional rate.

(6) In relation to an individual who is a Scottish taxpayer, references in this section to income which would otherwise be charged at a particular rate are to be read as references to income that would, if the individual were not a Scottish taxpayer (but were UK resident), be charged at that rate (and subsection (5) is to be read accordingly).

Savings income charged at the savings nil rate

Meaning of “non-active partner” etc

Limit on reliefs in any tax year not to exceed cap for tax year

Recovery of tax paid as a result of section 721

The non-exempt amount

Transactions with substantial donors

Disposals

888B

The duty to deduct a sum representing income tax under section 874 does not apply to a dividend so far as it is treated as a payment of yearly interest by regulations under section 45 of FA 2009 (dividends designated by investment trust or prospective investment trust).

888C

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of yearly interest under section 373 of ITTOIA 2005 (in the case of certain open-ended investment companies, payments of yearly interest treated as made where distributable amount shown in accounts as yearly interest).

888D

The duty to deduct a sum representing income tax under section 874 does not apply to a payment of yearly interest under section 376 of ITTOIA 2005 (in the case of certain authorised unit trusts, payments of yearly interest treated as made where distributable amount shown in accounts as yearly interest).

888E

(1) The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on an amount of peer-to-peer lending.

(2) In subsection (1) “peer-to-peer lending” means credit in relation to which the condition in subsection (4) is met.

(3) In this section—

“original borrower”, in relation to any credit, means the person to whom the credit is originally provided,

“credit” includes a cash loan and any other form of financial accommodation, and

“original lender”, in relation to any credit, means the person who originally provides the credit.

(4) The condition is that—

(a) the original borrower and the original lender enter the agreement under which the credit is provided at the invitation of a person (“the operator”),

(b) the operator makes the invitation in the course of, or in connection with, operating an electronic system,

(c) the operator's operation of the electronic system is an activity specified in article 36H(1) or (2D) of the Order (operating an electronic system in relation to lending), and

(d) the operator has permission under Part 4A of FISMA 2000 to carry on that activity.

(5) For the purposes of subsection (4), it does not matter if the agreement mentioned in subsection (4)(a) is not an article 36H agreement (as defined in article 36H of the Order).

(6) The Commissioners for Her Majesty's Revenue and Customs may by regulations make such amendments of the preceding provisions of this section as they consider appropriate in consequence of—

(a) the Order, or any part of it, being replaced (or further replaced) by provision in another instrument, or

(b) any amendment of the Order or any such other instrument.

(7) In this section “the Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544).

Non-UK domiciled individuals to whom remittance basis applies

The capital receipt conditions

Statements about certain payments of interest

Overview of Chapter

6C

The default basic rate, default higher rate and default additional rate for a tax year are the rates determined as such by Parliament for the tax year.

7A

The savings basic rate, savings higher rate and savings additional rate for a tax year are the rates determined as such by Parliament for the tax year.

Meaning of “adjusted net income”

Limit on reliefs in any tax year not to exceed cap for tax year

127BA

(1) This section applies if—

(a) in a tax year a person makes a loss in a UK property business or overseas property business (whether carried on alone or in partnership), and

(b) the profits of the business are calculated on the cash basis for the tax year (see section 271D of ITTOIA 2005).

(2) No property loss relief against general income may be given to the person for the loss.

257LDA

(1) If at the time immediately before the investment is made the investor holds any shares in or debentures of—

(a) the social enterprise, or

(b) a company which at that time is a qualifying subsidiary of the social enterprise,

those shares or debentures must be risk finance investments or (in the case of shares) permitted subscriber shares.

(2) A share or debenture is a “risk finance investment” for the purposes of this section if—

(a) it is a share that was issued to the investor, or a debenture of which the investor is the holder in return for advancing an amount, and

(b) at any time, a compliance statement under section 205, 257ED or 257PB is provided in respect of it or of shares or investments including it.

(3) Subscriber shares are “permitted subscriber shares” for the purposes of this section if—

(a) they were issued to the investor and have been continuously held by the investor since they were issued, or

(b) they were acquired by the investor at a time when the company which issued them—

(i) had issued no shares other than subscriber shares, and

(ii) had not begun to carry on or make preparations for carrying on any trade or business.

(4) In this section “debenture” is to be read in accordance with section 257L(6).

257LEA

(1) The investment must not be made, and money raised by the social enterprise from the making of the investment must not be employed,—

(a) in consequence or anticipation of disqualifying arrangements, or

(b) otherwise in connection with disqualifying arrangements.

(2) Arrangements are “disqualifying arrangements” if—

(a) the main purpose, or one of the main purposes, of the arrangements is to secure both that an activity is or will be carried on by the social enterprise or a 90% social subsidiary of the social enterprise and that—

(i) one or more persons (whether or not including any party to the arrangements) may obtain relevant tax relief in respect of a qualifying investment which raises money for the purposes of that activity, or

(ii) shares issued by the social enterprise which raise money for the purposes of that activity may comprise part of the qualifying holdings of a VCT,

(b) that activity is the relevant qualifying activity, and

(3) Condition A is that, as a (direct or indirect) result of the money raised by the investment being employed as required by section 257MM, an amount representing the whole or the majority of the amount raised is, in the course of the arrangements, paid to or for the benefit of a relevant person or relevant persons.

(4) Condition B is that, in the absence of the arrangements, it would have been reasonable to expect that the whole or greater part of the component activities of the relevant qualifying activity would have been carried on as part of another business by a relevant person or relevant persons.

(5) For the purposes of this section it is immaterial whether the social enterprise is a party to the arrangements.

(6) In this section—

“90% social subsidiary” is to be read in accordance with section 257MV;

“component activities” means the carrying on of a qualifying trade or preparing to carry on such a trade, which constitutes the relevant qualifying activity;

a “qualifying investment” means—shares in the social enterprise, ora qualifying debt investment in the social enterprise (see section 257L);

“qualifying holdings”, in relation to the social enterprise, is to be construed in accordance with section 286 (VCTs: qualifying holdings);

“relevant person” means a person who is a party to the arrangements or a person connected with such a party;

“relevant qualifying activity” means the qualifying trade or activity mentioned in section 257ML(1) for the purposes of which the investment raised money;

“relevant tax relief” has the meaning given by subsection (7).

(7) “Relevant tax relief”—

(a) in relation to a qualifying debt investment, means SI relief in respect of that investment;

(b) in relation to shares, means one or more of the following—

(i) SI relief in respect of the shares;

(ii) EIS relief (within the meaning of Part 5) in respect of the shares;

(iii) SEIS relief (within the meaning of Part 5A) in respect of the shares;

(iv) relief under Chapter 6 of Part 4 (losses on disposal of shares) in respect of the shares;

(v) relief under section 150A or 150E of TCGA 1992 (EIS and SEIS) in respect of the shares;

(vi) relief under Schedule 5B to that Act (EIS: reinvestment) in consequence of which deferral relief is attributable to the shares (see paragraph 19(2) of that Schedule);

(vii) relief under Schedule 5BB to that Act (SEIS: re-investment) in consequence of which SEIS re-investment relief is attributable to the shares (see paragraph 4 of that Schedule).

257MIA

(1) The social enterprise must meet the financial health requirement at the beginning of the shorter applicable period.

(2) The financial health requirement is that the social enterprise is not in difficulty.

(3) The social enterprise is “in difficulty” if it is reasonable to assume that it would be regarded as a firm in difficulty for the purposes of the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty (2004/C 244/02).

Limits on amounts that may be invested

257MNA

(1) This section applies where—

(a) the investment is made before the end of the period of 7 years beginning with the relevant first commercial sale, or

(b) the investment is made after that period but—

(i) a relevant investment was made in the social enterprise before the end of that period, and

(ii) some or all of the money raised by that relevant investment was employed for the purposes of (or of part of) the qualifying activity for which the money raised by the investment is employed.

(2) Where this section applies, the total amount of relevant investments made in the social enterprise on or before the date when the investment is made must not exceed £1.5 million.

(3) The reference in subsection (2) to relevant investments “made in the social enterprise” is to be read with section 257MNB.

(4) In this section—

“qualifying activity” means—a qualifying trade within paragraph (a) of section 257ML(1) carried on by the social enterprise or a 90% social subsidiary of the social enterprise, oran activity within paragraph (b) of section 257ML(1) so carried on;

“the relevant first commercial sale” has the meaning given by section 175A(6), reading—references to the issuing company as references to the social enterprise,references to the issue date as references to the investment date, andreferences to money raised by the issue of the relevant shares as references to money raised by the investment;

“relevant investment” has the meaning given by section 173A(3) (reading references in section 173A(3) to a company as including any social enterprise).

(5) Section 173A(4) and (5) apply to determine for the purposes of this section when a relevant investment is made.

(6) Where the social enterprise is an accredited social impact contractor—

(a) the reference in subsection (1)(a) to the relevant first commercial sale is to be read as a reference to the date on which the social enterprise first entered into a social impact contract;

(b) the reference in subsection (1)(b) to the qualifying activity mentioned there is to be read as a reference to the carrying out of the social impact contract for which the money raised by the investment is employed.

(7) For provision about maximum amounts where this section does not apply, see section 257MNC.

257MNB

(1) In section 257MNA(2) the reference to relevant investments “made in the social enterprise” includes—

(a) relevant investments made in a company which, at the material date, is or has been a 51% subsidiary of the social enterprise,

(b) any other relevant investment made in a company to the extent that the money raised by that relevant investment has been employed for the purposes of a trade carried on by another company (“company X”) which, at the material date, is or has been a 51% subsidiary of the social enterprise, and

(i) the money raised by that relevant investment has been employed for the purposes of a trade carried on by that company or another person, and

(ii) after that relevant investment was made, but on or before the material date, that trade became a transferred trade (see subsection (5)).

(2) The investments within paragraph (a) of subsection (1)—

(a) include investments made in a company mentioned in that paragraph before it became a 51% subsidiary of the social enterprise, but

(b) where a company mentioned in that paragraph is not a 51% subsidiary of the social enterprise at the material date, do not include any investments made in that company after it last ceased to be such a subsidiary.

(3) For the purposes of subsection (1)(b), where company X is not a 51% subsidiary of the social enterprise at the material date, any money employed after company X last ceased to be such a subsidiary is to be ignored.

(4) Where only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a transferred trade, only the corresponding proportion of that relevant investment is to be treated as falling within subsection (1)(c).

(5) For the purposes of this section, if—

(a) on or before the material date a trade is transferred—

(i) to the social enterprise,

(ii) to a company which, at the material date, is or has been a 51% subsidiary of the social enterprise, or

(iii) to a partnership of which the social enterprise, or a company within sub-paragraph (ii), is a member, and

(b) the trade or part of it was at any time before the transfer carried on by another person,

the trade or part mentioned in paragraph (b) becomes a “ transferred trade ” when it is transferred as mentioned in paragraph (a).

(6) The cases within subsection (5)(a)—

(a) include the case where the trade is transferred to a company within subsection (5)(a)(ii), or a partnership of which such a company is a member, before the company became a 51% subsidiary of the social enterprise, but

(b) where a company within subsection (5)(a)(ii) is not a 51% subsidiary of the social enterprise at the material date, do not include the case where the trade is transferred to that company, or a partnership of which that company is a member, after that company last ceased to be such a subsidiary.

(7) In this section—

“the material date” means the date on which the investment is made;

“relevant investment” has the meaning given by section 173A(3) (reading references in section 173A(3) to a company as including any social enterprise).

(8) Section 173A(4) and (5) apply to determine for the purposes of this section when a relevant investment is made.

(9) Section 173A(6) and (7) (meaning of “trade” etc) apply also for the purposes of this section.

257MNC

(1) This section applies where—

(a) the investment is made at any time after the period mentioned in section 257MNA(1)(a), and

(b) it is not the case that the conditions in section 257MNA(1)(b)(i) and (ii) are met.

(2) Where this section applies—

(a) the total amount of relevant investments made in the social enterprise on or before the date when the investment is made must not exceed £1.5 million, and

(b) the amount invested must not be more than the amount mentioned in subsection (3).

(3) That amount is the amount given by the formula—

$$( [euro] 200,000 − M RCG + RSI ) − T$where—T is the total of any relevant investments made in the social enterprise in the aid period,M is the total of any de minimis aid, other than relevant investments, that is granted during the aid period—to the social enterprise, orto a qualifying subsidiary of the social enterprise at a time when it is such a subsidiary,RCG is the highest rate at which capital gains tax is charged in the aid period, andRSI is the highest SI rate in the aid period.$

(4) In subsection (3) “the aid period” means the 3 years—

(a) ending with the day on which the investment is made, but

(b) in the case of that day, including only the part of the day before the investment is made.

(5) In this section “de minimis aid” means de minimis aid which fulfils the conditions laid down in Commission Regulation (EU) No 1407/2013 (de minimis aid) as it had effect in the United Kingdom immediately before IP completion day.

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

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

(6) For the purposes of subsection (3), the amount of any de minimis aid is the amount of the grant or, if the aid is not in the form of a grant, the gross grant equivalent amount within the meaning of that Regulation as it had effect in the United Kingdom immediately before IP completion day.

(7) For the purposes of subsection (3), if—

(a) the investment or any relevant investment is made, or

(b) any aid is granted,

in sterling or any other currency that is not the euro, its amount is to be converted into euros at an appropriate spot rate of exchange for the date on which the investment is made or the aid is paid.

(8) In this section “relevant investment” has the meaning given by section 173A(3) (reading references in section 173A(3) to a company as including any social enterprise).

(9) Section 173A(4) and (5) apply to determine for the purposes of this section when a relevant investment is made.

(10) Section 257MNB (which expands the meaning of “relevant investments made in the social enterprise”) applies for the purposes of each of subsections (2) and (3) above as it applies for the purposes of section 257MNA(2).

257MND

(1) This section applies where condition A or condition B is met.

(2) Condition A is that—

(a) a company becomes a 51% subsidiary of the social enterprise at any time during the shorter applicable period,

(b) all or part of the money raised by the investment is employed for the purposes of a qualifying activity which consists wholly or partly of a trade carried on by that company, and

(c) that trade (or part of it) was carried on by that company before it became a 51% subsidiary as mentioned in paragraph (a).

(3) Condition B is that all or part of the money raised by the investment is employed for the purposes of a qualifying activity which consists wholly or partly of a trade which, during the shorter applicable period, becomes a transferred trade (see subsection (9)).

(4) Where this section applies, at each time in the shorter applicable period (“the relevant time”) the total of the relevant investments made in the social enterprise before that time must not exceed £1.5 million.

(5) In subsection (4) the reference to relevant investments “made in the social enterprise” includes—

(a) relevant investments made in a company which at any time before the relevant time has been a 51% subsidiary of the social enterprise,

(b) any other relevant investment made in a company to the extent that the money raised by that relevant investment has been employed for the purposes of a trade carried on by another company (“company X”) which at any time before the relevant time has been a 51% subsidiary of the social enterprise, and

(i) the money raised by that relevant investment has been employed for the purposes of a trade carried on by that company or another person, and

(ii) after that relevant investment was made, but before the relevant time, that trade (or part of it) became a transferred trade.

(6) The investments within paragraph (a) of subsection (5)—

(a) include investments made in a company mentioned in that paragraph before it became a 51% subsidiary of the social enterprise, but

(b) where a company mentioned in that paragraph is not a 51% subsidiary of the social enterprise at the relevant time, do not include any investments made in that company after it last ceased to be such a subsidiary.

(7) For the purposes of subsection (5)(b), where company X is not a 51% subsidiary of the social enterprise at the relevant time, any money employed after company X last ceased to be such a subsidiary is to be ignored.

(8) Where only a proportion of the money raised by a relevant investment is employed for the purposes of a trade which becomes a transferred trade, only the corresponding proportion of that relevant investment is to be treated as falling within subsection (5)(c).

(9) For the purposes of this section, if—

(a) before the relevant time, a trade is transferred—

(i) to the social enterprise,

(ii) to a company which, at the relevant time, is or has been a 51% subsidiary of the social enterprise, or

(iii) to a partnership of which the social enterprise, or a company within sub-paragraph (ii), is a member, and

(b) the trade or part of it was at any time before the transfer carried on by another person,

the trade or part mentioned in paragraph (b) becomes a “ transferred trade ” when it is transferred as mentioned in paragraph (a).

(10) The cases within subsection (9)(a)—

(a) include the case where the trade is transferred to a company within subsection (9)(a)(ii), or a partnership of which such a company is a member, before the company became a 51% subsidiary of the social enterprise, but

(b) where a company within subsection (9)(a)(ii) is not a 51% subsidiary of the social enterprise at the relevant time, do not include the case where the trade is transferred to that company, or a partnership of which that company is a member, after that company last ceased to be such a subsidiary.

(11) In this section—

“qualifying activity” has the same meaning as in section 257MNA (see subsection (4) of that section);

“relevant investment” has the meaning given by section 173A(3) (reading references in section 173A(3) to a company as including any social enterprise).

(12) Section 173A(4) and (5) apply to determine for the purposes of this section when a relevant investment is made.

(13) Section 173A(6) and (7) (meaning of “trade” etc) apply also for the purposes of this section.

257MNE

(1) The Treasury may by regulations substitute a different figure for the figure for the time being specified in section 257MNA(2), 257MNC(2) or (3) or 257MND(4).

(2) Regulations under this section may make incidental, supplemental, consequential, transitional or saving provision.

(3) Regulations under this section may not be made unless a draft of the instrument containing them has been laid before, and approved by a resolution of, the House of Commons.

257MQA

(1) This section supplements section 257MQ(1)(bc).

(2) “Nursing home” means any establishment which exists wholly or mainly for the provision of nursing care—

(a) for persons suffering from sickness, injury or infirmity, or

(b) for women who are pregnant or have given birth.

(3) “Residential care home” means any establishment which exists wholly or mainly for the provision of residential accommodation, together with board and personal care, for persons in need of personal care because of—

(a) old age,

(b) mental or physical disability,

(d) any past illnesses, or

(e) past or present mental disorder.

(4) The activities of a person are not to be taken to fall within section 257MQ(1)(bc) unless that person has an estate or interest in, or is in occupation of, the nursing home or residential care home in question.

327A

(1) Subsections (2) and (3) apply where—

(a) this section applies (see section 326(1)),

(b) the acquisition by the new company of all the old shares, which is provided for by the arrangements mentioned in section 326(1), takes place, and

(2) If, after the acquisition, another company makes an investment in the new company, section 280C (the permitted maximum age condition) has effect in relation to that investment as if—

(a) in subsection (4)(a) the reference to a relevant investment having been made in the relevant company before the end of the initial investing period included a reference to a relevant investment having been made in the old company before the acquisition and before the end of the initial investing period, and

(b) in subsection (6)(a) the reference to relevant investments made in the relevant company included a reference to relevant investments made in the old company before the acquisition.

(3) In relation to any relevant holding issued by the new company after the acquisition, section 294A (the permitted company age requirement) has effect as if—

(a) in subsection (3)(a) the reference to a relevant investment having been made in the relevant company before the end of the initial investing period included a reference to a relevant investment having been made in the old company before the acquisition and before the end of the initial investing period, and

(b) in subsection (5)(a) the reference to relevant investments made in the relevant company included a reference to relevant investments made in the old company before the acquisition.

(4) In subsection (3) “relevant holding” has the same meaning as in Chapter 4.

721A

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

721B

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

729A

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

733A

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

735B

(1) This section applies in relation to income if—

(a) the income was treated under section 732 as arising to an individual (“the beneficiary”) for any of the tax years 2017-18 to 2024-25,

(b) the settlor was under section 733A(2) or (3) (as it had effect for that tax year) liable for tax on the income, and

(2) The income (“the transferred-liability deemed income”) is treated as relevant foreign income of the settlor.

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