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Finance Act 2009

Type Public General Act

Publication 2009-07-21

Last updated 2025-09-01

State In force

Department Statute Law Database

Source legislation.gov.uk

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(a) anything previously done under it, or

(b) the making of a new order.

Interpretation: general

24

(1) Expressions used in this Schedule and in VATA 1994 have the same meaning in this Schedule as in that Act.

(2) In this Schedule—

(a) “treated as taking place” means treated as taking place for the purposes of the charge to VAT, and

(b) references to the person by or to whom a supply is made (however expressed) are to the person by or to whom the supply is treated as being made for the purposes of VATA 1994.

Part 6 — Amendments of VATA 1994

25

(1) VATA 1994 is amended as follows.

(2) In section 2(2) (orders increasing or decreasing rate of VAT), after “such order” insert “ that has not previously expired or been revoked ”.

(3) In section 97 (orders, rules and regulations), after subsection (4) insert—

(4A) Where an order under section 2(2) is in force, the reference in subsection (4)(c)(i) of this section to the rate of VAT in force under section 2 at the time of the making of an order is a reference to the rate which would be in force at that time if no such order had been made.

SCHEDULE 4

1

VERA 1994 is amended as follows.

2

(1) Section 3 (duration of licences) is amended as follows.

(2) In subsection (4)(b), for “a licence taken out on the first registration under this Act of” substitute “ the first vehicle licence for ”.

(3) Insert at the end—

(7) Neither subsection (2) nor any order under subsection (3) permits the first vehicle licence for a vehicle to be taken out for a period of less than twelve months if the annual rate of vehicle excise duty chargeable on the licence would be lower if it were not the first vehicle licence for the vehicle.

3

(1) Section 19 (rebates) is amended as follows.

(2) In subsection (1), for “from the Secretary of State the amount specified in subsection (2)” substitute “ the relevant amount from the Secretary of State ”.

(3) Omit subsection (2).

(4) After subsection (3) insert—

(3A) Subject to subsection (3B), the relevant 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. (3B) Where— (a) the licence is the first vehicle licence for the vehicle, (b) the application is made by virtue of paragraph (d), (e) or (f) of subsection (3), and (c) the annual rate of duty rate chargeable on the licence (at the time when it was taken out) would have been lower if it had not been the first vehicle licence for the vehicle, the relevant amount is an amount equal to one-twelfth of that lower annual rate of duty in respect of each such complete month.

4

(1) Section 62 (definitions) is amended as follows.

(2) In subsection (1), after the definition of “exempt vehicle” insert—

“first vehicle licence”, in relation to a vehicle, means (subject to subsections (1B) and (1C)) the vehicle licence for the vehicle on the issue of which the vehicle is first registered under this Act (so that, if the vehicle is first registered on the issue of a nil licence, there is no first vehicle licence in relation to it),

(3) After subsection (1A) insert—

(1B) Where a vehicle is first registered under this Act on the issue of a temporary licence, the “first vehicle licence” in relation to the vehicle is the first vehicle licence subsequently issued for it. (1C) Where a vehicle— (a) has been registered under the law of a country or territory outside the United Kingdom, (b) is first registered under this Act more than 6 months after the time when it was first registered as mentioned in paragraph (a), and (c) has travelled more than 6,000 kilometres under its own power before it is first registered under this Act, there is no first vehicle licence in relation to the vehicle.

5

(1) Schedule 1 (annual rates of duty) is amended as follows.

(2) In paragraph 1A (vehicles to which Part 1A applies)—

(a) in sub-paragraph (1)(a), after “registered”, and

(b) in sub-paragraph (5), after “registration”,

insert “, under this Act or under the law of a country or territory outside the United Kingdom,”.

(3) In paragraph 1C (the reduced rate)—

(a) in sub-paragraph (3)(a), after “registration” insert “ , under this Act or under the law of a country or territory outside the United Kingdom, ”,

(b) in sub-paragraph (3)(b), for “its” substitute “ that ”, and

(4) In paragraph 1H (vehicles to which Part 1B applies)—

(a) in sub-paragraph (1)(a), after “registered”, and

(b) in sub-paragraph (3), after “registration”,

insert “, under this Act or under the law of a country or territory outside the United Kingdom,”.

(5) In paragraph 1K(a) (pre-2007 lower-emission vans), after “registered” insert “ , under this Act or under the law of a country or territory outside the United Kingdom, ”.

(6) In paragraph 1M(a) (post-2008 lower-emission vans), after “registered” insert “ , under this Act or under the law of a country or territory outside the United Kingdom, ”.

6

(1) Paragraph 25 of Schedule 2 (exempt vehicles: light passenger vehicles with low CO₂ emissions) is re-numbered as sub-paragraph (1) of that paragraph.

(2) After that sub-paragraph insert—

(2) A vehicle is an exempt vehicle for the appropriate period if— (a) it is a vehicle to which Part 1A of Schedule 1 applies, and (b) the applicable CO₂ emissions figure (as defined in paragraph 1A(3) and (4) of that Schedule) exceeds 100g/km but does not exceed 130g/km. (3) “The appropriate period” is the period for which (if the vehicle were not an exempt vehicle by virtue of sub-paragraph (2)) the first vehicle licence for the vehicle would (if taken out) have effect.

7

(1) The amendments made by this Schedule have effect in relation to licences taken out on or after 1 April 2010.

(2) But the amendments made by paragraph 5 do not have effect in relation to vehicles first registered under this Act before that date.

SCHEDULE 5

Amendments

1

Chapter 4 of Part 1 of FA 1994 (air passenger duty) is amended as follows.

2

(1) Section 30 (rates of duty) is amended as follows.

(2) After subsection (8) insert—

(8A) The Treasury may by order amend Schedule 5A.

(3) Omit subsections (9) to (9B).

3

For section 39 substitute—

(39) (1) This section applies if the Commissioners consider that, having regard to difficulties encountered or expected to be encountered by any registered operator in obtaining and recording information about passengers and their journeys, it is appropriate for this Chapter to have effect in relation to the registered operator in accordance with a special accounting scheme. (2) The Commissioners may agree with the registered operator that this Chapter is to have effect in relation to the registered operator in accordance with a special accounting scheme agreed between the Commissioners and the registered operator (but subject to subsection (4)). (3) A special accounting scheme is a scheme which makes provision for methods of calculating— (a) how many persons are to be regarded for the purposes of this Chapter as chargeable passengers carried by chargeable aircraft operated by a registered operator, and (b) how many of those are to be so regarded as having been so carried on journeys in respect of which duty is chargeable at any particular rate. (4) The Commissioners may publish a notice specifying terms and conditions subject to which special accounting schemes are to have effect. (5) Where the Commissioners and a registered operator have agreed that this Chapter is to have effect in relation to the registered operator in accordance with a special accounting scheme, this Chapter has effect in relation to the registered operator in accordance with the scheme (and with any notice under subsection (4) which has been published by the Commissioners and not withdrawn) for the period agreed by the Commissioners and the registered operator. (6) The Commissioners and the registered operator may at any time agree to vary the special accounting scheme for the future. (7) The Commissioners may at any time terminate the operation of the special accounting scheme— (a) on the application of the registered operator, or (b) where they have reasonable grounds for doing so, by giving notice to the registered operator.

4

In section 42(4) (orders), after “chargeable passengers” insert “ , or to increase the rate of air passenger duty to be charged on the carriage of any chargeable passengers whose journeys end in any place, ”.

5

After Schedule 5 insert—

SCHEDULE 5A

Albania	Finland	Latvia	Portugal (including Madeira)
Algeria	France (including Corsica)	Libya	Romania
Andorra	Germany	Liechtenstein	Russian Federation, west of the Urals
Austria	Gibraltar	Lithuania	San Marino
Azores	Greece	Luxembourg	Serbia
Belarus	Greenland	Former Yugoslav Republic of Macedonia	Slovak Republic
Belgium	Guernsey	Malta	Slovenia
Bosnia and Herzegovina	Hungary	Moldova	Spain (including the Balearic Islands and the Canary Islands)
Bulgaria	Iceland	Monaco	Sweden
Croatia	Republic of Ireland	Montenegro	Switzerland
Cyprus	Isle of Man	Morocco	Tunisia
Czech Republic	Italy (including Sicily and Sardinia)	Netherlands	Turkey
Denmark (including the Faroe Islands)	Jersey	Norway (including Svalbard)	Ukraine
Estonia	Republic of Kosovo	Poland	Western Sahara
Afghanistan	Egypt	Kazakhstan	Saudi Arabia
---	---	---	---
Armenia	Equatorial Guinea	Kuwait	Senegal
Azerbaijan	Eritrea	Kyrgyzstan	Sierra Leone
Bahrain	Ethiopia	Lebanon	Sudan
Benin	Gabon	Liberia	Syria
Bermuda	Gambia	Mali	Tajikistan
Burkina Faso	Georgia	Mauritania	Togo
Cameroon	Ghana	Niger	Turkmenistan
Canada	Guinea	Nigeria	Uganda
Cape Verde	Guinea-Bissau	Oman	United Arab Emirates
Central African Republic	Iran	Pakistan	United States of America
Chad	Iraq	Qatar	Uzbekistan
Democratic Republic of Congo	Israel and the Occupied Palestinian Territories	Russian Federation, east of the Urals	Yemen
Republic of Congo	Ivory Coast	Saint Pierre and Miquelon
Djibouti	Jordan	Sao Tome and Principe
Angola	Cuba	Macao SAR	Saint Helena
---	---	---	---
Anguilla	Dominica	Madagascar	Saint Lucia
Antigua and Barbuda	Dominican Republic	Malawi	Saint Martin
Aruba	Ecuador	Maldives	Saint Vincent and the Grenadines
Ascension Island	El Salvador	Martinique	Seychelles
Bahamas	French Guiana	Mauritius	Somalia
Bangladesh	Grenada	Mayotte	South Africa
Barbados	Guadeloupe	Mexico	Sri Lanka
Belize	Guatemala	Mongolia	Suriname
Bhutan	Guyana	Montserrat	Swaziland
Botswana	Haiti	Mozambique	Tanzania
Brazil	Honduras	Namibia	Thailand
British Indian Ocean Territory	Hong Kong SAR	Nepal	Trinidad and Tobago
British Virgin Islands	India	Netherlands Antilles	Turks and Caicos Islands
Burma	Jamaica	Nicaragua	Venezuela
Burundi	Japan	Panama	Vietnam
Cayman Islands	Kenya	Puerto Rico	Virgin Islands
China	North Korea	Reunion	Zambia
Colombia	South Korea	Rwanda	Zimbabwe.
Comoros	Laos	Saint Barthelemy
Costa Rica	Lesotho	Saint Christopher and Nevis (St Kitts and Nevis)

Consequential repeals

6

In consequence of the amendments made by section 17 and this Schedule, omit—

(a) in FA 1995, section 15,

(b) in FA 2000, in section 18—

(i) subsections (1) to (5), and

(ii) subsection (7),

(d) in FA 2007, section 12.

Commencement etc

7

The amendments made by paragraphs 2(3) and 6(a), (b)(i), (c) and (d) have effect in relation to the carriage of passengers beginning on or after 1 November 2009.

8

(1) No agreement for Chapter 4 of Part 1 of FA 1994 to have effect in relation to a registered operator in accordance with a special accounting scheme pursuant to section 39 of FA 1994 as substituted by paragraph 3 may be made so as to have effect as respects the carriage of passengers beginning before 1 November 2009.

(2) Nothing in this Schedule affects the continuing operation of, or of schemes prepared under, that section as it has effect immediately before this Act is passed as respects the carriage of passengers beginning before 1 November 2009.

SCHEDULE 6

Income tax

1

(1) A person who has made a loss in a trade in the tax year 2008-09 or 2009-10 may make a claim for relief under this paragraph if—

(a) relief is available to the person under section 64 of ITA 2007 (trade loss relief against general income) in relation to an amount of the loss (“the section 64 amount”), and

(b) condition A or B is met.

(2) Condition A is that the person makes a claim under that section for relief in respect of the section 64 amount—

(a) where it is a loss made in the tax year 2008-09, for either or both of the tax years 2007-08 and 2008-09, or

(b) where it is a loss made in the tax year 2009-10, for either or both of the tax years 2008-09 and 2009-10.

(3) Condition B is that—

(a) where it is a loss made in the tax year 2008-09, for the tax years 2007-08 and 2008-09, or

(b) where it is a loss made in the tax year 2009-10, for the tax years 2008-09 and 2009-10,

the person's total income is nil or does not include any income from which a deduction could be made in pursuance of a claim under that section for relief in respect of the section 64 amount.

(4) The amount of the loss that may be relieved under this paragraph (“the deductible amount”) is—

(a) in a case where condition A is met, so much of the section 64 amount as cannot be relieved pursuant to the claim under section 64 of ITA 2007, and

(b) in a case where condition B is met, the whole of the section 64 amount,

(but see sub-paragraph (12)).

(5) A claim for relief under this paragraph is for the deductible amount to be deducted (in accordance with sub-paragraph (6) and with whichever is applicable of sub-paragraphs (7), (8), (9) and (10))—

(a) where it is a loss made in the tax year 2008-09, in either or both of the following ways—

(i) in computing the person's total income for either or both of the tax years 2005-06 and 2006-07 in accordance with section 835 of ICTA, and

(ii) in calculating the person's net income for the tax year 2007-08 in accordance with Step 2 of the calculation in section 23 of ITA 2007 (which applies as if this paragraph were a provision listed in section 24 of that Act), or

(b) where it is a loss made in the tax year 2009-10, in either or both of the following ways—

(i) in computing the person's total income for the tax year 2006-07 in accordance with section 835 of ICTA, and

(ii) in calculating the person's net income for either or both of the tax years 2007-08 and 2008-09 in accordance with Step 2 of the calculation in section 23 of ITA 2007 (which applies as if this paragraph were a provision listed in section 24 of that Act).

(6) A deduction is to be made only from profits of the trade (and accordingly, in relation to the tax years 2007-08 and 2008-09, subsection (2) of section 25 of ITA 2007 has effect as if this sub-paragraph were included in subsection (3) of that section).

(7) This sub-paragraph explains how the deductions are to be made in a case where the loss is made in the tax year 2008-09 and the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for the tax year 2007-08.

Step 1

Deduct the deductible amount from the profits of the trade for the tax year 2006-07.

Step 2

Deduct from the profits of the trade for the tax year 2005-06 so much of the deductible amount as has not been deducted under Step 1.

(8) This sub-paragraph explains how the deductions are to be made in any other case where the loss is made in the tax year 2008-09.

Step 1

Deduct the deductible amount from the profits of the trade for the tax year 2007-08.

Step 2

Deduct from the profits of the trade for the tax year 2006-07 so much of the deductible amount as has not been deducted under Step 1.

Step 3

Deduct from the profits of the trade for the tax year 2005-06 so much of the deductible amount as has not been deducted under Step 1 or 2.

(9) This sub-paragraph explains how the deductions are to be made in a case where the loss is made in the tax year 2009-10 and the person makes a claim under section 64 of ITA 2007 for relief in respect of the section 64 amount for the tax year 2008-09.

Step 1

Deduct the deductible amount from the profits of the trade for the tax year 2007-08.

Step 2

Deduct from the profits of the trade for the tax year 2006-07 so much of the deductible amount as has not been deducted under Step 1.

(10) This sub-paragraph explains how the deductions are to be made in any other case where the loss is made in the tax year 2009-10.

Step 1

Deduct the deductible amount from the profits of the trade for the tax year 2008-09.

Step 2

Deduct from the profits of the trade for the tax year 2007-08 so much of the deductible amount as has not been deducted under Step 1.

Step 3

Deduct from the profits of the trade for the tax year 2006-07 so much of the deductible amount as has not been deducted under Step 1 or 2.

(11) The provision made by the preceding provisions means that the following sections of ITA 2007 apply in relation to relief under this paragraph as in relation to relief under section 64 of that Act—

(a) section 66 to 70 (restrictions on relief under section 64),

(b) sections 74ZA to 74D (general restrictions on relief),

(c) sections 75 to 79 (restrictions on relief under section 64 and early trade losses relief in relation to capital allowances),and

(d) section 80 (restrictions on those reliefs in relation to ring fence income), ...

(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(12) The total amount that may be deducted in accordance with sub-paragraph (7), or in accordance with Steps 2 and 3 in sub-paragraph (8), is limited to £50,000; and the total amount that may be deducted in accordance with sub-paragraph (9), or in accordance with Steps 2 and 3 in sub-paragraph (10), is also limited to £50,000.

2

(1) A claim for relief under paragraph 1 must be made—

(a) where the relief is in respect of a loss made in the tax year 2008-09, on or before the first anniversary of the normal self-assessment filing date for that tax year, and

(b) where the relief is in respect of a loss made in the tax year 2009-10, on or before the first anniversary of the normal self-assessment filing date for that tax year.

(2) Paragraph 1 applies to professions and vocations as it applies to trades.

(3) Paragraph 1 is subject to paragraph 2 of Schedule 1B to TMA 1970 (claims for loss relief involving 2 or more years).

(4) Sections 61 to 63 of ITA 2007 (meaning of “making a loss in a tax year” etc and prohibition against double counting) have effect as if paragraph 1 were included in Chapter 2 of Part 4 of that Act.

(5) Subsections (1) to (3) of section 127 of that Act (UK furnished holiday lettings business treated as trade) have effect as if paragraph 1 were included in Part 4 of that Act.

(6) The reference in paragraph 3(1) of Schedule 2 to the Social Security Contributions and Benefits Act 1992 and the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (levy of Class 4 contributions with income tax) to section 64 of ITA 2007 includes paragraph 1.

Corporation tax

3

(1) Sections 37(3)(b) and 38(1) and (3) of CTA 2010 (trade loss relief against profits of same or earlier accounting period) have effect in relation to any loss to which this paragraph applies as if the references to 12 months were references to 3 years (but subject as follows).

(2) This paragraph applies to any loss incurred by a company in a trade in a relevant accounting period (but subject to sub-paragraph (3)); and a relevant accounting period is one ending after 23 November 2008 and before 24 November 2010.

(3) The maximum amount of loss to which this paragraph applies in the case of any company is—

(a) £50,000 in relation to losses incurred in relevant accounting periods ending after 23 November 2008 and before 24 November 2009, and

(b) £50,000 in relation to losses incurred in relevant accounting periods ending after 23 November 2009 and before 24 November 2010;

and the overall limit or limits apply whether a loss is incurred by the company in only one relevant accounting period or losses are so incurred in more than one such period.

(4) Subject to that, if in the case of the company the length of a relevant accounting period is less than one year, the maximum amount of the loss incurred in that period that may be relieved under section 37 of CTA 2010 by virtue of this paragraph is the relevant proportion of £50,000.

(5) “The relevant proportion” is—

$$RAPY$where—RAP is the number of days in the relevant accounting period, andY is 365.$

(6) The reference in subsection (2) of section 40 of CTA 2010 to the loss mentioned in subsection (1)(a) of that section (so far as not a terminal loss and so far as not exceeding the allowance mentioned in subsection (1)(b) of that section) (“the section 40 loss”) has effect in relation to a relevant accounting period as a reference to so much of the section 40 loss as exceeds that which can be set off under section 37 by virtue of this paragraph.

SCHEDULE 7

Part 1 — Amendments of Part 14 of CTA 2009

1

Part 14 of CTA 2009 (remediation of contaminated land) is amended as follows.

2

In the heading of the Part, after “contaminated” insert “ or derelict ”.

3

(1) Section 1143 (overview of Part) is amended as follows.

(2) In subsection (1), after “contamination” insert “ or dereliction ”.

(3) In subsection (7), after “contaminated” insert “ or derelict ”.

4

(1) Section 1144 (“qualifying land remediation expenditure”) is amended as follows.

(2) In subsection (1), for “E” substitute “ F ”.

(3) In subsection (2), insert at the end “or a derelict state (see section 1145A)”.

(4) In subsection (3), after “contaminated” insert “ or derelict ”.

(5) For subsection (4) substitute—

(4) Condition C is that it is— (a) in the case of land in a contaminated state, expenditure on relevant contaminated land remediation undertaken by the company (see section 1146), or (b) in the case of land in a derelict state, expenditure on relevant derelict land remediation so undertaken (see section 1146A).

(6) In subsection (5), for paragraph (c) (and the “or” before it) substitute—

(c) incurred in respect of relevant land remediation contracted out by the company to another person with whom the company is not connected, or (d) qualifying expenditure on connected sub-contracted land remediation (see section 1175).

(7) After subsection (6) insert—

(6A) Condition F is that the expenditure is not incurred on landfill tax.

5

For section 1145 substitute—

(1145) (1) For the purposes of this Part land is in a contaminated state if (and only if), because of something in, on or under the land, the land is in a condition such that— (a) relevant harm is being caused, or (b) there is a serious possibility that relevant harm will be caused. (2) But land is not in a contaminated state by reason of the presence in, on or under it of— (a) living organisms or decaying matter deriving from living organisms, air or water, or (b) anything present otherwise than as a result of industrial activity. (3) The Treasury may by order specify circumstances in which subsection (2) is not to apply to the extent specified in the order; and an order under this subsection may contain incidental, supplemental, consequential and transitional provision and savings. (4) In this section “relevant harm” means— (a) death of living organisms or significant injury or damage to living organisms, (b) significant pollution of controlled waters, (c) a significant adverse impact on the ecosystem, or (d) structural or other significant damage to buildings or other structures or interference with buildings or other structures that significantly compromises their use. (1145A) For the purposes of this Part land is in a derelict state if (and only if) the land— (a) is not in productive use, and (b) cannot be put into productive use without the removal of buildings or other structures. (1145B) (1) A nuclear site is not land in a contaminated state or land in a derelict state for the purposes of this Part. (2) “Nuclear site” means— (a) any site in respect of which a nuclear site licence is for the time being in force, or (b) any site in respect of which, after the revocation or surrender of a nuclear site licence, the period of responsibility of the licensee has not yet come to an end. (3) In subsection (2) “nuclear site licence”, “licensee” and “period of responsibility” have the same meaning as in the Nuclear Installations Act 1965.

6

(1) Section 1146 (“relevant land remediation”) is amended as follows.

(2) In subsection (1)—

(a) for “land remediation”, in relation to land” substitute “contaminated land remediation”, in relation to land which is in a contaminated state and in which a major interest has been”, and

(b) for “and B” substitute “ to C ”.

(3) In subsection (3)—

(a) in paragraph (a), for “harm, or any pollution of controlled waters,” substitute “ relevant harm ”, and

(b) omit paragraph (b) (and the “or” before it).

(4) After that subsection insert—

(3A) Condition C is that the activities are not— (a) activities of a description specified by order made by the Treasury, or (b) activities required by or by virtue of any enactment specified by such an order. (3B) An order under subsection (3A) may contain incidental, supplemental, consequential and transitional provision and savings.

(5) In subsection (5), for the words after “(and only if)” substitute

because of something in, on or under the land by virtue of which it is contaminated land, the land is in a condition such that— (a) significant pollution of those waters is being caused, or (b) there is a serious possibility that significant pollution of those waters will be caused.

(6) In the heading, after “relevant” insert “ contaminated ”.

7

After that section insert—

(1146A) (1) For the purposes of this Part “relevant derelict land remediation”, in relation to land which is in a derelict state and in which a major interest has been acquired by a company, means— (a) activities in relation to which conditions A and B are met, and (b) if there are such activities, relevant preparatory activity. (2) Condition A is that the activities comprise the doing of any works, the carrying out of any operations or the taking of any steps in relation to the land in question. (3) Condition B is that the purpose of the activities is a purpose specified by order made by the Treasury. (4) An order under subsection (3) may contain incidental, supplemental, consequential and transitional provision and savings. (5) For the purposes of subsection (1)(b) “relevant preparatory activity” has the same meaning as for the purposes of subsection (1)(b) of section 1146 (see subsection (4) of that section, but reading the reference to subsection (1)(a) of that section as a reference to subsection (1)(a) of this section).

8

In the heading of Chapter 2, after “contaminated” insert “ or derelict ”.

9

(1) Section 1147 (deduction for capital expenditure) is amended as follows.

(2) In subsection (2), after “that” insert “ a major interest in ”.

(3) For subsection (3) substitute—

(3) Condition B is that— (a) in the case of land in a contaminated state, the land was in a contaminated state at the time of the acquisition, and (b) in the case of land in a derelict state, the land was in a derelict state throughout the period beginning with the earlier of— (i) 1 April 1998, and (ii) the date on which a major interest in the land was first acquired by the company or a person who was connected with the company. (3A) The Treasury may by order— (a) specify circumstances in which the condition in paragraph (a) of subsection (3) need not be met, or (b) replace the date for the time being specified in paragraph (b)(i) of that subsection with a later date. (3B) An order under subsection (3A) may contain incidental, supplemental, consequential and transitional provision and savings.

10

(1) Section 1149 (additional deduction for qualifying land remediation expenditure) is amended as follows.

(2) In subsection (2), after “that” insert “ a major interest in ”.

(3) For subsection (3) substitute—

(3) Condition B is that— (a) in the case of land in a contaminated state, the land was in a contaminated state at the time of the acquisition, and (b) in the case of land in a derelict state, the land was in a derelict state throughout the period beginning with the earlier of— (i) 1 April 1998, and (ii) the date on which a major interest in the land was first acquired by the company or a person who was connected with the company. (3A) The Treasury may by order— (a) specify circumstances in which the condition in paragraph (a) of subsection (3) need not be met, or (b) replace the date for the time being specified in paragraph (b)(i) of that subsection with a later date. (3B) An order under subsection (3A) may contain incidental, supplemental, consequential and transitional provision and savings.

11

(1) Section 1150 (no relief if company responsible for contamination) is amended as follows.

(2) The existing provision becomes subsection (1) of that section.

(3) In that subsection, for “state if the land is in that” substitute “ or derelict state if the land is in a contaminated or derelict ”.

(4) After that subsection insert—

(2) A company is not entitled to relief under this Chapter in respect of expenditure on land all or part of which is in a contaminated or derelict state if— (a) the land is in that state wholly or partly as a result of any thing done, or omitted to be done, by a person not within subsection (1), and (b) that person, or a person connected with that person, has a relevant interest in the land. (3) For the purposes of subsection (2) a person has a relevant interest in land if the person— (a) holds any interest in, right over or licence to occupy the land (including an option to acquire any such interest, right or licence in any circumstances), or (b) has disposed of any estate or interest in the land for a consideration that to any extent reflects the impact, or likely impact, on the value of the land of the remediation of its contamination or dereliction.

(5) In the heading, insert at the end “or dereliction or polluter has interest”.

12

(1) Section 1161 (relief in respect of I minus E basis: enhanced expenses payable) is amended as follows.

(2) In subsection (2), after “that” insert “ a major interest in ”.

(3) For subsection (3) substitute—

(3) Condition B is that— (a) in the case of land in a contaminated state, the land was in a contaminated state at the time of the acquisition by the company of a major interest in the land, and (b) in the case of land in a derelict state, the land was in a derelict state throughout the period beginning with the earlier of— (i) 1 April 1998, and (ii) the date on which a major interest in the land was first acquired by the company or a person who was connected with the company. (3A) The Treasury may by order— (a) specify circumstances in which the condition in paragraph (a) of subsection (3) need not be met, or (b) replace the date for the time being specified in paragraph (b)(i) of that subsection with a later date. (3B) An order under subsection (3A) may contain incidental, supplemental, consequential and transitional provision and savings.

(4) In subsection (4)—

(a) for “Chapter 4” substitute “ land remediation ”, and

(b) omit “(see section 1162)”.

(5) Omit subsection (5).

(6) In subsection (6), omit “150% of”.

(7) In the heading, omit “enhanced”.

(8) In the heading before the section omit “for qualifying Chapter 4 expenditure”.

13

For section 1162 substitute—

(1162) (1) If a company is entitled to relief under section 1161 for an accounting period it is also entitled to relief under this section for the period. (2) For the company to obtain the relief it must make a claim. (3) The relief is that the company may treat 50% of the qualifying Chapter 4 expenditure as expenses payable which fall to be brought into account at Step 3 in section 76(7) of ICTA (deduction for expenses payable). (4) For the purposes of this Chapter “the qualifying Chapter 4 expenditure” means— (a) the company's qualifying land remediation expenditure for the accounting period, less (b) the amount (if any) which as a result of paragraph (a) of Step 1 in section 76(7) of ICTA is not to be brought into account at that step as expenses payable for the period.

14

(1) Section 1163 (no relief if company responsible for contamination) is amended as follows.

(2) The existing provision becomes subsection (1) of that section.

(3) In that subsection—

(a) after “1161” insert “ or 1162 ”, and

(b) for “state if the land is in that” substitute “ or derelict state if the land is in a contaminated or derelict ”.

(4) After that subsection insert—

(2) A company is not entitled to relief under this Chapter in respect of expenditure on land all or part of which is in a contaminated or derelict state if— (a) the land is in that state wholly or partly as a result of any thing done, or omitted to be done, by a person not within subsection (1), and (b) that person, or a person connected with that person, has a relevant interest in the land. (3) For the purposes of subsection (2) a person has a relevant interest in land if— (a) the person holds any interest in, right over or licence to occupy the land (including an option to acquire any such interest, right or licence in any circumstances), or (b) has disposed of any estate or interest in the land for a consideration that to any extent reflects the impact, or likely impact, on the value of the land of the remediation of its contamination or dereliction.

(5) In the heading, insert at the end “or dereliction or polluter has interest”.

15

In section 1165(1)(a) (meaning of “qualifying life assurance business loss”), after “1161” insert “ or 1162 ”.

16

In section 1169(2)(c) and (3)(c) (artificially inflated claims for relief), after “1161” insert “ or 1162 ”.

17

(1) Section 1173 (expenditure incurred because of contamination) is amended as follows.

(2) In subsections (1) and (2), after “contaminated” insert “ or derelict ”.

(3) For subsection (3) substitute—

(3) Subsection (4) applies— (a) in the case of land in a contaminated state, if the main purpose of any activities is any of those specified in section 1146(3), or (b) in the case of land in a derelict state, if the main purpose of any activities is any of those specified in section 1146A(3).

(4) In the heading, insert at the end “or dereliction”.

18

Omit section 1174 (sub-contractor payments: introductory).

19

(1) Section 1175 (“qualifying expenditure on sub-contracted land remediation”: connected persons) is amended as follows.

(2) After subsection (1) insert—

(1A) In this section, a “sub-contractor payment” means a payment made by the company to the sub-contractor in respect of relevant land remediation contracted out by the company to the sub-contractor.

(3) In subsection (2), for “sub-contracted land remediation” substitute “connected sub-contracted land remediation” for the purposes of section 1144(5)”.

(4) In subsection (3)—

(a) in paragraph (a), after “carrying on” insert “ or arranging for carrying on ”, and

(b) in paragraph (c) for “incurred on” substitute “ in respect of ”.

(5) For the heading substitute “Connected sub-contractors”.

20

Omit section 1176 (“qualifying expenditure on sub-contracted land remediation”: other cases).

21

In section 1178 (persons having a “relevant connection” to a company)—

(a) after “contaminated” insert “ or derelict ”, and

(b) in paragraph (b), after “when” insert “ a major interest in ”.

22

After section 1178 insert—

(1178A) (1) References in this Part to the acquisition of a major interest in land are to the acquisition of a freehold interest in the land or of a relevant leasehold interest in the land. (2) The reference in subsection (1) to the acquisition of a freehold interest in land is— (a) in relation to land in England and Wales, to the acquisition of an estate in fee simple absolute (whether subsisting at law or in equity), (b) in relation to land in Scotland, to the acquisition of the interest of an owner of land, and (c) in relation to land in Northern Ireland, to the acquisition of any freehold estate (whether subsisting at law or in equity). (3) The reference in subsection (1) to the acquisition of a relevant leasehold interest in land is to the acquisition by grant or assignment (or assignation) of— (a) in relation to land in England and Wales, a term of years absolute (whether subsisting at law or in equity), (b) in relation to land in Scotland, the tenant's right over or interest in a property subject to a lease, or (c) in relation to land in Northern Ireland, any leasehold estate (whether subsisting at law or in equity), in relation to which the condition in subsection (4) is met. (4) That condition is that— (a) in the case of a grant, the term of years or period of the lease is at least 7 years, and (b) in the case of an assignment (or assignation) the unexpired portion of the term or period is at least 7 years.

23

In section 1179 (definitions), omit the definitions of “harm” and “land” and the definition of “substance” (apart from the “and” at the end).

Part 2 — Amendments of other enactments

ICTA

24

In section 76(7) of ICTA (expenses of insurance companies), in step 3—

(a) for “1161” substitute “ 1162 ”,

(b) for “150%” substitute “ 50% additional ”, and

FA 1998

25

In Schedule 18 to FA 1998 (company tax returns etc), in the heading of Part 9B, after “contaminated” insert “ or derelict ”.

CTA 2009

26

(1) Schedule 4 to CTA 2009 (index of expressions) is amended as follows.

(2) After the entry relating to “deposit back arrangements” insert—

derelict state (in relation to land) (in Part 14)	section 1145A.

(3) Omit the entries relating to “harm (in Part 14)” and “land (in Part 14)”.

(4) After the entry relating to “major interest (in Chapter 12 of Part 8)” insert—

major interest in land (in Part 14)	section 1178A.

(5) After the entry relating to “relevant consortium creditor relationship (in Chapter 7 of Part 5)” insert—

relevant contaminated land remediation (in Part 14)	section 1146.

(6) After the entry relating to “relevant debits (in Part 8)” insert—

relevant derelict land remediation (in Part 14)	section 1146A.

(7) Omit the references relating to “relevant land remediation (in Part 14)”, “sub-contractor payment (and sub-contractor) (in Chapter 6 of Part 14)” and “substance (in Part 14)”.

Part 3 — Commencement

27

Any power to make orders which is conferred on the Treasury by virtue of an amendment of CTA 2009 made by this Schedule may be exercised at any time after this Act is passed; and any order made by virtue of any such amendment before 6 April 2010 may make provision having effect in relation to expenditure incurred on or after 1 April 2009.

28

Subject to that, the amendments made by this Schedule have effect in relation to expenditure incurred on or after 1 April 2009; and for this purpose no account is to be taken of section 61 of CTA 2009 (earlier expenditure treated as incurred when trade started).

SCHEDULE 8

Enterprise investment scheme

1

Schedule 5B to TCGA 1992 (enterprise investment scheme: re-investment) is amended as follows.

2

(1) Paragraph 1(2) (application of Schedule) is amended as follows.

(2) For paragraphs (g) and (h) substitute

and (g) all of the money raised by the issue of the shares (other than any of them which are bonus shares) is, no later than the time mentioned in section 175(3) of ITA 2007, employed wholly for the purpose of that activity,

(3) In the words following the paragraphs, for “conditions in paragraphs (g) and (h) above do” substitute “ condition in paragraph (g) above does ”.

3

(1) Paragraph 1A (failure of conditions of application) is amended as follows.

(2) In sub-paragraph (4)—

(a) omit “or (h)”, and

(b) for “sub-paragraph (4A) below” substitute “ section 175(3) of ITA 2007 ”.

(3) Omit sub-paragraph (4A).

4

(1) Paragraph 9 (other reconstructions and amalgamations) is amended as follows.

(2) For sub-paragraph (1) substitute—

(1) This paragraph applies if section 135 or 136 (company reconstructions) applies in relation to shares to which deferral relief, but not relief under Part 5 of ITA 2007 (or Chapter 3 of Part 7 of the Taxes Act), is attributable. (1A) Paragraphs 3 and 4 of this Schedule have effect as if section 135 or 136 did not apply in relation to the shares.

(3) In sub-paragraph (2), for “Sub-paragraph (1) above shall not have effect to disapply section 135 or 136 where” substitute “ Sub-paragraph (1A) does not apply if ”.

(4) For sub-paragraph (3) substitute—

(3) Sub-paragraph (1A) does not apply if paragraph 8 applies in relation to the shares.

5

In paragraph 16 (information), omit sub-paragraph (4A).

6

(1) Section 158 of ITA 2007 (form and amount of EIS relief) is amended as follows.

(2) In subsection (4), omit—

(a) “Subject to subsection (5),”, and

(b) “before 6 October”.

(3) Omit subsection (5).

7

(1) Section 175 of that Act (use of money raised requirement) is amended as follows.

(2) For subsection (1) substitute—

(1) The requirement of this section is that all of the money raised by the issue of the relevant shares (other than any of them which are bonus shares) is, no later than the time mentioned in subsection (3), employed wholly for the purpose of the qualifying business activity for which it was raised.

(3) In subsection (2), for “requirements in subsection (1)(a) and (b) do” substitute “ requirement in subsection (1) does ”.

(4) In subsection (3)—

(a) for “subsection (1)(a)” substitute “ subsection (1) ”, and

(b) for “12 months” (in both places) substitute “ two years ”.

Corporate venturing scheme

8

(1) Paragraph 36 of Schedule 15 to FA 2000 (corporate venturing scheme: requirement as to money raised) is amended as follows.

(2) In sub-paragraph (1), for “At least 80%” substitute “ All ”.

(3) Omit sub-paragraph (1A).

(4) In sub-paragraph (1B), for “12 months” (in both places) substitute “ two years ”.

(5) In sub-paragraph (1C), for “Sub-paragraphs (1) and (1A) are” substitute “ Sub-paragraph (1) is ”.

(6) In sub-paragraph (5) omit “does not apply and the requirement of sub-paragraph (1A)”.

Venture Capital Trusts

9

(1) Section 293 of ITA 2007 (use of money raised requirement) is amended as follows.

(2) For subsection (1) substitute—

(1) The requirement of this section is that— (a) less than two years has passed since the trading time, or (b) at least two years has passed since the trading time and all of the money raised by the issue of the relevant holding has been employed wholly for the purposes of a relevant qualifying activity.

(3) Omit subsections (2) to (4).

Consequential repeals

10

In consequence of the amendments made by paragraphs 2, 3 and 5, omit—

(a) in FA 2001, in Schedule 15, paragraphs 26 to 28,

(b) in FA 2004, in Schedule 18, paragraph 13(1)(f), and

Commencement

11

The amendments made by paragraphs 2, 3, 5, 7, 8 and 10 have effect in relation to shares issued on or after 22 April 2009.

12

The amendments made by paragraph 4 have effect in relation to—

(a) any exchange of shares to which section 135 of TCGA 1992 applies, where the new holding is issued on or after 22 April 2009, and

(b) any arrangement within section 136(1) of that Act entered into on or after that date.

13

(1) The amendments made by paragraph 6 have effect as follows.

(2) The amendments made by sub-paragraph (2) have effect in relation to shares issued in the tax year 2009-10 or a subsequent tax year.

(3) The amendment made by sub-paragraph (3) has effect in relation to claims made under section 158(4) of ITA 2007 in respect of shares issued in the tax year 2009-10 or a subsequent tax year.

14

The amendments made by paragraph 9 have effect in relation to shares or securities issued on or after 22 April 2009.

SCHEDULE 9

Amendments of Schedule 18 to ICTA

1

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

2

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

3

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

4

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

Commencement

5

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

Election to opt out of changes in relation to pre-existing etc shares

6

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

7

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

Paragraph 2(7) of Schedule 25 to ICTA

8

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

SCHEDULE 10

Introduction

1

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

Paragraph 7

2

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

Paragraph 13A

3

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

Paragraph 17

4

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

Paragraph 23

5

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

Paragraph 23A

6

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

Paragraph 32

7

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

Paragraph 39

8

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

Commencement

9

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

SCHEDULE 11

Part 1 — Capital allowances

Plant and machinery allowances for cars and motor cycles

1

Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

2

In section 38B (general exclusions from AIA qualifying expenditure), in general exclusion 2, for “81” substitute “ 268A ”.

3

In section 46(2) (general exclusions from first year allowances), in general exclusion 2, for “81” substitute “ 268A ”.

4

Omit sections 74 to 79 (cars above the cost threshold).

5

Omit section 81 (extended meaning of “car”) and section 82 (qualifying hire cars).

6

In section 84 (cases in which short-life asset treatment is ruled out), in the Table, in item 3, in the first column, for “81” substitute “ 268A ”.

7

(1) Section 104A (special rate expenditure) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (a), after “the” insert “ first ”,

(b) omit “and” at the end of paragraph (c), and

, and (e) expenditure incurred on or after the second relevant date on the provision of a car that is not a main rate car.

(3) In subsection (2), after “The” insert “ first ”.

(4) After that subsection insert—

(3) The second relevant date is— (a) for corporation tax purposes, 1 April 2009, and (b) for income tax purposes, 6 April 2009. (4) In this section— - “car” has the meaning given in section 268A; - “main rate car” has the meaning given in section 104AA.

8

After that section insert—

(104AA) (1) “Main rate car” means— (a) a car that is first registered before 1 March 2001, (b) a car that has low CO₂ emissions, or (c) a car that is electrically-propelled. (2) For the purposes of this section a car has low CO₂ emissions if it meets conditions A and B. (3) Condition A is that, when the car is first registered, it is so registered on the basis of a qualifying emissions certificate. (4) Condition B is that the applicable CO₂ emissions figure in relation to the car does not exceed 160 grams per kilometre driven. (5) The Treasury may by order amend the amount from time to time specified in subsection (4). (6) An order under subsection (5) may contain transitional provision and savings. (7) In this section— - “applicable CO₂ emissions figure” and “qualifying emissions certificate” have the meanings given in section 268C; - “car” has the meaning given in section 268A; - “electrically-propelled” has the meaning given in section 268B.

9

After section 104E insert—

(104F) (1) This section applies if— (a) a company (“the taxpayer”) has incurred special rate expenditure within section 104A(1)(e) (expenditure on a car other than a main rate car) to which section 104C applies (allocation to special rate pool), (b) the qualifying activity carried on by the taxpayer is permanently discontinued, and (c) conditions A, B and C are met. (2) Condition A is that the qualifying activity carried on by the taxpayer consisted of or included (other than incidentally) making cars available to other persons. (3) Condition B is that, at any time in the 6 months after the taxpayer's qualifying activity is permanently discontinued, the qualifying activity of a group relief company consists of or includes (other than incidentally) making cars available to other persons. (4) Condition C is that the balancing allowance (“SBA”) to which the taxpayer would be entitled (but for this section) in respect of the special rate pool is greater than— $$BC–OBA$where—BC is the total of the balancing charges (if any) to which the taxpayer is liable for the final chargeable period in respect of any pool, andOBA is the total of the balancing allowances to which the taxpayer is entitled for that period in respect of any pool other than the special rate pool.$ For the purposes of this section if BC – OBA is a negative amount it is to be treated as if it were nil. (5) The balancing allowance to which the taxpayer is entitled in respect of the special rate pool is reduced to an amount equal to BC — OBA. (6) The relevant company is to be treated as having incurred qualifying expenditure within section 104A(1)(e) (“notional expenditure”), whether or not the relevant company owns cars previously owned by the taxpayer. (7) The amount of the notional expenditure is an amount equal to the amount by which SBA exceeds BC — OBA. (8) The relevant company is to be treated as having incurred the notional expenditure on the day after the end of the taxpayer's final chargeable period. (9) If part of the chargeable period in which the relevant company is treated as incurring expenditure under this section (“the acquisition period”) overlaps with the taxpayer's penultimate chargeable period— (a) the part of the expenditure which is proportional to that part of the acquisition period is not to be taken into account in determining the relevant company's available qualifying expenditure for the acquisition period, but (b) this does not prevent that part of the expenditure being taken into account in determining the relevant company's available qualifying expenditure for any subsequent chargeable period. (10) In this section— - “car” has the meaning given in section 268A; - “company” means any body corporate; - “group relief company” means— 1. a company to which group relief under Chapter 4 of Part 10 of ICTA would be available (on the making of a claim) in respect of balancing allowances surrendered by the taxpayer in the taxpayer's final chargeable period, and 2. a company to which such relief would be available (on the making of a claim) in respect of balancing allowances surrendered by a company within paragraph (a); - “main rate car” has the meaning given in section 104AA; - “penultimate chargeable period” means the chargeable period preceding the final chargeable period; - “the relevant company” means the group relief company mentioned in subsection (3) or, if there is more than one, the one— 1. nominated by the taxpayer not more than 6 months after the end of the taxpayer's final chargeable period, or 2. in the absence of such a nomination, nominated by Her Majesty's Revenue and Customs.

10

After section 208 insert—

(208A) (1) This section applies if— (a) a disposal value is required to be brought into account under section 61, (b) the disposal event is that the person ceases to own a section 206 car because of a sale or the performance of a contract, and (c) allowances under this Part in respect of the person's expenditure under that transaction are restricted under section 217 or 218 (anti-avoidance). (2) A car is a section 206 car if expenditure on the provision of the car is required to be allocated to a single asset pool under that section. (3) The disposal value to be brought into account is— (a) the market value of the car at the time of the disposal event, or (b) if less, the capital expenditure incurred, or treated as incurred, on the provision of the car by the person disposing of it. (4) The person acquiring the car is to be treated as having incurred capital expenditure on its provision of an amount equal to the disposal value required to be brought into account under subsection (3). (5) In this section “car” has the meaning given in section 268A.

11

After section 268 insert—

(268A) (1) In this Part “car” means a mechanically propelled road vehicle other than— (a) a motor cycle, (b) a vehicle of a construction primarily suited for the conveyance of goods or burden of any description, or (c) a vehicle of a type not commonly used as a private vehicle and unsuitable for such use. (2) In this Part “motor cycle” has the meaning given by section 185(1) of the Road Traffic Act 1988. (268B) For the purposes of this Part a vehicle is electrically-propelled only if— (a) it is propelled solely by electrical power, and (b) that power is derived from— (i) a source external to the vehicle, or (ii) an electrical storage battery which is not connected to any source of power when the vehicle is in motion. (268C) (1) In this Part “qualifying emissions certificate”, in relation to a vehicle, means an EC certificate of conformity, or a UK approval certificate, that specifies— (a) in the case of a vehicle other than a bi-fuel vehicle, a CO₂ emissions figure in terms of grams per kilometre driven, or (b) in the case of a bi-fuel vehicle, separate CO₂ emissions figures in terms of grams per kilometre driven for different fuels. (2) For the purposes of this Part, in relation to a vehicle other than a bi-fuel vehicle, the applicable CO₂ emissions figure is— (a) where the qualifying emissions certificate specifies only one CO₂ emissions figure, that figure, and (b) where the certificate specifies more than one CO₂ emissions figure, the figure specified as the CO₂ emissions (combined) figure. (3) For the purposes of this Part, in relation to a bi-fuel vehicle, the applicable CO₂ emissions figure is— (a) where the qualifying emissions certificate specifies more than one CO₂ emissions figure in relation to each fuel, the lowest CO₂ emissions (combined) figure specified, and (b) in any other case, the lowest CO₂ figure specified by the certificate. (4) In this section— - “bi-fuel”, in relation to a vehicle, means capable of being propelled by— 1. petrol and road fuel gas, or 2. diesel and road fuel gas; - “diesel” means any diesel fuel within the definition in Article 2 of Directive 98/70/EC of the European Parliament and of the Council; - “EC certificate of conformity” means a certificate of conformity issued by a manufacturer under any provision of the law of a member State implementing Article 6 of Council Directive 70/156/EEC, as amended; - “petrol” has the meaning given by Article 2 of Directive 98/70/EC of the European Parliament and of the Council; - “road fuel gas” has the same meaning as in section 171(1) of ITEPA 2003; - “UK approval certificate” means a certificate issued under— 1. section 58(1) or (4) of the Road Traffic Act 1988, or 2. Article 31A(4) or (5) of the Road Traffic (Northern Ireland) Order 1981 (S.I. 1981/154 (N.I. 1)).

Consequential amendments of CAA 2001

12

CAA 2001 is amended as follows.

13

In section 33 (personal security), omit subsection (7).

14

(1) Section 45D (expenditure on cars with low carbon dioxide emissions) is amended as follows.

(2) In subsection (1), for paragraph (c) substitute—

(c) the car— (i) is electrically-propelled, or (ii) has low CO₂ emissions, and

(3) In subsection (2), for “a car with low CO₂ emissions is a car which” substitute “ a car has low CO₂ emissions if it ”.

(4) In subsection (3), for the words from “an EC certificate” to the end substitute “ a qualifying emissions certificate. ”

(5) In subsection (4), for “in the case of” substitute “ in relation to ”.

(6) Omit subsections (5) and (6).

(7) In subsection (8)—

(a) after “car” insert “ is to a car within the meaning of section 268A, except that it ”, and

(b) omit paragraph (b) (and the “but” before it).

(8) Omit subsections (9) and (10).

(9) After subsection (10) insert—

(11) In this section— - “applicable CO₂ emissions figure” and “qualifying emissions certificate” have the meanings given in section 268C; - “electrically-propelled” has the meaning given in section 268B.

15

In section 54(3) (single asset pools), omit “section 74 (car above the cost threshold)”.

16

In section 55(6) (determination of entitlement or liability), after “subject to” insert “ section 104F (special rate cars: discontinued activity continued by relevant company) and ”.

17

In section 65(3) (the final chargeable period), for “sections 77(1) and” substitute “ section ”.

18

In section 66 (list of provisions about disposal values)—

(a) omit the entry in the list relating to section 79, and

(b) insert at the appropriate place—

section 208A	cars: disposal value in avoidance cases

19

(1) In section 84 (cases in which short-life asset treatment is ruled out), the Table is amended as follows.

(2) In item 3, for the words in the second column substitute “The car is a hire car for a disabled person (as defined by section 268D).”

(3) In item 4, in the second column, insert “The expenditure is incurred on the provision of a car which is a hire car for a disabled person (as defined by section 268D)”.

(4) In item 5, in the second column, for “within section 82(4) (cars hired out to persons receiving disability allowances etc)” substitute “ a hire car for a disabled person (as defined by section 268D) ”.

20

(1) Section 86 (short-life assets) is amended as follows.

(2) In subsection (2)(b), for “main pool” substitute “ appropriate pool ”.

(3) After subsection (4) insert—

(5) In subsection (2)(b) “appropriate pool” means— (a) in the case of expenditure incurred on the provision of a car that is not a main rate car (as defined by section 104AA), the special rate pool, and (b) in any other case, the main pool.

21

In section 96 (expenditure on cars excluded from being long-life asset expenditure), for “car (as defined by section 81)” substitute “ car or motor cycle (as defined by section 268A) ”.

22

After section 268C (inserted by this Part of this Schedule) insert—

(268D) (1) For the purposes of this Part a car is a hire car for a disabled person if it is provided wholly or mainly for hire to, or the carriage of, disabled persons in the ordinary course of a trade. (2) “Disabled person” means a person in receipt of— (a) a disability living allowance under— (i) the Social Security Contributions and Benefits Act 1992, or (ii) the Social Security Contributions and Benefits (Northern Ireland) Act 1992, because of entitlement to the mobility component, (b) a mobility supplement under a scheme made under the Personal Injuries (Emergency Provisions) Act 1939, (c) a mobility supplement under an Order in Council made under section 12 of the Social Security (Miscellaneous Provisions) Act 1977, or (d) a payment that appears to the Treasury to be similar to those mentioned in paragraphs (a) to (c) and that is specified by order made by the Treasury.

23

(1) Part 2 of Schedule 1 (defined expressions) is amended as follows.

(2) In the entry relating to “car (in Part 2)”, for “section 81” substitute “ section 268A ”.

(3) Insert at the appropriate places—

applicable CO₂ emissions figure (in Part 2)	section 268C
electrically-propelled (in Part 2)	section 268B
---	---
hire car for a disabled person (in Part 2)	section 268D
---	---
motor cycle (in Part 2)	section 268A
---	---
qualifying emissions certificate (in Part 2)	section 268C
---	---

24

In Schedule 3 (transitionals and savings), omit paragraph 19 (cars above the cost threshold) and the headings immediately before it.

Consequential repeal

25

In consequence of the amendments made by this Part of this Schedule, in FA 2002, in Schedule 19, omit paragraph 6.

Commencement and transitionals: introduction

26

For the purposes of this Part of this Schedule—

(a) the first relevant date is—

(i) for corporation tax purposes, 1 April 2009, and

(ii) for income tax purposes, 6 April 2009,

(b) the second relevant date is—

(i) for corporation tax purposes, 1 August 2009, and

(ii) for income tax purposes, 6 August 2009, and

(i) for corporation tax purposes, 1 April 2014, and

(ii) for income tax purposes, 6 April 2014.

27

(1) For the purposes of this Part of this Schedule “new expenditure” means—

(a) expenditure incurred on or after the first relevant date, and

(b) expenditure incurred before that date to which sub-paragraph (2) applies,

and expenditure that is not new expenditure is “old expenditure”.

(2) This sub-paragraph applies to expenditure if—

(a) it is incurred under an agreement for the provision of a car entered into after 8 December 2008, and

(b) under that agreement the car is not required to be made available before the second relevant date.

(3) For the purposes of sub-paragraph (2) an agreement is entered into on the date on which the following conditions are met—

(a) there is a contract in writing for the provision of the car,

(b) the contract is unconditional or, if it is conditional, the conditions have been met, and

Commencement

28

(1) The amendments made by this Part of this Schedule have effect in relation to new expenditure (subject to sub-paragraph (2)).

(2) The repeal of section 79 of CAA 2001 and the amendments made by paragraphs 10 and 18 have effect in cases in which a person ceases to own a car or motor cycle if the expenditure incurred on the provision of the car or motor cycle is new expenditure.

29

(1) The repeal of sections 74 to 78 of CAA 2001 and the amendments made by paragraphs 15 and 17 have effect in relation to old expenditure, but only for chargeable periods beginning on or after the third relevant date.

(2) The repeal of section 79 of CAA 2001 and the amendment made by paragraph 18(a) have effect in cases in which a person ceases to own a car or motor cycle if the expenditure incurred on the provision of the car or motor cycle is old expenditure, but only for chargeable periods beginning on or after the third relevant date.

Transitionals

30

(1) This paragraph applies where expenditure incurred by a person on the provision of a car or motor cycle includes both new expenditure and old expenditure.

(2) The new expenditure and the old expenditure are to be treated as if they were incurred on the provision of separate (but identical) cars or motor cycles.

(3) Any amount required to be brought into account in connection with a disposal event in respect of the car or motor cycle mentioned in sub-paragraph (1) is to be apportioned on a just and reasonable basis.

31

(1) This paragraph applies where—

(a) old expenditure is required to be allocated to a single asset pool by section 74 of CAA 2001,

(b) there is unrelieved expenditure in that pool at the end of a transitional chargeable period, and

(c) the unrelieved expenditure is not required to be allocated to a single asset pool by any other provision of Part 2 of that Act.

(2) The unrelieved expenditure must be carried forward to the main pool.

(3) A “transitional chargeable period” is one that begins before the third relevant date and ends on or after the day before the third relevant date.

32

An order made under section 82(4)(d) of CAA 2001 (qualifying hire cars for disabled persons) before the day on which this Act is passed (and not revoked before that day) has effect as if it had also been made under section 268D(2)(d) of that Act (hire cars for disabled persons) (inserted by this Part of this Schedule).

Interpretation

33

In this Part of this Schedule—

(a) “car” and “motor cycle” have the meaning given in section 268A of CAA 2001 (inserted by paragraph 11), and

(b) other expressions used in this Part of this Schedule and in Part 2 of CAA 2001 have the same meaning here as in that Part of that Act.

Part 2 — Restrictions on deductions for hire expenses

Income tax

34

ITTOIA 2005 is amended as follows.

35

In section 31(1)(b) (relationship between rules prohibiting and allowing deductions), omit “or motor cycle”.

36

(1) Section 48 (rules restricting deductions from profits: car or motor cycle hire) is amended as follows.

(2) In subsection (1), for the words from “or motor cycle”, in the first place, to the end substitute

which is not— (a) a car that is first registered before 1 March 2001, (b) a car that has low CO₂ emissions, (c) a car that is electrically propelled, or (d) a qualifying hire car.

(3) In subsection (2), for the words from “multiplying” to the end substitute “ 15% ”.

(4) In subsection (4), for “multiplying it by the fraction in subsection (2)” substitute “ 15% ”.

(5) In subsection (4A)(a), (b) and (c), omit “or motor cycle”.

(6) Omit subsection (5).

(7) In the heading, omit “or motor cycle”.

37

(1) Section 49 (car or motor cycle hire: supplementary) is amended as follows.

(2) In subsection (1)—

(a) omit “or motor cycle”,

(b) omit “one”,

(za) a motor cycle (within the meaning of section 185(1) of the Road Traffic Act 1988),

, and

(d) in paragraphs (a) and (b), insert at the beginning “a vehicle”.

(3) After that subsection insert—

(1A) In section 48— - “a car that has low CO2 emissions” has the same meaning as in section 104AA of CAA 2001 (special rate expenditure: main rate car); - “electrically propelled” has the meaning given in section 268B of that Act.

(4) In subsection (2)—

(a) omit “or motor cycle” (in each place),

(b) omit paragraph (c), and

(d) is leased under a long-funding lease (within the meaning of section 70G of CAA 2001).

(5) In subsection (6), omit “and section 48”.

(6) In the heading, omit “or motor cycle”.

38

Omit section 50 (hiring cars with low carbon dioxide emissions).

39

After that section insert—

(50A) (1) Section 48 does not apply to expenses incurred by a person (“the taxpayer”) on the hiring of a car if condition A or B is met. (2) Condition A is that— (a) the expenses are incurred in respect of the making available of the car to the taxpayer for a period (“the hire period”) of not more than 45 consecutive days, and (b) if the car is made available to the taxpayer (whether by the same person or different persons) for one or more periods linked to the hire period, the hire period and the linked period or periods, taken together, consist of not more than 45 days. (3) Condition B is that the expenses are incurred in respect of a period (“the sub-hire period”) throughout which the taxpayer makes the car available to another person (“the customer”) and— (a) the sub-hire period consists of more than 45 consecutive days, or (b) if the taxpayer makes the car available to the customer throughout one or more periods linked to the sub-hire period, the sub-hire period and the linked period or periods, taken together, consist of more than 45 days, but see subsection (4). (4) Condition B is not met if— (a) the customer is an employee of the taxpayer or of a person connected with the taxpayer, or (b) during all or part of the sub-hire period (or any period linked to the sub-hire period), the customer makes any car available to an employee of the taxpayer under arrangements with the taxpayer or with a person connected with the taxpayer. (5) Neither condition A nor condition B is met if the car is hired under arrangements the purpose, or one of the main purposes, of which is— (a) to disapply or reduce the effect of section 48, or (b) other avoidance of tax. (6) For the purposes of condition B the expenses incurred by the taxpayer on the hiring of the car must be apportioned between— (a) the sub-hire period, and (b) the remainder of the period during which the car is made available to the taxpayer, according to the respective lengths of those periods. (7) A period of consecutive days (“the main period”) is linked to— (a) a period of consecutive days that ends not more than 14 days before the main period begins, (b) a period of consecutive days that begins not more than 14 days after the main period ends, and (c) a period of consecutive days linked to a period in paragraph (a) or (b). (8) For the purposes of this section, where arrangements for the hiring of a car include arrangements for the provision of a replacement car in the event that the first car is not available, the first car and any replacement car are to be treated as if they were the same car. (9) In this section (and section 50B) “arrangements” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable and whether involving a single transaction or two or more transactions. (50B) (1) This section applies where connected persons incur expenses on the hiring of the same car for the same period and— (a) section 48 would (but for this section) apply to the expenses of two or more of those persons, or (b) section 48 and section 56 of CTA 2009 would (but for this section and section 58B of that Act) each apply to the expenses of at least one of those persons. (2) This section only applies where one or more of the persons mentioned in subsection (1)(a) or (b) incurs the expenses under commercial arrangements (and such a person is referred to below as a “commercial lessee”). (3) In relation to the expenses mentioned in subsection (1) to which section 48 would (but for this section) apply, section 48 only applies to the following— (a) where there is one commercial lessee, any such expenses incurred by that lessee, and (b) where there is more than one, any such expenses incurred by the first commercial lessee in the chain of arrangements for the hiring of the car for the period. (4) In this section— (a) references to expenses incurred by a commercial lessee include expenses incurred in that or any other capacity, and (b) “commercial arrangements” means arrangements the terms of which are such as would reasonably have been expected if the parties to the arrangements had been dealing at arm's length.

40

In section 247(1) (other rules about what counts as post-cessation receipts), omit “or motor cycle”.

41

In section 272(2) (profits of a property business: application of trading income rules), in the entry in the Table relating to sections 48 to 50—

(a) for “50” substitute “ 50B ”, and

(b) omit “or motor cycle”.

42

In section 274(1)(b) (relationship between rules prohibiting and allowing deductions), omit “or motor cycle”.

43

In section 354(2) (other rules about what counts as post-cessation receipts), omit “or motor cycle”.

44

In Schedule 2 (transitionals and savings), omit paragraphs 16 and 17 (and the heading before them).

Corporation tax

45

CTA 2009 is amended as follows.

46

In section 51(1)(b)(i) (relationship between rules prohibiting and allowing deductions), omit “or motor cycle”.

47

(1) Section 56 (rules restricting deductions from profits: car or motor cycle hire) is amended as follows.

(2) In subsection (1), for the words from “or motor cycle”, in the first place, to the end substitute

which is not— (a) a car that is first registered before 1 March 2001, (b) a car that has low CO₂ emissions, (c) a car that is electrically propelled, or (d) a qualifying hire car.

(3) In subsection (2), for the words from “multiplying” to the end substitute “ 15% ”.

(4) In subsection (4), for “multiplying it by the fraction in subsection (2)” substitute “ 15% ”.

(5) In subsection (5)(a), (b) and (c), omit “or motor cycle”.

(6) Omit subsection (6).

(7) In the heading, omit “or motor cycle”.

48

(1) Section 57 (car or motor cycle hire: supplementary) is amended as follows.

(2) In subsection (1)—

(a) omit “or motor cycle”,

(b) omit “one”,

(za) a motor cycle (within the meaning of section 185(1) of the Road Traffic Act 1988),

, and

(d) in paragraphs (a) and (b), insert at the beginning “a vehicle”.

(3) After that subsection insert—

(1A) In section 56— - “a car that has low CO2 emissions” has the same meaning as in section 104AA of CAA 2001 (special rate expenditure: main rate car); - “electrically propelled” has the meaning given in section 268B of that Act.

(4) In subsection (2)—

(a) omit “or motor cycle” (in each place),

(b) omit paragraph (c), and

(d) is leased under a long-funding lease (within the meaning of section 70G of CAA 2001).

(5) In subsection (6), omit “and section 56”.

(6) In the heading, omit “or motor cycle”.

49

Omit section 58 (hiring cars with low CO₂ emissions before 1 April 2013).

50

After section 58 insert—

(58A) (1) Section 56 does not apply to expenses incurred by a company (“the taxpayer”) on the hiring of a car if condition A or B is met. (2) Condition A is that— (a) the expenses are incurred in respect of the making available of the car to the taxpayer for a period (“the hire period”) of not more than 45 consecutive days, and (b) if the car is made available to the taxpayer (whether by the same person or different persons) for one or more periods linked to the hire period, the hire period and the linked period or periods, taken together, consist of not more than 45 days. (3) Condition B is that the expenses are incurred in respect of a period (“the sub-hire period”) throughout which the taxpayer makes the car available to another person (“the customer”) and— (a) the sub-hire period consists of more than 45 consecutive days, or (b) if the taxpayer makes the car available to the customer throughout one or more periods linked to the sub-hire period, the sub-hire period and the linked period or periods, taken together, consist of more than 45 days, but see subsection (4). (4) Condition B is not met if— (a) the customer is an employee or officer of the taxpayer or of a person connected with the taxpayer, or (b) during all or part of the sub-hire period (or any period linked to the sub-hire period), the customer makes any car available to an employee or officer of the taxpayer under arrangements with the taxpayer or with a person connected with the taxpayer. (5) Neither condition A nor condition B is met if the car is hired under arrangements the purpose, or one of the main purposes, of which is— (a) to disapply or reduce the effect of section 56, or (b) other avoidance of tax. (6) For the purposes of condition B the expenses incurred by the taxpayer on the hiring of the car must be apportioned between— (a) the sub-hire period, and (b) the remainder of the period during which the car is made available to the taxpayer, according to the respective lengths of those periods. (7) A period of consecutive days (“the main period”) is linked to— (a) a period of consecutive days that ends not more than 14 days before the main period begins, (b) a period of consecutive days that begins not more than 14 days after the main period ends, and (c) a period of consecutive days linked to a period in paragraph (a) or (b). (8) For the purposes of this section, where arrangements for the hiring of a car include arrangements for the provision of a replacement car in the event that the first car is not available, the first car and any replacement car are to be treated as if they were the same car. (9) In this section (and section 58B) “arrangements” includes any arrangements, scheme or understanding of any kind, whether or not legally enforceable and whether involving a single transaction or two or more transactions. (58B) (1) This section applies where connected persons incur expenses on the hiring of the same car for the same period and— (a) section 56 would (but for this section) apply to the expenses of two or more of those persons, or (b) section 56 and section 48 of ITTOIA 2005 would (but for this section and section 50B of that Act) each apply to the expenses of at least one of those persons. (2) This section only applies where one or more of the persons mentioned in subsection (1)(a) or (b) incurs the expenses under commercial arrangements (and such a person is referred to below as a “commercial lessee”). (3) In relation to the expenses mentioned in subsection (1) to which section 56 would (but for this section) apply, section 56 only applies to the following— (a) where there is one commercial lessee, any such expenses incurred by that lessee, and (b) where there is more than one, any such expenses incurred by the first commercial lessee in the chain of arrangements for the hiring of the car for the period. (4) In this section— (a) references to expenses incurred by a commercial lessee include expenses incurred in that or any other capacity, and (b) “commercial arrangements” means arrangements the terms of which are such as would reasonably have been expected if the parties to the arrangements had been dealing at arm's length.

51

In section 191(1) (other rules about what counts as post-cessation receipts), omit “or motor cycle”.

52

In section 210(2) (profits of a property business: application of trading income rules), in the entry in the Table relating to sections 56 to 58—

(a) for “58” substitute “ 58B ”, and

(b) omit “or motor cycle”.

53

In section 214(1)(b)(i) (relationship between rules prohibiting and allowing deductions), omit “or motor cycle”.

54

In section 283(2) (other rules about what counts as post-cessation receipts), omit “or motor cycle”.

55

In section 865(3)(a) (debits for expenditure not generally deductible for tax purposes), omit “or motor cycle”.

56

In section 1231(3) (absence of accounts), omit “or motor cycle”.

57

(1) Section 1251 (car or motor cycle hire: companies with investment business) is amended as follows.

(2) In subsection (1), for the words from “or motor cycle”, in the first place, to the end substitute

which is not— (a) a car that is first registered before 1 March 2001, (b) a car that has low CO₂ emissions, (c) a car that is electrically propelled, or (d) a qualifying hire car.

(3) In subsection (2), for the words from “multiplying” to the end substitute “ 15% ”.

(4) In subsection (4)(b), for “multiply that amount by the fraction set out in subsection (2) above” substitute “ reduce that amount by 15% ”.

(5) In subsection (5)(a), (b) and (c), omit “or motor cycle”.

(6) Omit subsection (6).

(7) In subsection (7)—

(a) omit “or motor cycle”, and

(b) for “58 (hiring cars with low CO₂ emissions before 1 April 2013)” substitute “ 58A (short-term hiring in and long-term hiring out) ”.

(8) After that subsection insert—

(8) For the purposes of section 58B of this Act and section 50B of ITTOIA 2005 (connected persons: application of restrictions), this section is to be treated as if it were part of section 56 of this Act.

(9) In the heading, omit “or motor cycle”.

58

In Schedule 2 (transitionals and savings), omit paragraphs 16 and 17 (and the heading before them).

59

ICTA is amended as follows.

60

(1) Section 76ZN (car or motor cycle hire: expenses of insurance companies) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (a), omit “or motor cycle”, and

(b) for paragraphs (b) and (c) substitute—

(b) the car is not— (i) a car that is first registered before 1 March 2001, (ii) a car that has low CO₂ emissions (as defined in section 104AA of the Capital Allowances Act), (iii) a car that is electrically propelled (as defined in section 268B of that Act), or (iv) a qualifying hire car.

(3) After that subsection insert—

(1A) Subsection (2) does not apply if condition A or condition B in section 58A of CTA 2009 (short-term hiring in and long-term hiring out) is met.

(4) In subsection (2), for the words from “multiplying” to the end substitute “ 15% ”.

(5) In subsection (5), for the words from “multiplying” to the end substitute “ 15% ”.

(6) In subsection (6)(a), (b) and (c), omit “or motor cycle”.

(7) Omit subsection (7).

(8) In subsection (8), omit “or motor cycle” (in both places).

(9) After that subsection insert—

(9) For the purposes of section 50B of ITTOIA 2005 and section 58B of CTA 2009 (connected persons: application of restrictions), this section is to be treated as if it were part of section 56 of CTA 2009.

61

Omit section 76ZO (hiring cars (but not motor cycles) with low CO₂ emissions before 1 April 2013).

62

(1) Section 578A (rules restricting deductions: car or motor cycle hire) is amended as follows.

(2) In subsection (2), for paragraphs (a) and (b) substitute

which is not— (a) a car that is first registered before 1 March 2001, (b) a car that has low CO₂ emissions (as defined in section 104AA of the Capital Allowances Act), (c) a car that is electrically propelled (as defined in section 268B of that Act), or (d) a qualifying hire car.

(3) Omit subsections (2A) and (2B).

(4) After subsection (2B) insert—

(2C) This section does not apply to the hiring of a car where condition A or condition B in section 58A of CTA 2009 (short-term hiring in and long-term hiring out) is met.

(5) In subsection (3), for the words from “multiplying” to the end substitute “ 15% ”.

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