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Finance Act 2008

Type Public General Act

Publication 2008-07-21

Last updated 2025-05-01

State In force

Department Statute Law Database

Source legislation.gov.uk

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Reform history JSON API

(b) arose after that procedure was so applied but relates to, or to matters occurring at, times before it was so applied.

(5) Subject to subsection (6), an insolvency procedure is to be taken, for the purposes of this section, to be applied to a person when—

(a) a bankruptcy order or winding up order or award of sequestration is made or an administrator is appointed in relation to that person,

(b) that person is put into administrative receivership,

(d) a voluntary arrangement comes into force in relation to that person, ...

(e) a deed of arrangement takes effect in relation to that person , or

(f) that person's estate becomes vested in any other person as that person's trustee under a trust deed (within the meaning of the Bankruptcy (Scotland) Act 1985).

(6) In this section references to the application of an insolvency procedure to a person do not include—

(a) the application of an insolvency procedure to a person at a time when another insolvency procedure applies to the person, or

(b) the application of an insolvency procedure to a person immediately upon another insolvency procedure ceasing to have effect.

(7) For the purposes of this section—

(a) a person shall be treated as being in administrative receivership throughout any continuous period for which there is an administrative receiver of that person (disregarding any temporary vacancy in the office of receiver), and

(b) the reference in subsection (5) to a person being put into administrative receivership shall be interpreted accordingly.

(8) In this section—

“administrative receiver” means an administrative receiver within the meaning of section 251 of the Insolvency Act 1986 (c. 45) or Article 5(1) of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)),

“administrator” means a person appointed to manage the affairs, business and property of another person under Schedule B1 to that Act or to that Order,

“credit” and “debit” have the same meaning as in section 130,

“deed of arrangement” means a deed of arrangement registered in accordance with ... Chapter 1 of Part 8 the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), and

“voluntary arrangement” means a voluntary arrangement approved in accordance with Part 1 or Part 8 of the Insolvency Act 1986 (c. 45) or Part 2 or Chapter 2 of Part 8 of the Insolvency (Northern Ireland) Order 1989.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

VAT: requirement to set-off

132

(1) Section 81 of VATA 1994 (set-off of credits etc) is amended as follows.

(2) For subsection (4C) substitute—

(4C) In this section, references to the application of an insolvency procedure to a person do not include— (a) the application of an insolvency procedure to a person at a time when another insolvency procedure applies to the person, or (b) the application of an insolvency procedure to a person immediately upon another insolvency procedure ceasing to have effect.

(3) In subsection (5)—

(a) omit paragraph (a),

(b) in paragraph (b)—

(i) for “that Act of 1986” substitute “ the Insolvency Act 1986 ”, and

(ii) for “that Order of 1989” substitute “ the Insolvency (Northern Ireland) Order 1989 ”, and

(ba) “administrator” means a person appointed to manage the affairs, business and property of another person under Schedule B1 to that Act or to that Order;

Set-off etc where right to be paid a sum has been transferred

133

(1) This section applies where there has been a transfer from one person (“the original creditor”) to another person (“the current creditor”) of a right to be paid a sum (“the transferred sum”) by the Commissioners.

(2) The Commissioners—

(a) must set the transferred sum against a sum payable to them by the original creditor if they would have had an obligation to do so under or by virtue of an enactment had the original creditor retained the right, and

(b) may do so if they would have had a power to do so under or by virtue of an enactment or under a rule of law had the original creditor retained the right.

(3) Subsection (2) applies whether the sum payable by the original creditor to the Commissioners first became payable before or after the transfer (but not if it only became payable after the Commissioners discharged their obligation to pay the transferred sum to the current creditor).

(4) The following are discharged to the extent of any set-off under this section—

(a) the obligations of the Commissioners in relation to the current creditor, and

(b) the obligations of the original creditor.

(5) An obligation under or by virtue of an enactment (other than this section) to set the transferred sum against a sum payable to the Commissioners by a person other than the original creditor has effect subject to the obligation under subsection (2)(a) and to any exercise of the power under subsection (2)(b).

(6) A power under or by virtue of an enactment (other than this section) or under a rule of law to set the transferred sum against a sum payable to the Commissioners by a person other than the original creditor has effect subject to the obligation under subsection (2)(a).

(7) In determining the sum (if any) to be paid, the Commissioners may make any reduction that they could have made if the original creditor had retained the right to be paid the transferred sum (in addition to any other reduction that they are entitled to make), including a reduction arising from any defence to a claim for the sum.

(8) In this section—

(a) references to the transfer of a right are to its transfer by assignment, assignation or any other means, ...

(b) references to a sum that is payable by or to a person are to a sum that is to be paid, repaid or credited by or to that person and references to the payment of the sum (however expressed) are to be interpreted accordingly, and

(c) where a right in relation to a sum has been transferred more than once, references to the original creditor are to the person from whom the right was first transferred (except in subsection (1)).

(9) Where the right to be paid the transferred sum is dependent on the making of a claim—

(a) subsection (2) does not apply unless a claim in respect of the transferred sum has been made, and

(b) the references in subsections (2) and (7) to the obligations or powers that the Commissioners would have had if the original creditor had retained the right are references to those that they would have had if the original creditor had also made the claim in respect of the transferred sum.

(10) This section has effect where the right to be paid the transferred sum was transferred from the original creditor on or after 25 June 2008.

Retained funding bonds: tender by Commissioners

134

(1) Section 939 of ITA 2007 (duty to retain bonds where issue treated as payment of interest) is amended as follows.

(2) After subsection (4) insert—

(4A) If bonds are tendered in accordance with subsection (4), the Commissioners for Her Majesty's Revenue and Customs may tender the bonds in satisfaction of any amount that is payable by the Commissioners to the relevant creditor in connection with the relevant debt. (4B) For the purposes of subsection (4A)— (a) “relevant creditor” and “relevant debt” mean the creditor and the debt mentioned in subsection (1)(a), and (b) a bond is to be taken to have the same value that it had at the time of its issue. (4C) If bonds that are to be tendered in accordance with subsection (4) or (4A) are subject to restrictions on their tender or transfer, the restrictions do not prevent the bonds from being— (a) tendered in accordance with that subsection, or (b) transferred from the person tendering them to the person to whom they are tendered.

(3) Omit subsection (5).

(4) In ITA 2007, after section 940 insert—

(940A) (1) This section applies if— (a) the Commissioners for Her Majesty's Revenue and Customs hold one or more bonds tendered in accordance with section 939(4), (b) the Commissioners wish to tender bonds in accordance with section 939(4A) in satisfaction of an amount payable to the relevant creditor, and (c) the Commissioners consider that they do not hold a bond, or combination of bonds, that is appropriate for satisfying the amount payable. (2) If requested to do so by the Commissioners, the bond issuer must secure that the Commissioners hold a bond, or combination of bonds, that the Commissioners consider to be appropriate for satisfying the amount payable. (3) If requested to do so by the bond issuer, a person must assist the bond issuer to comply with subsection (2). (4) The duty under subsection (2), or under subsection (3), does not apply if it would be impracticable for the bond issuer, or the other person, to comply with the duty. (5) The matters which the Commissioners may take into account when considering whether or not a bond or combination of bonds is appropriate for satisfying the amount payable include— (a) the value of a bond at the time of its issue, (b) the interest which the relevant creditor, or any other person, has in a bond (including the nature or size of the interest), and (c) the terms on which a bond is issued. (6) For the purposes of this section— (a) “bond issuer” means the person by or through whom bonds were issued, and (b) “relevant creditor” and “relevant debt” have the same meanings as in section 939(4A).

(5) The amendments made by this section have effect in relation to funding bonds issued on or after 12 March 2008.

Other measures

Interest on unpaid tax in case of disaster etc of national significance

135

(1) This section applies in any case where the Commissioners agree that the payment of a relevant sum may be deferred by reason of circumstances arising as a result of a disaster or emergency specified in an order under this section (an “agreement for deferred payment”).

(2) In subsection (1) “relevant sum” means a sum to meet any liability to the Commissioners that—

(a) arises under or by virtue of an enactment or a contract settlement, and

(b) is of a description (if any) specified in the order.

(3) No interest on the amount deferred is chargeable in respect of the relief period and no liability to a surcharge on the deferred amount arises during that period.

(4) The relief period , in relation to a deferred amount, is the period—

(a) beginning with a date specified in the order or, if the Commissioners so direct, a later date from which the agreement for deferred payment has effect, and

(b) ending with the date on which the agreement for deferred payment ceases to have effect or, if earlier, the date on which the order is revoked or amended so that it ceases to have effect in relation to the deferred amount.

(5) The agreement for deferred payment ceases to have effect at the end of the period of deferment specified in the agreement or, if the Commissioners agree to extend (or further extend) that period by reason of circumstances arising as a result of the disaster or emergency, with the end of that extended (or further extended) period.

(6) If the agreement for deferred payment is an agreement for payment by instalments, the period of deferment in relation to each instalment ends with the date on or before which that instalment is to be paid; but if an instalment is not paid by the agreed date and the Commissioners do not agree to extend the period of deferment, the whole of the agreement for deferred payment is to be treated as ceasing to have effect on that date.

(7) This section applies whether the agreement for deferred payment was made—

(a) before or after the amount to which it relates becomes due and payable, or

(b) before or after the making of the order concerned.

(8) If in any case the Commissioners are satisfied that, although no agreement for deferred payment was made, one could have been made, this section applies as if one had been made; and the terms of the notional agreement for deferred payment are to be assumed to be such as the Commissioners are satisfied would have been agreed in the circumstances.

(9) An order under this section may be made only in relation to a disaster or emergency which the Treasury consider to be of national significance.

(10) Such an order—

(a) may specify a disaster or emergency which has begun (or both begun and ended) before it is made (including one which has begun, or both begun and ended, before the passing of this Act), ...

(b) may specify a date before the date on which it is made (including a date before the passing of this Act) , and

(11) The power to make an order under this section is exercisable by the Treasury by statutory instrument.

(12) A statutory instrument containing such an order is subject to annulment in pursuance of a resolution of the House of Commons.

(13) In FA 2001, omit section 107 (interest on unpaid tax etc: foot and mouth disease); but the repeal of that section does not affect any agreement for deferred payment made before this Act is passed.

Fee for payment

136

(1) The Commissioners may by regulations provide that, where a person makes a payment to the Commissioners or a person authorised by the Commissioners using a method of payment specified in the regulations, the person must also pay a fee specified in, or determined in accordance with, the regulations.

(2) A method of payment may only be specified in regulations made under this section if the Commissioners expect that they, or the person authorised by them, will be required to pay a fee or charge (however described) in connection with amounts paid using that method of payment.

(3) Regulations under this section—

(a) may make provision about the time and manner in which the fee must or may be paid,

(b) may make provision generally or only for specified purposes, and

(4) Regulations under this section are to be made by statutory instrument.

(5) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

County court proceedings

137

(1) In section 25 of CRCA 2005 (conduct of civil proceedings)—

(a) after subsection (1) insert—

(1A) An officer of Revenue and Customs or a person authorised by the Commissioners may conduct county court proceedings for the recovery of an amount payable to the Commissioners under or by virtue of an enactment or under a contract settlement.

, and

(b) after subsection (5) insert—

(6) In this section “contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners under or by virtue of an enactment.

(2) In section 66 of TMA 1970 (county court proceedings)—

(a) in subsection (1), omit “commenced in the name of a collector”, and

(b) omit subsection (2).

(3) Accordingly, in FA 1984, omit section 57(2).

(4) In section 244 of IHTA 1984 (right to address court), omit “county court or”.

(5) In paragraph 3 of Schedule 4 to the Social Security Contributions (Transfer of Functions, etc.) Act 1999 (c. 2) (recovery of contributions where income tax recovery provisions not applicable)—

(a) in sub-paragraph (1), omit “commenced in the name of an authorised officer”, and

(b) omit sub-paragraph (2).

(6) In paragraph 5 of Schedule 12 to FA 2003 (stamp duty land tax)—

(a) in sub-paragraph (1), omit “brought in the name of the collector”, and

(b) omit sub-paragraph (2).

(7) Nothing in subsections (2) to (6) affects proceedings commenced or brought in the name of a collector or authorised officer before this Act is passed.

Certificates of debt

138

(1) In CRCA 2005, after section 25 insert—

(25A) (1) A certificate of an officer of Revenue and Customs that, to the best of that officer's knowledge and belief, a relevant sum has not been paid is sufficient evidence that the sum mentioned in the certificate is unpaid. (2) In subsection (1) “relevant sum” means a sum payable to the Commissioners under or by virtue of an enactment or under a contract settlement (within the meaning of section 25). (3) Any document purporting to be such a certificate shall be treated as if it were such a certificate until the contrary is proved. (4) Subsection (1) has effect subject to any provision treating the certificate as conclusive evidence.

(2) Schedule 44 contains provisions consequential on this section.

Supplementary

Interpretation of Chapter

139

In this Chapter—

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

“contract settlement” means an agreement made in connection with any person's liability to make a payment to the Commissioners under or by virtue of an enactment.

Part 8 — Miscellaneous

Inheritance tax

Charge on termination of interest in possession where new interest acquired

140

(1) In section 53 of IHTA 1984 (exceptions from charge on termination of interest in possession), for subsection (2A) substitute—

(2A) Subsection (2) above applies by virtue of the person becoming beneficially entitled on or after 12 March 2008 to another interest in possession in the property only if that other interest is— (a) a disabled person's interest, or (b) a transitional serial interest; and that is the case irrespective of whether the person's beneficial entitlement to the interest in possession in the property which comes to an end is one which began before, or on or after, 22 March 2006.

(2) The amendment made by subsection (1) is treated as having come into force on 22 March 2006 (so that paragraph 14(3) of Schedule 20 to FA 2006 is treated as never having had effect).

Interest in possession settlements: extension of transitional period

141

(1) In Chapter 2 of Part 3 of IHTA 1984 (interests in possession etc)—

(a) in section 49C (transitional serial interest: interest to which person becomes entitled on or after 22 March 2006 and before 6 April 2008), in subsection (3) and in the heading,

(b) in section 49D (transitional serial interest: interest to which person becomes entitled on death of spouse or civil partner on or after 6 April 2008), in subsection (3) and in the heading, and

for “April” substitute “ October ”.

(2) The amendments made by subsection (1) are treated as having come into force on 6 April 2008.

Insurance premium tax

Tax representatives

142

(1) In Part 3 of FA 1994 (insurance premium tax), omit the following provisions (which relate to tax representatives)—

(a) sections 57 and 58,

(b) in section 65(1), paragraph (b) and the “and” before it,

(d) in Schedule 7, paragraph 18 and, in paragraph 20, “, 18(2)”.

(2) In consequence of the repeals made by subsection (1), omit sections 27(4) and (5) of FA 1997.

Overseas insurers

143

(1) Section 65 of FA 1994 (insurance premium tax: liability of insured where insurer not established in United Kingdom) is amended as follows.

(2) In subsection (1), for the words after “time” substitute

the insurer— (a) does not have any business establishment or other fixed establishment in the United Kingdom, and (b) is established in a country or territory in respect of which it appears to the Commissioners that the condition in subsection (1A) below is met.

(3) After that subsection insert—

(1A) The condition mentioned in subsection (1)(b) above is that— (a) the country or territory is neither a member State nor a part of a member State, and (b) there is no provision for mutual assistance between the United Kingdom and the country or territory similar in scope to the assistance provided for between the United Kingdom and each other member State by the mutual assistance provisions. (1B) In subsection (1A) above “the mutual assistance provisions” means— (a) section 134 of, and Schedule 39 to, the Finance Act 2002 (recovery of taxes etc due in other member States), and (b) section 197 of the Finance Act 2003 (exchange of information between tax authorities of member States).

Vehicle excise duty

Rebates

144

(1) VERA 1994 is amended as follows.

(2) In section 10 (transfer and surrender of vehicle licences), omit subsections (2) and (3) and, in the heading, “and surrender”.

(3) For section 19 (rebates on surrender of licences) substitute—

(19) (1) If the relevant person makes an application to the Secretary of State under this subsection for a rebate of the duty paid on a vehicle licence in force for a vehicle, the person is entitled to receive from the Secretary of State the amount specified in subsection (2). (2) That amount is an amount equal to one-twelfth of the annual rate of duty chargeable on the licence (at the time when it was taken out) in respect of each complete month of the period of the currency of the licence which is unexpired when the application is made. (3) An application under subsection (1) may only be made if— (a) the vehicle has been stolen, (b) the vehicle has been destroyed and the Secretary of State is notified of that, (c) an application for a nil licence for the vehicle is made in accordance with regulations under section 22, (d) the vehicle is neither used nor kept on a public road and the particulars and declaration required to be furnished and made by regulations under section 22(1D) are furnished and made in relation to it in accordance with the regulations, (e) the vehicle has been sold or disposed of and the particulars prescribed by regulations under section 22(1)(d) are furnished in relation to it in accordance with the regulations, or (f) the vehicle has been removed from the United Kingdom with a view to its remaining permanently outside the United Kingdom and the Secretary of State is notified of that. (4) In subsection (1) “the relevant person” means the person in whose name the vehicle is registered at the time when the application is made; but in a case within subsection (3)(e) also includes the person in whose name it was registered immediately before being sold or disposed of. (5) The Secretary of State may specify conditions which must be complied with by a person before making an application under subsection (1). (6) The conditions that may be specified include (in particular)— (a) a condition requiring the surrender of the licence, (b) a condition requiring that particulars which are required to be furnished to the Secretary of State are transmitted to the Secretary of State by such electronic means as may be specified, and (c) in a case within subsection (3)(a), conditions relating to the reporting to the police that the vehicle has been stolen. (7) Where an application is made under subsection (1) and the licence is not surrendered on the making of the application, it ceases to be in force when the application is made. (8) Where a trade licence is surrendered to the Secretary of State under section 14(2), the holder of the licence is entitled to receive from the Secretary of State (by way of rebate of the duty paid on the licence) an amount equal to one-twelfth of the annual rate of duty chargeable on the licence (at the time when it was taken out) in respect of each complete month of the period of the currency of the licence which is unexpired at the date of the surrender.

(4) In section 22(1D) (requirement to furnish particulars etc in certain circumstances), omit paragraph (a) (surrender under section 10(2)).

(5) In—

(a) section 31(7)(a),

(b) section 31B(9)(a)(i), and

(meaning of “expiry”), after “surrender” insert “ or ceasing to be in force under section 19(7) ”.

(6) In consequence of the amendment made by subsection (3), omit section 14 of FA 2001.

(7) The amendments made by this section come into force on 1 January 2009.

Offence of using or keeping unlicensed vehicle

145

Schedule 45 contains provision in relation to the offence of using or keeping an unlicensed vehicle.

Rates for new lower-emission vans

146

(1) Part 1B of Schedule 1 to VERA 1994 (annual rates of duty: light goods vehicles) is amended as follows.

(2) In paragraph 1J(a) and (b) (rates), after “a” insert “ pre-2007 or post-2008 ”.

(3) In paragraph 1K (meaning of “lower-emission van”), for “ “lower-emission van”” substitute “pre-2007 lower-emission van” .

(4) After paragraph 1L insert—

(1M) For the purposes of paragraph 1J, a vehicle to which this Part of this Schedule applies is a “post-2008 lower-emission van” if— (a) the vehicle is first registered on or after 1 January 2009 and before 1 January 2011, (b) it is a vehicle to which Regulation (EC) No 715/2007 of the European Parliament and of the Council applies (see Article 2 of that Regulation), (c) it is powered by a compression ignition engine, and (d) the emissions from it do not exceed any of the emission limit values specified in Table 1 of Annex 1 to that Regulation in relation to vehicles so powered.

Not exhibiting licence: period of grace

147

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Reduced pollution certificates

148

(1) Section 61B of VERA 1994 (certificates as to reduced pollution) is amended as follows.

(2) In subsection (1), after paragraph (b) insert—

(ba) for the production of information and making of declarations for the purposes of a determination (including provision about the person to whom, and the time at which and manner in which, the information is to be produced and the declarations are to be made);

(3) In paragraph (c) of that subsection, for “examination of an eligible vehicle, for the purposes of the determination mentioned in paragraph (b),” substitute “ Secretary of State to specify cases in which a determination is to be made only after an examination of an eligible vehicle ”.

(4) In paragraph (d) of that subsection, for “for such an examination” substitute “ in respect of a determination ”.

(5) In paragraph (e) of that subsection, for “on a prescribed examination,” substitute “ in accordance with the regulations, ”.

(6) In subsection (3)—

(a) in paragraph (a), for “in accordance with the regulations” substitute “ (or, if not previously examined, examined) in accordance with the regulations (“a post-certification examination”) ”,

(b) in paragraph (b), for “such a re-examination” substitute “ a post-certification examination ”, and

Climate change levy and landfill tax

Climate change levy: coal mine methane no longer to be renewable source

149

(1) In paragraph 19 of Schedule 6 to FA 2000 (exemption: electricity from renewable sources), omit sub-paragraph (4A) (coal mine methane to be regarded as renewable source).

(2) Accordingly, omit—

(a) section 126 of FA 2002 (which inserted sub-paragraph (4A)), and

(b) regulation 47(2A) of the Climate Change Levy (General) Regulations 2001 (S.I. 2001/838).

(3) The repeals and revocation made by this section have effect in relation to electricity generated on or after 1 November 2008.

Climate change levy accounting documents: abolition of self-identification

150

In paragraph 143(2) of Schedule 6 to FA 2000 (requirements to be met by invoice if it is to be a “climate change levy accounting document”), omit paragraph (a) (requirement that it must state that it is a climate change levy accounting document).

Landfill tax credit: withdrawing approval of environmental bodies

151

(1) Part 3 of FA 1996 (landfill tax) is amended as follows.

(2) In section 53(4)(d) (withdrawal of approval of environmental body or regulatory body), for “approval of an environmental body or the regulatory body to be withdrawn” substitute “ the withdrawal of approval of an environmental body by the Commissioners or by the regulatory body, and the withdrawal of approval of the regulatory body by the Commissioners, ”.

(3) In section 54(1) (review of Commissioners' decisions), after paragraph (c) insert—

(ca) a decision to withdraw approval of an environmental body under any provision contained in regulations by virtue of section 53(4)(d) above;

(4) The amendments made by this section are treated as having come into force on 19 March 2008.

Aviation

Aviation duty

152

The Commissioners for Her Majesty's Revenue and Customs may incur expenditure in preparing for the introduction of a new duty chargeable in respect of flights by aircraft.

Air passenger duty: class of travel with large seat pitch

153

(1) In section 30 of FA 1994 (rate of air passenger duty), after subsection (10) insert—

(11) But a class of travel is not standard class travel if the seats for passengers whose agreement for carriage provides for that class of travel have a pitch exceeding 1.016 metres (40 inches). (12) For this purpose “pitch”, in relation to a seat, means the distance between a fixed point on the seat and the same point on the seat immediately in front of it; but where there is no seat immediately in front of the seat, the seat is to be treated as having the same pitch as the seat immediately behind it.

(2) The amendment made by subsection (1) has effect in relation to any carriage of a passenger on an aircraft which begins on or after 1 November 2008.

Alternative finance arrangements

Stamp duty and stamp duty reserve tax: alternative finance investment bonds

154

(1) FA 1986 is amended as follows.

(2) In section 78(7) (stamp duty: loan capital), after paragraph (c) insert—

(d) any capital raised under arrangements which fall within section 48A of the Finance Act 2005 (alternative finance investment bonds).

(3) In section 79 (loan capital: instruments not chargeable to stamp duty), after subsection (8) insert—

(8A) In the application of this section to loan capital that falls within paragraph (d) of section 78(7) (alternative finance investment bonds)— (a) subsection (6) has effect as if— (i) paragraph (a) were omitted, and (ii) for paragraph (c) there were substituted— (c) a right at the end of the bond term (within the meaning of section 48A(1) of the Finance Act 2005) to a payment of an amount that exceeds the aggregate of— (i) the amount paid for the issue of the bond, and (ii) the notional payment amount; and for this purpose the “notional payment amount” means the amount of the payments that would represent a reasonable commercial return (within the meaning of section 48A(1) of the Finance Act 2005) on the bond over the bond term, less the amount of the payments actually made. (b) subsections (6)(b), (7), (7A), (7B) and (13) have effect as if references to interest were references to additional payments (“additional payments” having the same meaning as in section 48A of the Finance Act 2005), and (c) subsections (7B) and (13) also have effect as if— (i) references to a capital market investment were references to the loan capital falling within paragraph (d) of section 78(7), and (ii) references to a capital market arrangement were to the arrangements under which that loan capital is raised.

(4) In section 99 (stamp duty reserve tax: interpretation), after subsection (9) insert—

(9A) But “unit trust scheme” does not include arrangements falling within section 48A of the Finance Act 2005 (alternative finance investment bonds).

(5) The amendments made by subsections (2) and (3) have effect in relation to instruments executed on or after the day on which this Act is passed (and for this purpose it does not matter when the arrangements falling within section 48A of FA 2005 are made).

(6) The amendment made by subsection (4) has effect in relation to—

(a) agreements to transfer chargeable securities made on or after the day on which this Act is passed, and

(b) the transfer, issue or appropriation of chargeable securities after that day in pursuance of an agreement made after that day;

(and for this purpose it does not matter when the arrangements falling within section 48A of FA 2005 or section 507 of CTA 2009 are made).

Alternative property finance: anti-avoidance

155

(1) FA 2003 is amended as follows.

(2) For the heading of section 73A substitute “ Sections 71A to 73: relationship with Schedule 7 ”.

(3) After section 73A insert—

(73AB) (1) Section 71A, 72 or 72A does not apply to alternative finance arrangements if those arrangements, or any connected arrangements, include arrangements for a person to acquire control of the relevant financial institution. (2) That includes arrangements for a person to acquire control of the relevant financial institution only if one or more conditions are met (such as the happening of an event or doing of an act). (3) In this section— - “alternative finance arrangements” means the arrangements referred to in section 71A(1), 72(1) or 72A(1); - “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable); - “connected arrangements” means any arrangements entered into in connection with the making of the alternative finance arrangements (including arrangements involving one or more persons who are not parties to the alternative finance arrangements); - “relevant financial institution” means the financial institution which enters into the alternative finance arrangements. (4) Section 840 of the Taxes Act 1988 applies for the purposes of determining who has control of the relevant financial institution.

(4) The amendment made by subsection (3) has effect in relation to alternative finance arrangements entered into on or after 12 March 2008.

Alternative finance arrangements: power to vary Chapter 5 of Part 2 of FA 2005

156

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Government borrowing: alternative finance arrangements

157

(1) The Treasury may by regulations make provision for raising money through alternative finance arrangements.

(2) Regulations under subsection (1) must specify the purpose or purposes for which money may be raised through each kind of alternative finance arrangements that, under regulations under subsection (1), is available for raising money.

(3) The Treasury may not raise money through a particular kind of alternative finance arrangements unless, in the Treasury's opinion, raising the money would be in accordance with the provision made under subsection (2) in relation to that kind of arrangements.

(4) Regulations under subsection (2) may, in particular, specify a purpose or purposes for which money may be raised under the National Loans Act 1968 (c. 13).

(5) Money to be raised under regulations made under this section—

(a) may be raised either within or outside the United Kingdom, and

(b) may be raised either in sterling or in any other currency or medium of exchange, whether national or international.

(6) Subsection (5) is subject to provision made in or under the regulations.

(7) Schedule 46 contains further provision about regulations under this section.

(8) In this section and Schedule 46 “alternative finance arrangements” means arrangements which in the Treasury's opinion—

(a) equate in substance to a loan, deposit or other transaction of a kind that generally involves the payment of interest (including the issuance of government securities), but

(b) achieve a similar effect to such a transaction without including provision for the payment of interest.

Payments from Exchequer accounts

Power of Treasury to make payments

158

(1) This section applies if a person makes a claim which, in the Treasury's opinion, is a financial claim that concerns an Exchequer account.

(2) The Treasury may pay money from any Exchequer account—

(a) to satisfy the claim (in whole or in part), or

(b) to enable the claim to be satisfied (in whole or in part) from another government account.

(3) The reference in this section to a financial claim that concerns an Exchequer account includes, in particular, either of the following cases.

(4) The first case is where a financial claim relates to—

(a) a case where money is paid into a government account, but the money should not have, or need not have, been paid into that account, or

(b) a case where money should have been, or needed to be, paid out of a government account, but the money—

(i) was not paid out of that account, or

(ii) was paid out of that account, but not as it should have been, or needed to be, paid.

(5) The second case is where a financial claim relates to the exercise of functions that relate to an Exchequer account (whether the functions are exercisable by the Treasury or another person).

(6) In this section—

“Exchequer account” means—the Consolidated Fund,the Debt Management Account,the Exchange Equalisation Account, orthe National Loans Fund;and a reference to an Exchequer account includes a reference to the assets or liabilities of the account;

“financial claim” means a claim (whether or not legally enforceable) for the payment of an amount of money, including a claim in respect of—money paid or not paid by any person,interest earned or not earned by any person, orloss, costs or expenses incurred by any person;

“government account” means—an Exchequer account, orany other account in which money is held by or on behalf of Her Majesty's Government in the United Kingdom.

Payments from certain Exchequer accounts: mechanism

159

(1) This section applies to money to be paid under section 158 from—

(a) the Consolidated Fund, or

(b) the National Loans Fund.

(2) In the case of the Consolidated Fund—

(a) the Comptroller and Auditor General shall on receipt of a requisition from the Treasury grant a credit on the Exchequer Account at the Bank of England (or on its growing balance), and

(b) an issue shall be made on orders given to the Bank by the Treasury in accordance with a credit granted under paragraph (a).

(3) An issue made under subsection (2) shall be recorded in the daily account under section 15(5) of the Exchequer and Audit Departments Act 1866 (c. 39).

(4) In the case of the National Loans Fund—

(a) the Comptroller and Auditor General shall at the request of the Treasury grant a credit on the National Loans Fund, and

(b) a payment out of the Fund shall be made by the Treasury in accordance with a credit granted under paragraph (a).

(5) A payment made under subsection (4) shall be recorded in the daily account under section 1(2) of the National Loans Act 1968 (c. 13).

Other matters

Power to give statutory effect to concessions

160

(1) The Treasury may by order make provision for and in connection with giving effect to any existing HMRC concession.

(2) “Existing HMRC concession” means a statement made by the Commissioners for Her Majesty's Revenue and Customs before the passing of this Act, and having effect at that time, that they will treat persons as if they were entitled to—

(a) a reduction in a liability to a tax or duty, or

(b) any other concession relating to a tax or duty,

to which they are not, or may not be, entitled in accordance with the law.

(3) For this purpose “statement” means a statement of any sort, whether it was described as an extra-statutory concession, a statement of practice, an interpretation, a decision or a press release or in any other way.

(4) The reference in subsection (2) to the Commissioners for Her Majesty's Revenue and Customs includes the Commissioners of Inland Revenue and the Commissioners of Customs and Excise.

(5) An order under this section—

(a) may give effect to an existing HMRC concession with or without modification,

(b) may include supplementary, incidental, consequential or transitional provision, and

(6) The power to make an order under this section is exercisable by statutory instrument.

(7) No order is to be made under this section unless a draft of the order has been laid before, and approved by a resolution of, the House of Commons.

Fuel duty: definition of “ultra low sulphur diesel”

161

(1) In section 1(6) of HODA 1979 (definition of “ultra low sulphur diesel”), omit paragraphs (b) and (c) (but not the “and” at the end of paragraph (c)).

(2) The amendment made by subsection (1) is treated as having come into force on 4 September 2007.

Duties: abolition of disregard of fractions of penny

162

In section 137 of CEMA 1979 (calculation of excise duty etc), omit subsection (4) (fractions of penny to be disregarded in calculation of duty).

National savings

163

(1) Section 10 of the National Debt Act 1972 (c. 65) (national savings stamps and gift tokens) is amended as follows.

(2) In subsection (2), after “tokens; and” insert “ (subject to regulations under subsection (2A)) ”.

(3) After that subsection insert—

(2A) Where the Treasury has issued a sum to the National Debt Commissioners under subsection (2), it may by regulations require them to repay to the National Loans Fund, in the way specified in the regulations, so much of that sum as may be specified in, or determined in accordance with, the regulations.

EU emissions trading: criminal offences

164

(1) Section 16 of FA 2007 (EU emissions trading: charges for allocations) is amended as follows.

(2) In subsection (4)(c), for “imposition and recovery of penalties” substitute “ creation of criminal offences, or for the imposition and recovery of civil penalties, ”.

(3) After subsection (6) insert—

(6A) Subsection (4)(c) does not permit the creation of a criminal offence with maximum penalties in excess of the maximum penalties which an instrument under section 2(2) of the European Communities Act 1972 may provide in respect of an offence created by such an instrument.

Part 9 — Final provisions

Interpretation

165

(1) In this Act—

“ALDA 1979” means the Alcoholic Liquor Duties Act 1979 (c. 4),

“BGDA 1981” means the Betting and Gaming Duties Act 1981 (c. 63),

“CAA 2001” means the Capital Allowances Act 2001 (c. 2),

“CEMA 1979” means the Customs and Excise Management Act 1979 (c. 2),

“CRCA 2005” means the Commissioners for Revenue and Customs Act 2005 (c. 11),

“CTA 2009” means the Corporation Tax Act 2009,

“CTA 2010” means the Corporation Tax Act 2010,

“CTTA 1984” means the Capital Transfer Tax Act 1984 (c. 51),

“HODA 1979” means the Hydrocarbon Oil Duties Act 1979 (c. 5),

“ICTA” means the Income and Corporation Taxes Act 1988 (c. 1),

“IHTA 1984” means the Inheritance Tax Act 1984 (c. 51),

“ITA 2007” means the Income Tax Act 2007 (c. 3),

“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003 (c. 1),

“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005 (c. 5),

“OTA 1975” means the Oil Taxation Act 1975 (c. 22),

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992 (c. 12),

“TMA 1970” means the Taxes Management Act 1970 (c. 9),

“TPDA 1979” means the Tobacco Products Duty Act 1979 (c. 7),

“VATA 1994” means the Value Added Tax Act 1994 (c. 23), and

“VERA 1994” means the Vehicle Excise and Registration Act 1994 (c. 22).

(2) In this Act—

“FA”, followed by a year, means the Finance Act of that year, and

“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year.

Short title

166

This Act may be cited as the Finance Act 2008.

SCHEDULE 1

Part 1 — Amendments of ITA 2007

1

ITA 2007 is amended as follows.

2

For section 7 (savings rate) substitute—

(7) The starting rate for savings is 10%.

3

(1) Section 10 (income charged at main rates: individuals) is amended as follows.

(2) Omit subsection (1).

(3) For subsection (2) substitute—

(2) Income tax on an individual's income up to the basic rate limit is charged at the basic rate (except to the extent that, in accordance with section 12, it is charged at the starting rate for savings).

(4) In subsection (4), omit the entry relating to section 12.

(5) Insert at the end—

(6) The basic rate limit is increased in some circumstances: see— (a) section 414(2) (gift aid relief), and (b) section 192(4) of FA 2004 (relief for pension contributions). (7) See section 21 for indexation of the basic rate limit.

(6) Accordingly, in the heading, omit “starting,”.

4

In section 11(2) (income charged at the basic rate: persons other than individuals), omit the reference to section 12.

5

For section 12 substitute—

(12) (1) Income tax is charged at the starting rate for savings (rather than the basic rate) on so much of an individual's income up to the starting rate limit for savings as is savings income. (2) This is subject to 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. (3) The starting rate limit for savings is £2,320. (4) See section 21 for indexation of the starting rate limit for savings. (5) Section 16 has effect for determining the extent to which a person's income up to the starting rate limit for savings consists of savings income.

6

In section 13 (income charged at dividend ordinary and dividend upper rates: individuals)—

(a) in subsection (1)(b), omit “starting or”, and

(b) in subsection (4), omit “starting,”.

7

In section 16(1) (savings and dividend income to be treated as highest part of total income), for the words from “the rate” to the end substitute

— (a) the extent to which a person's income up to the starting rate limit for savings consists of savings income, and (b) the rate at which income tax would be charged on a person's dividend income apart from section 13.

8

(1) Section 17 (repayment: tax paid at basic rate instead of starting rate or savings rate) is amended as follows.

(2) In subsection (1), for “starting or savings rate” substitute “ starting rate for savings ”.

(3) Accordingly, in the heading, for “starting or savings rate” substitute “ starting rate for savings ”.

9

For the heading before section 20 substitute— “ Indexation of basic rate limit and starting rate limit for savings ”.

10

Omit section 20 (starting rate limit and basic rate limit).

11

(1) Section 21 (indexation of starting and basic rate limits) is amended as follows.

(2) Omit subsection (2).

(3) After subsection (3) insert—

(3A) The starting rate limit for savings for the tax year is the amount found as follows. Step 1 Increase the starting rate limit for savings for the previous tax year by the same percentage as the percentage increase in the retail prices index. Step 2 If the result of Step 1 is a multiple of £10, it is the starting rate limit for savings for the tax year. If the result of Step 1 is not a multiple of £10, round it up to the nearest amount which is a multiple of £10. That amount is the starting rate limit for savings for the tax year.

(4) In subsection (4), for “(2) and (3)” substitute “ (3) and (3A) ”.

(5) In subsection (5)—

(a) for “section 20” substitute “ sections 10 and 12 ”,

(b) for “(2) and (3)” substitute “ (3) and (3A) ”, and

(c) for “starting rate limit and the basic rate limit” substitute “ basic rate limit and starting rate limit for savings ”.

(6) Accordingly, in the heading, for “starting rate limit and the basic rate limit” substitute “ basic rate limit and starting rate limit for savings ”.

12

In section 31(2), omit “or savings rate”.

13

(1) Section 158 (form and amount of EIS relief) is amended as follows.

(2) In subsection (2), for “savings rate” substitute “ EIS rate ”.

(3) After that subsection insert—

(2A) In this Part “the EIS rate” means 20%.

14

In section 209(3) (withdrawal or reduction of EIS relief: disposal of shares)—

(a) in the formula, for “S” substitute “ EISR ”, and

(b) for the definition of “S” substitute “ EISR is the EIS rate. ”

15

In section 210(1)(b) (cases where maximum EIS relief not obtained), for “savings rate for that year” substitute “ EIS rate ”.

16

In section 213(2) (withdrawal or reduction of EIS relief: value received by investor)—

(a) in the formula, for “S” substitute “ EISR ”, and

(b) for the definition of “S” substitute “ EISR is the EIS rate. ”

17

In section 220(1)(b) (cases where maximum EIS relief not obtained), for “savings rate for that year” substitute “ EIS rate ”.

18

In section 224(2) (withdrawal or reduction of EIS relief: repayments etc of share capital to other persons)—

(a) in the formula, for “S” substitute “ EISR ”, and

(b) for the definition of “S” substitute “ EISR is the EIS rate. ”

19

In section 229(1)(b) (cases where maximum EIS relief not obtained), for “savings rate for that year” substitute “ EIS rate ”.

20

In section 414(2) (relief for gifts to charity), for “section 20” substitute “ section 10 ”.

21

In section 486(1) (how allowable expenses are to be set against trust rate income), in Step 5, for “savings rate” substitute “ basic rate ”.

22

(1) Section 498 (types of income tax for purposes of section 497) is amended as follows.

(2) In subsection (1), in Type 3A, for “savings rate” substitute “ basic rate ”.

(3) In that subsection, in Type 4, omit “or at the savings rate”.

(4) In subsection (2A), for “savings rate” substitute “ basic rate ”.

23

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

24

In section 745(1) (rates of tax applicable to income charged under sections 720 and 727 etc), for “savings rate” substitute “ starting rate for savings ”.

25

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

26

In section 874(2) (deduction from payments of yearly interest), for “savings rate” substitute “ basic rate ”.

27

In section 889(4) (deduction from payments in respect of building society securities), for “savings rate” substitute “ basic rate ”.

28

In section 892(2) (deduction from UK public dividends), for “savings rate” substitute “ basic rate ”.

29

In section 901(4) (deduction from annual payments made by other persons), for “the applicable rate (see section 902)” substitute “ the basic rate in force for the tax year in which the payment is made ”.

30

Omit section 902 (meaning of “applicable rate” in section 901).

31

In section 919(2) (manufactured interest on UK securities: payments by UK residents etc), for “savings rate” substitute “ basic rate ”.

32

In section 939(2) (duty to retain bonds where issue treated as payment of interest), for “savings rate” substitute “ basic rate ”.

33

(1) Section 989 (definitions) is amended as follows.

(2) In the definition of “basic rate limit”, for “20(2)” substitute “ 10 ”.

(3) Omit the definition of “savings rate”.

(4) For the definitions of “starting rate” and “starting rate limit” substitute—

“starting rate for savings” has the meaning given by section 7, “starting rate limit for savings” has the meaning given by section 12,

34

In section 1014(5)(b)(i) (orders and regulations not subject to annulment), for “starting rate limit and basic rate limit” substitute “ basic rate limit and starting rate limit for savings ”.

35

In Schedule 1 (consequential amendments), omit paragraphs 85(2), 86, 112, 151, 152, 191, 244, 259, 279, 530, 535(2), 536(3), 537, 538, 564, 565 and 592(47) and (49).

36

(1) Schedule 4 (index of defined expressions) is amended as follows.

(2) After the entry relating to “EIS” insert—

EIS rate (in Part 5)	section 158(2A)

(3) For the entries relating to “starting rate” and “starting rate limit” substitute—

starting rate for savings	section 7
starting rate limit for savings	section 12

(4) Omit the entry relating to “savings rate”.

Part 2 — Other amendments

TMA 1970

37

TMA 1970 is amended as follows.

38

In section 7(6) (notice of liability to income tax and capital gains tax), for “, the savings rate or the starting rate” substitute “ or the starting rate for savings ”.

39

In section 91(3)(c) (effect of interest on reliefs), for “, the savings rate or the starting rate” substitute “ or the starting rate for savings ”.

ICTA

40

ICTA is amended as follows.

41

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

42

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

43

In section 552(5)(f)(i) (information: duty of insurers), for “savings rate” substitute “ basic rate ”.

44

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

45

In section 701(3A) (estates of deceased persons in administration), omit—

(a) “, the savings rate” (in both places),

(b) “at the savings rate or”, and

46

Omit section 789(2) (double taxation arrangements made under old law: surtax).

FA 1989

47

In section 88(1) of FA 1989 (insurance companies: policy holders' share of profits), for “savings rate” substitute “ basic rate ”.

TCGA 1992

48

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

FA 1996

49

Omit paragraph 21 of Schedule 6 to FA 1996 (which amends section 789(2) of ICTA).

ITTOIA 2005

50

ITTOIA 2005 is amended as follows.

51

In section 465A(1)(b) (gains from contracts for life insurance etc: amounts for which individuals liable to be treated as highest part of total income), for “savings rate” substitute “ basic rate ”.

52

In section 466(2) (gains from contracts for life insurance etc: personal representatives), for “savings rate” substitute “ basic rate ”.

53

In section 467(7) (gains from contracts for life insurance etc: UK resident trustees), for “savings rate” substitute “ basic rate ”.

54

(1) Section 530 (gains from contracts for life insurance etc: income tax treated as paid) is amended as follows.

(2) In subsection (1), for “savings rate” substitute “ basic rate ”.

(3) Omit subsection (6).

55

In section 535(3) (gains from contracts for life insurance etc: top slicing relief)—

(a) for “SRL” in both places substitute “ BRL ”, and

(b) for “savings rate” substitute “ basic rate ”.

56

In section 536(1) (gains from contracts for life insurance etc: top slicing relieved liability-one chargeable event), for “savings rate” substitute “ basic rate ”.

57

In section 537 (gains from contracts for life insurance etc: top slicing relieved liability-two or more chargeable events), for “savings rate” substitute “ basic rate ”.

58

In section 539(5) (gains from contracts for life insurance etc: relief for deficiencies)—

(a) omit Step 2,

(b) in Step 3, for “2” substitute “ 1 ” and omit “other”, and

59

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

60

In section 679(3) (income from which basic amounts are treated as paid), omit paragraph (b) (apart from the “and” at the end).

61

In section 680(4) (income treated as bearing income tax), for “savings rate” substitute “ basic rate ”.

62

(1) Section 680A (income treated as savings income or dividend income) is amended as follows.

(2) In subsection (1)—

(a) for “Subsections (2) and (3) apply” substitute “ Subsection (3) applies ”, and

(b) omit “the savings rate or”.

(3) Omit subsection (2).

(4) In subsection (3), for the words from the beginning to “it” substitute “ The income ”.

(5) In subsection (4)—

(a) for “Subsections (5) and (6) apply” substitute “ Subsection (6) applies ”, and

(b) omit “the savings rate or”.

(6) Omit subsection (5).

(7) In subsection (6), for the words from the beginning to “it” substitute “ The income ”.

(8) Accordingly, in the heading omit “savings income or”.

63

(1) Schedule 4 (index of defined expressions) is amended as follows.

(2) For the entry relating to “starting rate” substitute—

starting rate for savings	section 7 of ITA 2007 (as applied by section 989 of that Act)
starting rate limit for savings	section 12 of ITA 2007 (as applied by section 989 of that Act)

(3) Omit the entry relating to “savings rate”.

F(No.2)A 2005

64

In section 7(5) of F(No.2)A 2005 (charge to income tax on social security pension lump sum)—

(a) omit paragraph (b), and

(b) in paragraph (c), for “exceeds the starting rate limit” substitute “ is greater than nil ”.

Part 3 — Commencement

65

Apart from the amendments made by paragraph 11, the amendments made by this Schedule have effect for the tax year 2008-09 and subsequent tax years.

SCHEDULE 2

Rate: consequentials

1

TCGA 1992 is amended as follows.

2

In section 2(7)(a) (chargeable gains and allowable losses), omit “77 or”.

3

Omit section 6 (rates: special cases).

4

In section 13(7A) (attribution of gains to members of non-resident companies: ordering rules), omit paragraphs (b) to (d).

5

Omit sections 77 to 79 (charge on settlor with interest in settlement).

6

Omit section 88(6) (gains of dual resident settlements: sections 77 to 79 to be ignored).

7

(1) Schedule 4A (disposal of interest in settled property: deemed disposal of underlying assets) is amended as follows.

(2) In paragraph 7—

(a) in sub-paragraph (4), for “77(2) to (5) and (8)” substitute “ 169F(2) to (6) ”, and

(b) in sub-paragraph (5)(c), for “77(2A)(a) or (b)” substitute “ 169F(3A)(a) or (b) ”.

(3) In paragraph 12—

(a) for “section 79(1) and (3) to (5A)” substitute “ paragraphs 7 and 8(1), (3), (6) and (7) of Schedule 5 ”, and

(b) for “sections 77 and 78” substitute “ section 86 ”.

8

(1) Schedule 4B (transfers of value by trustees linked with trustee borrowing) is amended as follows.

(2) In paragraph 1(1), omit “77,”.

(3) In paragraph 3, omit—

(a) in sub-paragraph (1), “77,”, and

(b) sub-paragraph (2),

and in the heading before it omit “77,”.

9

Omit paragraph 6(3) of Schedule 4C (attribution of gains to beneficiaries: sections 77 to 79 to be ignored).

10

In paragraph 1(1) of Schedule 5 (construction of section 86(1)(e)), for “sections 3 and 77 to 79” substitute “ section 3 ”.

11

Chapter 4 of Part 2 of FA 2005 (trusts with vulnerable beneficiary) is amended as follows.

12

In section 23(4) (introduction), for “33” substitute “ 32 ”.

13

In section 26(1) (income tax: amount of relief), in the definition of VQTI, after “extra” insert “ income ”.

14

(1) Section 28 (vulnerable person's liability: VQTI) is amended as follows.

(2) In subsection (1), after “total” (in both cases) insert “ income ”.

(3) In subsection (2), omit “and capital gains tax”.

(4) In subsection (4), omit paragraph (b) and the “and” before it.

(5) In subsection (7), omit paragraph (b) and the “and” before it.

15

In section 30 (qualifying trust gains: special capital gains tax treatment), omit subsections (1A) and (3A).

16

(1) Section 31 (UK resident vulnerable persons: section 77 treatment) is amended as follows.

(2) For subsections (2) and (3) substitute—

(2) The trustees' liability to capital gains tax for the tax year is to be reduced by an amount equal to— $$TQTG-VQTG$where—TQTG is the amount of capital gains tax to which the trustees would (apart from this Chapter) be liable for the tax year in respect of the qualifying trust gains, andVQTG is the amount arrived at under subsection (3).$ (3) That amount is— $$TLVA-TLVB$where—TLVB is the total amount of capital gains tax to which the vulnerable person is liable for the tax year, andTLVA is what TLVB would be if the qualifying trust gains accrued to the vulnerable person (instead of to the trustees) and no allowable losses were deducted from the qualifying trust gains.$

(3) In the heading, for “section 77 treatment” substitute “ amount of relief ”.

17

(1) Section 32 (non-UK resident vulnerable persons: amount of relief) is amended as follows

(2) In subsection (2), for the definition of VQTG substitute— “ VQTG is the amount arrived at under subsection (3). ”

(3) After that subsection insert—

(3) That amount is— $$TLVA-TLVB$where—TLVB is the total amount of capital gains tax to which the vulnerable person would be liable for the tax year if the vulnerable person's taxable amount for the tax year for the purposes of section 3 of TCGA 1992 were equal to the vulnerable person's deemed CGT taxable amount for the tax year (if any), andTLVA is what TLVB would be if the vulnerable person's taxable amount for the tax year for the purposes of section 3 of TCGA 1992 were equal to the aggregate of the vulnerable person's deemed CGT taxable amount for the tax year (if any) and the amount of the qualifying trust gains.$ (4) For the purposes of this section the vulnerable person's deemed CGT taxable amount for the tax year is to be determined in accordance with Schedule 1.

18

Omit section 33 (non-UK resident vulnerable person's liability: VQTG).

19

In section 41(3) (interpretation), for “33” substitute “ 32 ”.

20

(1) Schedule 1 (non-UK resident vulnerable persons: interpretation) is amended as follows.

(2) Omit paragraphs 1 and 2.

(3) Omit paragraph 4.

(4) In paragraph 7(1), for “paragraphs 4 and 6” substitute “ paragraph 6 ”.

21

In consequence of section 8 and paragraphs 1 to 20, omit—

(a) paragraphs 27 to 29 of Schedule 17 to FA 1995,

(b) paragraphs 24 and 25 of Schedule 4 to F(No.2)A 1997,

(i) section 120, and

(ii) paragraph 6(1) of Schedule 21,

(d) section 26 of FA 1999,

(e) section 37 of FA 2000,

(f) paragraph 3 of Schedule 11 to FA 2002,

(g) paragraph 2 of Schedule 21 to FA 2004,

(h) paragraphs 427 and 428 of Schedule 1 to ITTOIA 2005,

(i) section 44(2) of FA 2005,

(j) paragraphs 3, 13, 29, 31 and 48(1) of Schedule 12 to FA 2006, and

(k) paragraphs 295, 296 and 301 of Schedule 1 to ITA 2007.

22

The amendments made by paragraphs 1 to 21 have effect for the tax year 2008-09 and subsequent tax years.

Abolition of taper relief

23

TCGA 1992 is amended as follows.

24

(1) Section 2 (chargeable gains and allowable losses) is amended as follows.

(2) For subsections (4) to (6) substitute—

(4) If chargeable gains are treated by virtue of section 87 or 89(2) as accruing to a person in a tax year (“the relevant deemed gains”)— (a) subsection (2) has effect as if the relevant deemed gains had not accrued, and (b) the amount on which the person is charged to capital gains tax for that year is the sum of— (i) the amount given by subsection (2) as it has effect by virtue of paragraph (a), and (ii) the amount of the relevant deemed gains. (5) In subsection (4) the reference to section 87 or 89(2) is to that section read, where appropriate, with section 10A.

(3) In subsection (7), omit—

(a) in paragraph (b) of the first sentence, sub-paragraph (ii) and the “and” before it,

(b) in paragraph (c) of the first sentence, “(“the equal tapered amounts”)”, and

(c) in the words following paragraph (c) in the first sentence, and in the second sentence (in both places), “equal-tapered”.

(4) Omit subsection (8).

25

Omit section 2A (taper relief).

26

(1) Section 3 (annual exempt amount) is amended as follows.

(2) In subsection (5), for the words from “which, after” to the end of paragraph (c) substitute “ which ”.

(3) In subsection (5C)(c)—

(a) for “in a year in which any amount falls to be brought into account by virtue of section 2(5)(b)” substitute “ if section 2(4) applies for that year, ”, and

(b) for “falling to be so brought into account” substitute “ mentioned in section 2(4)(b)(ii) ”.

27

In section 3A(2) (reporting limits)—

(a) omit paragraph (a), and

(b) in paragraph (b), for “such a deduction does fall to be made is the amount before deduction of losses or any reduction for taper relief” substitute “ a deduction falls to be made in respect of allowable losses is the amount before the deduction ”.

28

Omit section 13(10A) (attribution of gains to members of non-resident companies).

29

(1) Section 62 (death) is amended as follows

(2) In subsection (2A), for “brought into account for that year by virtue of section 2(5)(b)” substitute “ treated as accruing by virtue of section 87 or 89(2) (read, where appropriate, with section 10A) ”.

(3) Omit subsection (2B).

30

In section 86(1)(e) (attribution of gains to settlors with interest in non-resident or dual resident settlements), for the words after “under section 2(2)” substitute “ if the assumption as to residence specified in subsection (3) below were made; ”.

31

(1) Section 86A (attribution of gains to settlor in section 10A cases) is amended as follows.

(2) In subsection (2)—

(a) for “the tapered section 86(1)(e) amount” substitute “ the amount falling within section 86(1)(e) ”, and

(b) for “the tapered section 86(1)(e) amounts” substitute “ the amounts falling within section 86(1)(e) ”.

(3) Omit subsection (2A).

(4) Omit subsection (2B).

(5) In subsection (7), for “the tapered section 10A amount” substitute “ the amount (or aggregate amount) falling in accordance with that section to be so attributed ”.

(6) Omit subsection (7A).

32

Omit section 150D (enterprise investment scheme: application of taper relief).

33

In subsection (8) of section 165 (relief for gifts of business assets), for paragraph (aa) substitute—

(aa) “holding company”, “trading company” and “trading group” have the meaning given by section 165A; and

34

After that section insert—

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