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Finance Act 2012

Type Public General Act

Publication 2012-07-17

Last updated 2024-02-22

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

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(7) Sub-paragraph (8) applies if the section which would have applied as mentioned in paragraph 18(1)(d) above is section 196D or 196F of FA 2004.

(8) The payment referred to in sub-paragraph (1)(c) is the payment (if any) which E, or a person connected with E, makes to the lender, or a person connected with the lender, in order to reverse the relevant change in relation to the partnership.

(9) Amount C is to be taken to be nil if—

(a) on or before the completion day, a commitment (whether or not legally enforceable and whether or not subject to any conditions) is given (directly or indirectly) to a relevant person, and

(b) the commitment—

(i) is a commitment to secure that a person receives money or another asset, and

(ii) is linked (directly or indirectly) to the making of the payment covered by amount C.

(10) In sub-paragraph (9)(a) “relevant person” means—

(a) E;

(b) a person connected with E;

(c) a person acting (directly or indirectly) at the direction or request, or with the agreement, of E or a person connected with E;

(d) a person chosen (directly or indirectly) by E or a person connected with E;

(e) a person within a class of person chosen (directly or indirectly) by E or a person connected with E;

(f) a partnership.

(11) But “relevant person” does not include—

(a) the persons who from time to time are the trustees of the relevant scheme, or

(b) the persons who from time to time are the persons controlling the management of the relevant scheme,

in their capacity as such.

30

(1) This paragraph applies if amount A exceeds the sum of amounts B and C.

(2) The amount of the excess is treated as follows as relevant—

(a) for corporation tax purposes, the amount is treated as if it were a profit which E has in respect of E's loan relationships chargeable to corporation tax under section 299 of CTA 2009 for E's accounting period in which the beginning of the completion day falls, or

(b) for income tax purposes, the amount is treated as if it were an amount of income of E chargeable to income tax under Chapter 8 of Part 5 of ITTOIA 2005 for the tax year in which the beginning of the completion day falls.

31

If the sum of amounts B and C exceeds amount A—

(a) E is to be treated as having paid a contribution under the relevant scheme in respect of any individual of an amount equal to the excess,

(b) the contribution is to be treated as having been paid at the beginning of the completion day, and

PART 5 — Other provision relating to finance arrangements

Chapter 5B of Part 13 of ITA 2007

32

Chapter 5B of Part 13 of ITA 2007 (finance arrangements) is amended as follows.

33

In section 809BZA (type 1 finance arrangements: definition) after subsection (2) insert—

(2A) For the purposes of subsection (2)(c) it does not matter if an entitlement of the lender or a person connected with the lender is subject to any condition.

34

(1) Section 809BZF (type 2 finance arrangements: definition) is amended as follows.

(2) In subsection (2)(b) after “transferor” insert “ or a person connected with the transferor ”.

(3) After subsection (2) insert—

(2A) For the purposes of subsection (2)(e) it does not matter if any determination of the share in the partnership's profits of the person involved in the relevant change as mentioned is subject to any condition.

35

In section 809BZH (type 2 finance arrangements: certain tax consequences not to have effect) after “transferor” (wherever occurring) insert “ or the person connected with the transferor ”.

36

In section 809BZJ (type 3 finance arrangements: definition) after subsection (2) insert—

(2A) For the purposes of subsection (2)(d) it does not matter if any determination of the share in the partnership's profits of the person involved in the relevant change as mentioned is subject to any condition.

Chapter 2 of Part 16 of CTA 2010

37

Chapter 2 of Part 16 of CTA 2010 (finance arrangements) is amended as follows.

38

In section 758 (type 1 finance arrangements: definition) after subsection (2) insert—

(2A) For the purposes of subsection (2)(c) it does not matter if an entitlement of the lender or a person connected with the lender is subject to any condition.

39

(1) Section 763 (type 2 finance arrangements: definition) is amended as follows.

(2) In subsection (2)(b) after “transferor” insert “ or a person connected with the transferor ”.

(3) After subsection (2) insert—

(2A) For the purposes of subsection (2)(e) it does not matter if any determination of the share in the partnership's profits of the person involved in the relevant change as mentioned is subject to any condition.

40

In section 765 (type 2 finance arrangements: certain tax consequences not to have effect) after “transferor” (wherever occurring) insert “ or the person connected with the transferor ”.

41

In section 767 (type 3 finance arrangements: definition) after subsection (2) insert—

(2A) For the purposes of subsection (2)(d) it does not matter if any determination of the share in the partnership's profits of the person involved in the relevant change as mentioned is subject to any condition.

Commencement

42

(1) Subject to what follows, the amendments made by paragraphs 32 to 41 above have effect in relation to arrangements whenever made.

(2) In relation to arrangements made before 21 March 2012, an amount is by virtue of the amendments—

(a) to be charged to tax, or

(b) to be brought into account in calculating any income for tax purposes or deducted from any income for tax purposes,

only if the amount arises on or after 21 March 2012.

(3) The amendments have no effect for the purposes of section 196J(4) of FA 2004 inserted by paragraph 1 above.

(4) The amendments have no effect for the purposes of section 196C(2)(b), 196E(2)(b) or 196G(2)(b) of FA 2004 inserted by paragraph 15 above if the asset-backed arrangement is made before 21 March 2012.

SCHEDULE 14

PART 1 — Introduction

Qualifying gifts

1

(1) For the purposes of this Schedule, a person makes a “qualifying gift” if the person makes a gift in the circumstances described in sub-paragraph (2).

(2) The circumstances are—

(a) the person offers to give pre-eminent property to be held for the benefit of the public or the nation,

(b) the person is legally and beneficially entitled to the property and the property is not owned jointly (or in common) with others,

(d) the offer is registered in accordance with the scheme,

(e) the offer, or a part of the offer, is accepted in accordance with the scheme, and

(f) the gift is made pursuant to the offer, or the part of the offer, accepted.

(3) In this Schedule—

(a) “the agreed terms” means the terms on which acceptance is agreed, as recorded in the manner prescribed by the scheme, and

(b) “the offer registration date” means the date when the offer was registered in accordance with the scheme.

PART 2 — Income tax and capital gains tax

Taxes affected

2

(1) This Part applies to an individual's liability to income tax and capital gains tax.

(2) It does not apply to any liability arising as a trustee or personal representative.

(3) Subject to sub-paragraph (2)—

(a) a reference in this Part to an individual's “tax liability” is to the individual's liability to income tax and capital gains tax, and

(b) references to an amount of or on account of “tax” are to be read accordingly.

The basic rule

3

(1) If an individual (“N”) makes a qualifying gift, a portion of N's tax liability for each relevant tax year is to be treated as satisfied, as if N had paid that portion when it became due (or on the offer registration date, if the portion became due before that date).

(2) A “relevant tax year” is a tax year identified in the agreed terms as a tax year to which this paragraph is to apply.

(3) Up to 5 tax years may be identified in the agreed terms, but each one must be either—

(a) the tax year in which the offer registration date falls, or

(b) one of the 4 tax years following that tax year.

The portion treated as satisfied

4

(1) The portion of N's tax liability for a relevant tax year that is to be treated as satisfied is an amount equal to the smaller of—

(a) the tax reduction figure allocated to that tax year, and

(b) the amount of N's tax liability for that tax year less any portion of that amount that is treated as satisfied in consequence of any qualifying gift made by N on a previous occasion.

(2) The amount determined under sub-paragraph (1) may be nil.

(3) The tax reduction figure allocated to a tax year is such part of the total tax reduction figure as is expressed in the agreed terms to be allocated to that tax year.

(4) The figures allocated to the relevant tax years must in total add up to no more than the total tax reduction figure.

(5) “The total tax reduction figure” is 30% of the value set out in the agreed terms as the agreed value of the property forming the subject of the qualifying gift.

(6) The Treasury may by order substitute a different percentage for the percentage specified for the time being in sub-paragraph (5).

Order in which benefit is applied

5

(1) If the tax reduction figure allocated to a relevant tax year is less than the amount determined under paragraph 4(1)(b) for that tax year, the benefit of paragraph 3(1) is to be applied to N's tax liability in the order specified in the agreed terms.

(2) If no order is specified, the order is—

(a) first, to N's liability to income tax for that year, and

(b) then, to N's liability to capital gains tax for that year.

Effect of basic rule on interest and penalties

6

(1) This paragraph explains the effect of paragraph 3(1) as regards late payment interest and late payment penalties.

(2) The effect is that liability to pay amounts specified in sub-paragraph (3) ceases when the qualifying gift is made, as if the liability had never arisen.

(3) The amounts are—

(a) any late payment interest that accrued on the relevant portion during the negotiation period, and

(b) any late payment penalty to which N became liable in the negotiation period for failing to pay the relevant portion (together with any interest on such a penalty).

(4) “The relevant portion” is the portion of N's tax liability for a relevant tax year that is treated under paragraph 3 as satisfied.

(5) In determining for the purposes of sub-paragraph (2) whether or to what extent—

(a) late payment interest accruing on an amount of or on account of N's tax liability for the relevant tax year is attributable to the relevant portion, or

(b) a late payment penalty incurred for failing to pay an amount of or on account of N's tax liability for the relevant tax year is attributable to the relevant portion,

any attribution or apportionment is to be done in the way that maximises the relief obtained by N by virtue of this paragraph.

(6) “The negotiation period” is the period—

(a) beginning with the offer registration date, and

(b) ending with the day on which the qualifying gift is made.

(7) Nothing in this paragraph affects any late payment interest that accrued, or any late payment penalty to which N became liable, before the offer registration date.

Changes to N’s tax liability

7

(1) If the amount of N's tax liability for a relevant tax year is revised at any time, the portion of that liability that is treated under paragraph 3(1) as satisfied is to be re-calculated.

(2) But nothing in this paragraph permits any revision of the agreed terms.

Gifts set aside etc

8

If a qualifying gift is set aside or declared void after it is made—

(a) the portion of N's tax liability for each relevant tax year that is treated as satisfied ceases to be treated as satisfied,

(b) the effect described in paragraph 6 is negated, and

(c) N is required to pay the portion due for each relevant tax year, together with any late payment interest and late payment penalties in respect of it, by the later of—

(i) the end of the period of 30 days beginning with the day on which the gift was set aside or declared void, and

(ii) the day by which N would have been required to pay those amounts but for this Schedule.

Suspension pending negotiations

9

(1) An individual who makes an offer in the circumstances described in paragraph 1 (a “potential donor”) may make a request under this paragraph if—

(a) the offer is registered in accordance with the scheme,

(b) the offer includes a proposal (“the donor proposal”) of what should be in the agreed terms,

(c) the potential donor will be required to pay an amount of or on account of tax for a relevant tax year by a certain date, and

(d) the negotiations are not expected to conclude before that date (referred to as “the due date”).

(2) For the purposes of this paragraph, the negotiations “conclude” when—

(a) a qualifying gift is made pursuant to the offer,

(b) the offer is withdrawn by the potential donor, or

(3) A request under this paragraph is a request that the potential donor's obligation to pay the amount by the due date be suspended until the negotiations conclude.

(4) But the running total of amounts for which suspension may be requested under this paragraph in respect of the same offer and the same relevant tax year must not exceed the proposed tax reduction figure for that tax year.

(5) “The proposed tax reduction figure” for a tax year is the amount shown in the donor proposal as the proposed tax reduction figure for that year.

(6) A request under this paragraph—

(a) must be made in writing to HMRC at least 45 days before the due date, and

(b) must be accompanied by a copy of the donor proposal and such other information as an officer of Revenue and Customs may reasonably require.

(7) In considering whether or to what extent to agree to a request, HMRC must have regard to all the circumstances of the case (including, for example, the creditworthiness of the potential donor).

(8) HMRC may impose conditions with respect to the suspension.

10

(1) Suspension under paragraph 9 of a potential donor's obligation to pay an amount of or on account of tax stops the donor from becoming liable to late payment penalties for or in connection with the failure to pay that amount by the due date.

(2) But it does not stop late payment interest from accruing on that amount from the due date.

(3) HMRC may by notice in writing to the potential donor withdraw its agreement to the suspension with effect from such date, before conclusion of the negotiations, as may be specified in the notice.

(4) If it does so, the potential donor must pay the amount, together with any late payment interest that has accrued on it since the due date, by the end of the period of 30 days beginning with the date specified in the notice.

(5) The last day of that 30-day period is to be treated for the purposes of any enactment relating to late payment penalties as the date on or before which the amount must be paid.

(6) Paragraph 11 explains what happens once the negotiations conclude (depending on the outcome of the negotiations).

Conclusion of negotiations

11

(1) This paragraph applies if a potential donor's obligation to pay an amount of or on account of tax remains suspended under paragraph 9 when the negotiations conclude (within the meaning of that paragraph).

(2) The potential donor must pay the amount, together with any late payment interest that has accrued on it since the due date, within the period of 30 days beginning with the day on which the negotiations concluded.

(3) The last day of that 30-day period is to be treated for the purposes of any enactment relating to late payment penalties as the date on or before which the amount must be paid.

(4) But if the negotiations conclude because a qualifying gift is made pursuant to the offer or a part of the offer—

(a) sub-paragraph (2) is to be read subject to paragraph 3(1) (and its effect as described in paragraph 6), and

(b) accordingly, the potential donor is only required to pay so much as is not treated as satisfied under paragraph 3(1).

(5) If the negotiations conclude in relation to a part only of the offer—

(a) this paragraph is to be given effect as far as reasonably practicable in relation to that part, and

(b) on receipt of a revised copy of the donor proposal, HMRC may give effect to paragraph 9 in relation to the part of the offer that remains under negotiation.

PART 3 — Corporation tax

Taxes affected

12

(1) This Part applies to a company's liability to corporation tax.

(2) A reference in this Part to a company's “tax liability” is to the company's liability to corporation tax.

(3) References to an amount of or on account of “tax” are to be read accordingly.

The basic rule

13

(1) If a company (“C”) makes a qualifying gift, a portion of C's tax liability for the relevant accounting period is to be treated as satisfied, as if C had paid that portion when it became due (or on the offer registration date, if the portion became due before that date).

(2) “The relevant accounting period” is the accounting period of C's in which the offer registration date falls.

The portion treated as satisfied

14

(1) The portion of C's tax liability for the relevant accounting period that is to be treated as satisfied is an amount equal to the smaller of—

(a) the tax reduction figure, and

(b) the amount of C's tax liability for that period less any portion of that amount that is treated as satisfied in consequence of any qualifying gift made by C on a previous occasion.

(2) The amount determined under sub-paragraph (1) may be nil.

(3) The tax reduction figure is—

(a) 20% of the value set out in the agreed terms as the agreed value of the property forming the subject of the qualifying gift, or

(b) such lower figure as may be specified in the agreed terms as the tax reduction figure.

(4) The Treasury may by order substitute a different percentage for the percentage specified for the time being in sub-paragraph (3)(a).

Effect of basic rule on interest and penalties

15

(1) This paragraph explains the effect of paragraph 13 as regards late payment interest and late payment penalties.

(2) The effect is that liability to pay amounts specified in sub-paragraph (3) ceases when the qualifying gift is made, as if the liability had never arisen.

(3) The amounts are—

(a) any late payment interest that accrued on the relevant portion during the negotiation period, and

(b) any late payment penalty to which C became liable in the negotiation period for failing to pay the relevant portion (together with any interest on such a penalty).

(4) “The relevant portion” is the portion of C's tax liability for the relevant accounting period that is treated under paragraph 13 as satisfied.

(5) In determining for the purposes of sub-paragraph (2) whether or to what extent—

(a) late payment interest accruing on an amount of or on account of C's tax liability for the relevant accounting period is attributable to the relevant portion, or

(b) a late payment penalty incurred for failing to pay an amount of or on account of C's tax liability for the relevant accounting period is attributable to the relevant portion,

any attribution or apportionment is to be done in the way that maximises the relief obtained by C by virtue of this paragraph.

(6) “The negotiation period” is the period—

(a) beginning with the offer registration date, and

(b) ending with the day on which the qualifying gift is made.

(7) Nothing in this paragraph affects any late payment interest that accrued, or any late payment penalty to which C became liable, before the offer registration date.

Changes to C’s tax liability

16

(1) If the amount of C's tax liability for the relevant accounting period is revised at any time, the portion of that liability that is treated under paragraph 13 as satisfied is to be re-calculated.

(2) But nothing in this paragraph permits any revision of the agreed terms.

Gifts set aside etc

17

If a qualifying gift is set aside or declared void after it is made—

(a) the portion of C's tax liability for the relevant accounting period treated as satisfied ceases to be treated as satisfied,

(b) the effect described in paragraph 15 is negated, and

(c) C is required to pay the portion due, together with any late payment interest and late payment penalties in respect of it, by the later of—

(i) the end of the period of 30 days beginning with the day on which the gift was set aside or declared void, and

(ii) the day by which C would have been required to pay those amounts but for this Schedule.

Suspension pending negotiations

18

(1) A company that makes an offer in the circumstances described in paragraph 1 (a “potential donor”) may make a request under this paragraph if—

(a) the offer is registered in accordance with the scheme,

(b) the offer includes a proposal (“the donor proposal”) of what should be in the agreed terms,

(c) the potential donor will be required to pay an amount of or on account of tax for the relevant accounting period by a certain date, and

(d) the negotiations are not expected to conclude before that date (referred to as “the due date”).

(2) For the purposes of this paragraph, the negotiations “conclude” when—

(a) a qualifying gift is made pursuant to the offer,

(b) the offer is withdrawn by the potential donor, or

(3) A request under this paragraph is a request that the potential donor's obligation to pay the amount by the due date be suspended until the negotiations conclude.

(4) But the running total of amounts for which suspension may be requested under this paragraph in respect of the same offer must not exceed the proposed tax reduction figure.

(5) “The proposed tax reduction figure” is the amount shown in the donor proposal as the proposed tax reduction figure.

(6) A request under this paragraph—

(a) must be made in writing to HMRC at least 45 days before the due date, and

(b) must be accompanied by a copy of the donor proposal and such other information as an officer of Revenue and Customs may reasonably require.

(7) In considering whether or to what extent to agree to a request, HMRC must have regard to all the circumstances of the case (including, for example, the creditworthiness of the potential donor).

(8) HMRC may impose conditions with respect to the suspension.

19

(1) Suspension under paragraph 18 of a potential donor's obligation to pay an amount of or on account of tax stops the donor from becoming liable to late payment penalties for or in connection with the failure to pay that amount by the due date.

(2) But it does not stop late payment interest from accruing on that amount from the due date.

(3) HMRC may by notice in writing to the potential donor withdraw its agreement to the suspension with effect from such date, before conclusion of the negotiations, as may be specified in the notice.

(4) If it does so, the potential donor must pay the amount, together with any late payment interest that has accrued on it since the due date, by the end of the period of 30 days beginning with the date specified in the notice.

(5) The last day of that 30-day period is to be treated for the purposes of any enactment relating to late payment penalties as the date on or before which the amount must be paid.

(6) Paragraph 20 explains what happens once the negotiations conclude (depending on the outcome of the negotiations).

Conclusion of negotiations

20

(1) This paragraph applies if a potential donor's obligation to pay an amount of or on account of tax remains suspended under paragraph 18 when the negotiations conclude (within the meaning of that paragraph).

(2) The potential donor must pay the amount, together with any late payment interest that has accrued on it since the due date, within the period of 30 days beginning with the day on which the negotiations concluded.

(3) The last day of that 30-day period is to be treated for the purposes of any enactment relating to late payment penalties as the date on or before which the amount must be paid.

(4) But if the negotiations conclude because a qualifying gift is made pursuant to the offer or a part of the offer—

(a) sub-paragraph (2) is to be read subject to paragraph 13 (and its effect as described in paragraph 15), and

(b) accordingly, the potential donor is only required to pay so much as is not treated as satisfied under paragraph 13.

(5) If the negotiations conclude in relation to a part only of the offer—

(a) this paragraph is to be given effect as far as reasonably practicable in relation to that part, and

(b) on receipt of a revised copy of the donor proposal, HMRC may give effect to paragraph 18 in relation to the part of the offer that remains under negotiation.

PART 4 — General provision

Orders

21

(1) An order under Part 2 or 3 of this Schedule is to be made by statutory instrument.

(2) It may include transitional and saving provisions.

(3) A statutory instrument containing an order under Part 2 or 3 of this Schedule is subject to annulment in pursuance of a resolution of the House of Commons.

Pre-eminent property

22

(1) In this Schedule, “pre-eminent property” means—

(a) any picture, print, book, manuscript, work of art, scientific object or other thing that the relevant Minister is satisfied is pre-eminent for its national, scientific, historic or artistic interest,

(b) any collection or group of pictures, prints, books, manuscripts, works of art, scientific objects or other things if the relevant Minister is satisfied that the collection or group, taken as a whole, is pre-eminent for its national, scientific, historic or artistic interest, or

(c) any object that is or has been kept in a significant building if it appears to the relevant Minister desirable for the object to remain associated with the building.

(2) A “significant building” is any building falling within section 230(3)(a) to (d) of IHTA 1984 (acceptance of property in lieu of tax).

(3) “National interest” includes interest within any part of the United Kingdom.

(4) In determining whether an object or collection or group of objects is pre-eminent, regard is to be had to any significant association of the object, collection or group with a particular place.

The relevant Minister

23

(1) For the purposes of paragraph 22, “the relevant Minister” is—

(a) for items with a purely Scottish interest, the Scottish Ministers,

(b) for items with some Scottish interest but with no Northern Irish interest and no Welsh interest, the Secretary of State and the Scottish Ministers concurrently,

(d) for items with some Northern Irish interest but with no Scottish interest and no Welsh interest, the Secretary of State and the Northern Ireland Department of Culture, Arts and Leisure concurrently,

(e) for items with a purely Welsh interest, the Welsh Ministers,

(f) for items with some Welsh interest but with no Scottish interest and no Northern Irish interest, the Secretary of State and the Welsh Ministers concurrently, and

(g) for any other items, the Secretary of State.

(2) If an item within sub-paragraph (1)(g) has more than one devolved interest, the Secretary of State must consult the appropriate Minister for each such interest before making a decision under paragraph 22 affecting the item.

(3) An item has a purely Scottish interest if—

(a) it is located in Scotland, and

(b) the offer contains—

(i) no wish about where the item is to be displayed, or

(ii) a wish that it is to be displayed in Scotland.

(4) An item has some Scottish interest if it does not have a purely Scottish interest but—

(a) it is located in Scotland, or

(b) the offer contains a wish that it is to be displayed in Scotland.

(5) An item has no Scottish interest if it does not have a purely Scottish interest and it does not have some Scottish interest.

(6) References to items with a purely Northern Irish or purely Welsh interest, to items with some Northern Irish or some Welsh interest and to items with no Northern Irish interest or no Welsh interest are to be read in accordance with sub-paragraphs (3) to (5), but replacing references to Scotland with references to Northern Ireland or, as the case may be, Wales.

(7) A “devolved interest” is some Scottish interest, some Northern Irish interest or some Welsh interest.

(8) “The appropriate Minister” is—

(a) if the item has some Scottish interest, the Scottish Ministers,

(b) if the item has some Northern Irish interest, the Northern Ireland Department of Culture, Arts and Leisure, and

(9) “Item” means an object or collection or group of objects.

General interpretation

24

In this Schedule—

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

“company” has the meaning given in section 992 of ITA 2007;

“corporation tax” includes any amount assessable or chargeable as if it were corporation tax;

“HMRC” means Her Majesty's Revenue and Customs;

“late payment interest” means interest under section 101 of FA 2009, or under or by virtue of Part 9 of TMA 1970, on amounts payable to HMRC;

“late payment penalty” means a penalty under Schedule 56 to FA 2009.

25

Nothing in this Schedule is to give rise to any right or expectation that an offer made as mentioned in paragraph 1 will be accepted.

IHTA 1984

26

IHTA 1984 is amended as follows.

27

In section 25 (gifts for national purposes etc), after subsection (2) insert—

(3) A transfer of value is an exempt transfer to the extent that the value transferred by it is attributable to property that is being transferred in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation).

28

In section 26A (potentially exempt transfer of property subsequently held for national purposes etc), in paragraph (b), after “below” insert “ or in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation) ”.

29

(1) Section 32 (conditionally exempt transfers: chargeable events) is amended as follows.

(2) In subsection (3), for “subsections (4) and (5)” substitute “ subsections (4), (4A) and (5) ”.

(3) After subsection (4) insert—

(4A) A death or disposal is not a chargeable event with respect to any property if— (a) in the case of a death, a person who became beneficially entitled to the property on the death disposes of it in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation) within 3 years of the death, or (b) in the case of a disposal, the disposal is made in the circumstances described in paragraph 1 of that Schedule, and a death or disposal of the property after such a disposal as is mentioned in paragraph (a) or (b) is not a chargeable event with respect to the property unless there has again been a conditionally exempt transfer of it after that disposal.

30

(1) Section 32A (associated properties) is amended as follows.

(2) After subsection (5) insert—

(5A) The death of a person beneficially entitled to property, or the disposal of property, is not a chargeable event if— (a) in the case of a death, a person who became beneficially entitled to the property on the death disposes of it in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation) within 3 years of the death, or (b) in the case of a disposal, the disposal is made in the circumstances described in paragraph 1 of that Schedule.

(3) In subsection (7), after “(5)(a) or (b)” insert “ or (5A)(a) or (b) ”.

31

In section 33 (amount of charge under section 32), in subsection (6)—

(a) for “section 32(4)” substitute “ section 32(4) or (4A) ”, and

(b) for “section 32A(5)”, in both places it appears, substitute “ section 32A(5) or (5A) ”.

32

In section 34 (reinstatement of transferor's cumulative total), in subsection (4)—

(a) for “section 32(4)” substitute “ section 32(4) or (4A) ”, and

(b) for “section 32A(5)”, in both places it appears, substitute “ section 32A(5) or (5A) ”.

Estate duty etc

33

(1) This paragraph applies if a person makes a qualifying gift and as a result—

(a) estate duty becomes chargeable under section 40 of FA 1930 (exemption from death duties of objects of national etc interest), or

(b) tax becomes chargeable under Schedule 5 to IHTA 1984 (conditional exemption: deaths before 7 April 1976).

(2) Despite any other enactment, the amount of duty or tax that becomes so chargeable as a result of the gift is to be limited to the amount (if any) by which A exceeds B.

(3) For these purposes—

“A” is the amount of duty or tax that becomes so chargeable as a result of the gift (absent this paragraph), and

“B” is what that amount would be if the effective rate at which the duty or tax is charged were the highest rate specified in column 3 of the Table in Schedule 1 to IHTA 1984.

(4) References in this paragraph to the amount of duty or tax that becomes so chargeable are to the amount before applying any credit allowable against it under section 33(7) of IHTA 1984.

(5) Nothing in this paragraph entitles a person to any repayment of inheritance tax if the amount of any such credit exceeds the amount (if any) chargeable in accordance with sub-paragraph (2).

(6) In the application of this paragraph to Northern Ireland, for the reference to section 40 of FA 1930 substitute a reference to section 2 of the Finance Act (Northern Ireland) 1931.

TCGA 1992

34

In section 258 of TCGA 1992 (works of art etc), before subsection (2) insert—

(1A) A gain is not a chargeable gain if it accrues on a disposal made in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation).

ITA 2007

35

In Chapter A1 of Part 14 of ITA 2007 (income tax: remittance basis), after section 809YD (inserted by Schedule 12 to this Act) insert—

(809YE) (1) Section 809Y(1) does not apply to property if— (a) it ceases to be exempt property in the second case mentioned in that section, and (b) by no later than the time when it ceases to be exempt property, it has been donated in the circumstances described in paragraph 1 of Schedule 14 to FA 2012 (gifts to the nation). (2) Where section 809Y(1) does not apply to property by virtue of this section, the property is to continue to be treated as not remitted to the United Kingdom even though it no longer meets any of the relevant rules.

PART 6 — Commencement

36

(1) Parts 2 and 3 of this Schedule have effect in relation to liabilities for tax years and accounting periods beginning on or after such day as the Treasury may by order appoint.

(2) The power of the Treasury under sub-paragraph (1) includes power to appoint a day that is earlier than the day on which the order is made, but no earlier than 1 April 2012.

(3) An order under this paragraph is to be made by statutory instrument.

SCHEDULE 15

Claims by charitable trusts etc

1

(1) In Part 10 of ITA 2007 (special rules about charitable trusts etc), section 538A (claims in relation to gift aid relief) is amended as follows.

(2) Before subsection (1) insert—

(A1) This section applies to claims for— (a) repayment of income tax treated as having been paid by virtue of section 520(4) (gift aid relief: income tax treated as paid by trustees of charitable trust), or (b) repayment of income tax deducted at source from income to which any of the following applies— (i) section 532 (exemption for savings and investment income), (ii) section 533 (exemption for public revenue dividends), (iii) section 536 (exemption for certain miscellaneous income), or (iv) section 537 (exemption for income from estates in administration).

(3) In subsection (1)—

(a) before “applies” insert “ also ”, and

(b) for the words after “tax” substitute

by virtue of— (a) section 521(4) (gifts entitling donor to gift aid relief: charitable trusts), or (b) any of the provisions mentioned in subsection (A1)(b).

(4) Accordingly, in the heading, after “relief” insert “ etc ”.

Claims by charitable companies etc

2

Part 11 of CTA 2010 (charitable companies etc) is amended as follows.

3

(1) In Chapter 2 (gifts and other payments), section 477A (claims in relation to gift aid relief) is amended as follows.

(2) Before subsection (1) insert—

(A1) This section applies to claims for repayment of income tax treated as having been paid by virtue of— (a) section 471 (gifts qualifying for gift aid relief: charitable companies), or (b) section 475 (gifts qualifying for gift aid relief: eligible bodies).

(3) In subsection (1), before “applies” insert “ also ”.

4

In Chapter 3 (other exemptions), after section 491 insert—

(491A) (1) Subsections (2) to (5) of section 477A (claims in relation to gift aid relief) apply to— (a) claims for amounts to be exempt from tax by virtue of a provision listed in subsection (2), and (b) claims for repayment of income tax deducted at source from income which is exempt from tax by virtue of such a provision, as they apply to claims to which that section applies. (2) The provisions are— (a) section 486 (investment income and non-trading profits from loan relationships), (b) section 487 (public revenue dividends), (c) section 488 (certain miscellaneous income), and (d) section 489 (income from estates in administration).

Community amateur sports clubs: gift aid and other income

5

Chapter 9 of Part 13 of CTA 2010 (special types of company etc: community amateur sports clubs) is amended as follows.

6

After section 661C insert—

(661D) (1) This section applies if a gift is made to a registered club by an individual and the gift is a qualifying donation for the purposes of Chapter 2 of Part 8 of ITA 2007 (gift aid). (2) The club is treated as receiving, under deduction of income tax at the basic rate for the tax year in which the gift is made, a gift of an amount equal to the grossed up amount of the gift. (3) The income tax treated as deducted is treated as income tax paid by the club. (4) The grossed up amount of the gift is treated as an amount in respect of which the club is chargeable to corporation tax, under the charge to corporation tax on income. But this is subject to section 664 (exemption for interest and gift aid income). (5) References in this section to the grossed up amount of the gift are to the amount of the gift grossed up by reference to the basic rate for the tax year in which the gift is made.

7

After section 665 insert—

(665A) (1) This section applies to— (a) claims for repayment of income tax treated as having been paid by virtue of section 661D (tax treatment of gifts qualifying for gift aid relief), (b) claims for amounts to be exempt from tax by virtue of section 664 (exemption for interest and gift aid income), and (c) claims for repayment of income tax deducted at source from interest income (within the meaning of that section) which is exempt from tax by virtue of that section. (2) A claim to which this section applies may be made— (a) to an officer of Revenue and Customs, or (b) by being included in the claimant's company tax return. (3) In this section— - “free-standing claim” means a claim made as mentioned in subsection (2)(a), and - “tax return claim” means a claim made as mentioned in subsection (2)(b). (4) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision— (a) limiting the number of free-standing claims that may be made by a person in a tax year, or (b) requiring a claim for an amount below an amount specified in the regulations to be made as a tax return claim. (5) The regulations may make different provision for different cases or purposes.

8

In consequence of the provision made by paragraph 6, in section 413 of ITA 2007 (overview of gift aid relief), after subsection (5) insert—

(6) For related reliefs for community amateur sports clubs see Chapter 9 of Part 13 of CTA 2010.

Treatment of income tax deducted or repaid

9

In section 59B of TMA 1970 (payment of income tax and capital gains tax), in subsection (7), at the end insert—

But such a reference does not include income tax repaid on a claim for repayment of income tax which— (a) is treated as having been paid by virtue of section 520(4) of ITA 2007 (gift aid relief: income tax treated as paid by trustees of charitable trust), or (b) has been deducted at source from income to which section 532, 533, 536 or 537 of that Act (certain sources of income exempt from income tax) applies.

10

(1) Section 967 of CTA 2010 (set-off of income tax deductions against corporation tax: payments received by UK resident companies) is amended as follows.

(2) After subsection (4) insert—

(5) The reference in subsection (1) to a payment received by a company does not include a reference to a payment which is exempt from tax by virtue of any of the following— - section 472 (gifts qualifying for gift aid relief: charitable companies); - section 475 (gifts qualifying for gift aid relief: eligible bodies); - section 664 (exemption for interest and gift aid income: community amateur sports clubs).

(3) In subsection (5) (as inserted by sub-paragraph (2)), after the entry for section 475 insert—

section 486 (investment income and non-trading profits from loan relationships); section 487 (public revenue dividends); section 488 (certain miscellaneous income); section 489 (income from estates in administration);

Administration of claims under ITA 2007

11

(1) Section 42 of TMA 1970 (procedure for making claims etc) is amended as follows.

(2) In subsection (2), for “and (3ZA)” substitute “ to (3ZB) ”.

(3) In subsection (3ZA), for the words from “by virtue of” to the end substitute

by virtue of— (a) section 521(4) of ITA 2007 (gifts entitling donor to gift aid relief: charitable trusts), (b) section 532 of that Act (exemption for savings and investment income), (c) section 533 of that Act (exemption for public revenue dividends), (d) section 536 of that Act (exemption for certain miscellaneous income), or (e) section 537 of that Act (exemption for income from estates in administration).

(4) After subsection (3ZA) insert—

(3ZB) Subsection (2) also does not apply in relation to any claim for repayment of an amount of income tax which— (a) is treated as having been paid by virtue of section 520(4) of ITA 2007 (gift aid relief: income tax treated as paid by trustees of charitable trust), or (b) has been deducted at source from income to which any of the provisions mentioned in paragraphs (b) to (e) of subsection (3ZA) applies.

12

In consequence of the amendments made by paragraph 11, in Schedule 8 to FA 2010 omit paragraph 4(2).

Administration of claims under CTA 2010

13

Schedule 18 to FA 1998 (company tax returns, assessments and related matters) is amended as follows.

14

(1) Paragraph 9 (claims that cannot be made without a return) is amended as follows.

(2) In sub-paragraph (2), at the end insert—

This is subject to sub-paragraphs (2A) and (2B).

(3) For sub-paragraph (2A) substitute—

(2A) This paragraph does not apply to a claim by a company for repayment of income tax treated as having been paid by virtue of— (a) section 471 of the Corporation Tax Act 2010 (gifts qualifying for gift aid relief: charitable companies), (b) section 475 of that Act (gifts qualifying for gift aid relief: eligible bodies), or (c) section 661D of that Act (gifts qualifying for gift aid relief: community amateur sports clubs). (2B) This paragraph also does not apply to a claim by a company for repayment of income tax deducted at source from income which is exempt from tax by virtue of— (a) section 486 of the Corporation Tax Act 2010 (investment income and non-trading profits from loan relationships), (b) section 487 of that Act (public revenue dividends), (c) section 488 of that Act (certain miscellaneous income), (d) section 489 of that Act (income from estates in administration), or (e) section 664 of that Act (interest and gift aid income: community amateur sports clubs).

15

(1) Paragraph 57 (claims or elections affecting a single accounting period) is amended as follows.

(2) In sub-paragraph (1), at the end insert—

This is subject to sub-paragraphs (1A) to (1C).

(3) For sub-paragraph (1A) substitute—

(1A) This paragraph does not apply to a claim by a company for repayment of income tax treated as having been paid by virtue of— (a) section 471 of the Corporation Tax Act 2010 (gifts qualifying for gift aid relief: charitable companies), (b) section 475 of that Act (gifts qualifying for gift aid relief: eligible bodies), or (c) section 661D of that Act (gifts qualifying for gift aid relief: community amateur sports clubs). (1B) This paragraph also does not apply to a claim by a company for repayment of income tax deducted at source from income which is exempt from tax by virtue of— (a) section 486 of the Corporation Tax Act 2010 (investment income and non-trading profits from loan relationships), (b) section 487 of that Act (public revenue dividends), (c) section 488 of that Act (certain miscellaneous income), (d) section 489 of that Act (income from estates in administration), or (e) section 664 of that Act (interest and gift aid income: community amateur sports clubs). (1C) This paragraph also does not apply to a claim by a company for an amount to be exempt from tax by virtue of— (a) section 472 of the Corporation Tax Act 2010 (gifts qualifying for gift aid relief: charitable companies), (b) section 475 of that Act (gifts qualifying for gift aid relief: eligible bodies), or (c) any of the provisions mentioned in sub-paragraph (1B).

16

In consequence of the amendments made by paragraphs 14 and 15, in Schedule 8 to FA 2010 omit paragraph 6.

Application

17

(1) The amendments made by paragraphs 1 to 4 and 7 are treated as having come into force on 8 April 2010.

(2) The amendments made by paragraphs 6, 8 and 10 are treated as having effect—

(a) for corporation tax purposes, for accounting periods ending on or after 1 April 2010, and

(b) for income tax purposes, for the tax year 2010-11 and subsequent tax years.

(3) The amendment made by paragraph 9 has effect in relation to income tax repaid on gifts made or income received on or after 6 April 2006.

Accordingly, any reference in that amendment to a provision of ITA 2007 is to be read as including a reference to any corresponding earlier enactment which was rewritten in that provision.

(4) An amendment corresponding to that made by paragraph 10(2) is to be treated as having been made in ICTA and having had effect in relation to—

(a) gifts made by individuals to charitable companies and eligible bodies on or after 6 April 2000 which were not covenanted payments,

(b) covenanted payments falling to be made by individuals to charitable companies and eligible bodies on or after that date, and

(5) An amendment corresponding to that made by paragraph 10(3) is to be treated as having been made in ICTA and having had effect in relation to payments of income made on or after 1 April 2006.

(6) The amendments made by paragraphs 11 to 16 have effect in relation to claims whenever made.

SCHEDULE 16

PART 1 — Amendments of ICTA

1

ICTA is amended as follows.

2

Omit section 76 (expenses of insurance companies).

3

Omit section 76ZA (payments for restrictive undertakings).

4

Omit section 76ZB (seconded employees).

5

Omit sections 76ZC to 76ZE (counselling and retraining expenses).

6

Omit sections 76ZF to 76ZJ (redundancy payments etc).

7

Omit section 76ZK (contributions to local enterprise organisations or urban regeneration companies).

8

Omit sections 76ZL and 76ZM (unpaid remuneration).

9

Omit section 76ZN (car hire).

10

In section 95ZA(3) (taxation of UK distributions received by insurance companies), for “life assurance business” substitute “ business in relation to which section 111 of the Finance Act 2012 applies ”.

11

Omit section 431 (interpretative provisions relating to insurance companies).

12

Omit section 431ZA (election for assets not be foreign business assets).

13

Omit section 431A (amendment of Chapter etc).

14

Omit section 431B (meaning of “pension business”).

15

Omit section 431BA (meaning of “child trust fund business”).

16

Omit section 431BB (meaning of “individual savings account business”).

17

Omit section 431C (meaning of “life reinsurance business”).

18

Omit sections 431D and 431E (meaning of “overseas life assurance business” etc).

19

Omit section 431EA (meaning of “gross roll-up business”).

20

Omit section 431F (meaning of “basic life assurance and general annuity business”).

21

Omit section 431G (company carrying on life assurance business).

22

Omit section 431H (company carrying on life assurance business and other insurance business).

23

Omit section 432YA (PHI business — adjustment consequent of change in Insurance Prudential Sourcebook).

24

Omit section 432ZA (linked assets).

25

Omit section 432A (apportionment of income and gains).

26

Omit section 432AA (property businesses).

27

Omit section 432AB (losses from property businesses).

28

Omit sections 432B to 432G (apportionment of receipts brought into account).

29

Omit section 434 (franked investment income etc).

30

Omit section 434A (computation of losses and limitation on relief).

31

Omit sections 434AZA to 434AZC (reduced loss relief for additions to non-profit funds).

32

Omit section 436A (gross roll-up business: separate charge on profits).

33

Omit section 436B (gains referable to gross-roll up business not to be chargeable gains).

34

Omit sections 437 and 437A (general annuity business).

35

Omit section 438 (pension business: exemption from tax).

36

Omit section 440 (transfers of assets etc).

37

Omit section 440A (securities).

38

Omit section 440B (modifications where tax charged under s.35 of CTA 2009).

39

Omit section 440C (modifications for change of tax basis).

40

Omit section 440D (modifications in relation to BLAGAB group reinsurers).

41

Omit section 442 (overseas business of UK companies).

42

Omit section 442A (taxation of investment return where risk reinsured).

43

Omit sections 444A to 444AED (transfers of business).

44

Omit sections 444AF to 444AL (surpluses of mutual and former mutual businesses).

45

In Schedule 15 (qualifying policies), in paragraph 24(3)(a), for “section 431(2)” substitute “ section 56 of the Finance Act 2012 ”.

46

Omit Schedule 19ABA (modifications in relation to BLAGAB group reinsurers).

PART 2 — Amendments of FA 1989

47

FA 1989 is amended as follows.

48

In section 67(2) (employee share ownership trusts), for paragraph (b) (and the “or” before that paragraph) substitute—

(b) if the company is an investment company, shall be treated as expenses of management, or (c) if the company is a company in relation to which the I - E rules apply and the sum is referable, in accordance with Chapter 4 of Part 2 of the Finance Act 2012, to the company's basic life assurance and general annuity business, shall be treated for the purposes of section 76 of that Act as ordinary BLAGAB management expenses of the company.

49

Omit section 82 (calculation of profits: bonuses etc).

50

Omit section 82A (calculation of profits: policy holders' tax).

51

Omit section 82B (unappropriated surplus on valuation).

52

Omit sections 82D to 82F (treatment of profits: life assurance — adjustment consequent on change in Insurance Prudential Sourcebook).

53

Omit section 83 (receipts to be taken into account).

54

Omit section 83XA (structural assets).

55

Omit sections 83YA and 83YB (changes in value of assets brought into account: non-profit companies).

56

Omit sections 83YC to 83YF (FAFTS).

57

Omit section 83A (meaning of “brought into account”).

58

Omit section 83B (changes in recognised accounts: attribution of amounts carried forward under s.432F of ICTA).

59

Omit section 85 (charge of certain receipts of basic life assurance business).

60

Omit section 85A (excess adjusted life assurance trade profits).

61

Omit section 86 (spreading of relief for acquisition expenses).

62

Omit section 88 (corporation tax: policy holders' share of profits).

63

Omit section 89 (policy holders' share of profits).

PART 3 — Amendments of other Acts

Finance Act 1950

64

FA 1950 is amended as follows.

65

In section 39(3)(b)(ii) (treatment for taxation purposes of enemy debts etc written off during the war), for “an expenses deduction for the purposes of Step 1 of section 76(7) of the Income and Corporation Taxes Act 1988” substitute “ ordinary BLAGAB management expenses for the purposes of section 76 of the Finance Act 2012 ”.

Taxes Management Act 1970

66

TMA 1970 is amended as follows.

67

(1) Section 98 (special returns) is amended as follows.

(2) In the first column of the Table—

(a) omit the entry relating to regulations under section 431E(1) of ICTA, and

(b) at the end insert—

regulations under section 61(5) of the Finance Act 2012

(3) In the second column of the Table—

(a) omit the entry relating to section 76ZE(4) of ICTA,

(b) omit the entry relating to regulations under section 431E(1) of ICTA, and

regulations under section 61(5) of the Finance Act 2012

Inheritance Tax Act 1984

68

IHTA 1984 is amended as follows.

69

In section 59(3)(b) (qualifying interest in possession), for “Chapter I of Part XII of the Taxes Act 1988” substitute “ Part 2 of the Finance Act 2012 ”.

Finance Act 1991

70

FA 1991 is amended as follows.

71

In paragraph 16(1) of Schedule 7 (transitional relief for old general annuity contracts), for the words from “computation” to “1988” substitute “ application of the I - E rules in relation to an accounting period of an insurance company, an amount equal to the lesser of the following amounts is to be treated (if it is not nil) for the purposes of section 76 of the Finance Act 2012 as a deemed BLAGAB management expense for the accounting period ”.

Taxation of Chargeable Gains Act 1992

72

TCGA 1992 is amended as follows.

73

In section 10B (non-resident company with United Kingdom permanent establishment), after subsection (3) insert—

(3A) This section applies to an overseas life insurance company in the case of its long-term business with the omission from subsection (1)(b) of the words “situated in the United Kingdom and”.

74

In section 100(2B)(a) (exemption for authorised unit trusts etc), for “section 431 of the Taxes Act” substitute “ section 65 of the Finance Act 2012 ”.

75

In section 140C (transfer or division of non-UK business), omit subsection (8).

76

In section 151I(1) (meaning of “financial institution”)—

(a) in paragraph (g), for “section 431(2) of ICTA” substitute “ section 65 of the Finance Act 2012 ”, and

(b) in paragraph (h), for “section 431(2) of ICTA” substitute “ section 139(1) of the Finance Act 2012 ”.

77

(1) Section 171C (elections under s.171A: insurance companies) is amended as follows.

(2) In subsection (2), for “section 440(3) of the Taxes Act” substitute “ section 118 of the Finance Act 2012 ”.

(3) In subsection (3)(b), for “part of that company's long-term insurance fund” substitute “ held for the purposes of the company's long-term business ”.

(4) In subsection (4), for the words from “as arising” to the end substitute “ for the purposes of section 210A (ring-fencing of losses) as a non-BLAGAB chargeable gain or (as the case may be) a non-BLAGAB allowable loss ”.

(5) Omit subsection (5).

78

In section 185 (deemed disposal of assets on company ceasing to be UK resident), after subsection (4) insert—

(4A) Subsection (4) applies to an overseas life insurance company in the case of its long-term business with— (a) the omission from paragraph (a) of the words “are situated in the United Kingdom and”; and (b) the omission from paragraph (b) of the words “are so situated and”.

79

In section 204(10)(a) (policies of insurance and non-deferred annuities), for “Chapter 1 of Part 12 of the Taxes Act” substitute “ section 56(3) of the Finance Act 2012 ”.

80

(1) Section 210A (ring-fencing of losses) is amended as follows.

(2) For subsection (2) substitute—

(2) Non-BLAGAB allowable losses accruing to an insurance company are allowable as a deduction from the shareholders' share (if any) of the BLAGAB chargeable gains accruing to the company (but are not otherwise allowable as a deduction from the BLAGAB chargeable gains accruing to the company).

(3) For subsections (10) and (10A) substitute—

(10) For the purposes of this section the “shareholders' share” of BLAGAB chargeable gains or BLAGAB allowable losses accruing to an insurance company in an accounting period is determined as follows. (10A) If the company has an I - E profit for the accounting period— (a) find the percentage (including, if applicable, nil) of the I - E profit that is not represented by the policyholders' share of that profit as determined in accordance with section 103 of the Finance Act 2012, and (b) then multiply that percentage by the amount of the BLAGAB chargeable gains or BLAGAB allowable losses. The result is the shareholder's share of the BLAGAB chargeable gains or BLAGAB allowable losses. (10B) If the company does not have an I - E profit for the accounting period, the shareholders' share of the BLAGAB chargeable gains or BLAGAB allowable losses is nil. (10C) In determining for the purposes of subsections (10A) and (10B) whether or not the company has an I - E profit for an accounting period, assume that non-BLAGAB allowable losses cannot be deducted to any extent from BLAGAB chargeable gains (and, accordingly, assume that section 95 is not included in the Finance Act 2012).

(4) In subsection (11)—

(a) for “the policy holders' share” substitute “the shareholders' share”, and

(b) for “subsection (10)” substitute “ subsections (10) to (10C) ”.

(5) Omit subsection (12).

(6) In subsection (13)—

(a) in the definitions of “BLAGAB allowable losses” and “BLAGAB chargeable gains”, for “(in accordance with section 432A of the Taxes Act)” substitute “ , in accordance with Chapter 4 of Part 2 of the Finance Act 2012, ”, and

(b) omit the definitions of “the relevant profits” and “the policy holders' share of the relevant profits” (together with the “and” before the definition of “the relevant profits”).

81

(1) Section 210B (disposal and acquisition of section 440A securities) is amended as follows.

(2) In subsection (1)—

(a) in the opening words, for “section 440A securities” (in both places) substitute “ section 119 or 120 securities ”, and

(b) in paragraphs (a) and (b), for “chargeable section 440A holding” substitute “ chargeable section 119 or 120 holding ”.

(3) In subsection (7)(a), for “linked assets” substitute “ assets wholly matched to BLAGAB liabilities and the assets are ”.

(4) For subsection (8) substitute—

(8) In this section— - “BLAGAB internal linked fund” means an internal linked fund all the assets appropriated to which are matched wholly to BLAGAB liabilities, - “chargeable section 119 or 120 holding” means a holding which is a separate holding as a result of section 119(1)(a), (c) or (d) or section 120(1)(a), (c) or (d) of the Finance Act 2012 (and section 121(1) and (2) of that Act), - “internal linked fund”, in relation to an insurance company, means an account— 1. to which assets matched to the company's life assurance liabilities are appropriated by the company, and 2. which may be divided into units the value of which is determined by the company by reference to the value of those assets, and - “section 119 or 120 securities” means securities within the meaning of section 119 or 120 of the Finance Act 2012 (see section 121(6)).

(5) In the heading, for “section 440A securities” substitute “ section 119 or 120 securities ”.

82

In section 210C(2) (losses on disposal of authorised investment fund assets to connected manager), in the definition of “authorised investment fund assets”, for “of the company's long-term insurance fund consisting of” substitute “ held by the company for the purposes of its long-term business that consist of ”.

83

(1) Section 211 (transfers of business) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (a), for “of the transferor's long-term insurance fund” substitute “ held by the transferor for the purposes of its long-term business ”, and

(b) in paragraph (b), for “of the transferee's long-term insurance fund” substitute “ held by the transferee for the purposes of its long-term business ”.

(3) In subsection (2A), for “structural assets within the meaning of section 83XA of the Finance Act 1989” substitute “ assets which formed part of the long-term business fixed capital of the company in question ”.

(4) After subsection (3) insert—

(4) Subsection (2) does not apply in relation to assets which are referable to the long-term business of the transferor if all the income of the transferor's long-term business is chargeable to corporation tax on income under section 35 of CTA 2009.

84

In section 211ZA(10) (transfers of business: transfer of unused losses), for “(in accordance with section 432A of the Taxes Act)” substitute “ , in accordance with Chapter 4 of Part 2 of the Finance Act 2012, ”.

85

(1) Section 212 (annual deemed disposal of holdings of unit trusts etc) is amended as follows.

(2) In subsection (1), for “of an insurance company's long-term insurance fund” substitute “ held by an insurance company for the purposes of its long-term business ”.

(3) Omit subsection (2).

(4) At the end insert—

(9) This section applies to an overseas life insurance company as if references in subsection (1) to assets were to such of the assets concerned as are UK assets. (10) Assets (whether situated in the United Kingdom or elsewhere) are “UK assets” if, in accordance with the provision made by or under Chapter 4 of Part 2 of CTA 2009, they fall to be attributed to the permanent establishment in the United Kingdom through which the company carries on life assurance business.

86

(1) Section 213 (spreading of gains and losses under section 212) is amended as follows.

(2) In subsection (1A), for “(in accordance with section 432A of the Taxes Act)” substitute “ , in accordance with Chapter 4 of Part 2 of the Finance Act 2012, ”.

(3) After subsection (4) insert—

(4ZA) Subsection (4) applies in relation to an overseas life insurance company with the insertion after “long-term business” of the words “in the United Kingdom through a permanent establishment”.

87

After section 213 insert—

(213A) (1) The Treasury may make regulations for the purpose mentioned in subsection (2) in any case where— (a) an insurance company to which the I - E rules apply is deemed to make a disposal under section 212 of an interest in an offshore fund, (b) the offshore fund is a CFC, and (c) there is (or, but for the regulations, would be) a CFC charge on the insurance company referable to its relevant interest in the CFC for the accounting period in which the disposal is deemed to have been made. (2) The regulations are to be made for the purpose of modifying the operation of— (a) section 212 or 213, (b) the CFC rules, or (c) the I - E rules, in relation to any accounting period of the insurance company so as to reduce the charge to tax. (3) The regulations may— (a) make different provision for different cases or circumstances, and (b) contain incidental, supplementary, consequential, transitional, transitory or saving provision. (4) The provision that may be made as a result of subsection (3)(b) includes provision modifying any other provision of the Corporation Tax Acts. (5) In this section— - “CFC” and “CFC charge” have the same meanings as in Part 9A of TIOPA 2010 (see section 371VA), - “the CFC rules” means the rules contained in that Part, and - “offshore fund” has the meaning given by section 355 of TIOPA 2010.

88

(1) Schedule 7AC (exemptions for disposals by companies with substantial shareholdings) is amended as follows.

(2) In paragraph 6(1)(c), for “section 440(1) or (2) of the Taxes Act” substitute “ any of sections 116 to 118 of the Finance Act 2012 ”.

(3) Paragraph 17 is amended as follows.

(4) In sub-paragraph (2), for “of its long-term insurance fund” substitute “ held by it for the purposes of its long-term business ”.

(5) In sub-paragraph (3)(b), for “of its long-term insurance fund” substitute “ for the purposes of its long-term business ”.

(6) In sub-paragraph (4), for “as assets of its long-term insurance fund” substitute “ for the purposes of its long-term business ”.

(7) In sub-paragraph (4A)—

(a) for “of the investing company's long-term insurance fund” substitute “ held by the investing company for the purposes of its long-term business ”,

(b) for “as assets of its long-term insurance fund” substitute “ for the purposes of its long-term business ”, and

(c) for “a structural asset, or structural assets, within the meaning of section 83XA of the Finance Act 1989” substitute “ an asset or assets which formed part of the long-term business fixed capital of the company in question ”.

(8) In the italic heading before that paragraph, for “insurance company's long-term insurance fund” substitute “ insurance company held for the purposes of its long-term business ”.

89

In paragraph 1 of Schedule 7AD (gains of insurance company from venture capital investment partnership), for “the assets of the long-term insurance fund of an insurance company (“the company”)” substitute “ the assets held by an insurance company (“the company”) for the purposes of its long-term business ”.

Finance Act 1993

90

FA 1993 is amended as follows.

91

In section 91 (deemed disposals of unit trusts by insurance companies), omit subsection (2).

Finance Act 1999

92

FA 1999 is amended as follows.

93

In section 81(8) (acquisitions disregarded under insurance companies concession), in the definition of “insurance company”, for “meaning of Chapter I of Part XII of the Taxes Act 1988” substitute “ meaning given by section 65 of the Finance Act 2012 ”.

Capital Allowances Act 2001

94

CAA 2001 is amended as follows.

95

In section 19(5) (special leasing of plant or machinery), for “life assurance business” substitute “ long-term business ”.

96

In the italic heading before section 254, for “Life assurance” substitute “ Long-term ”.

97

In section 254(1) (introductory), for “life assurance business” substitute “ long-term business ”.

98

For section 255 substitute—

(255) (1) This section applies if the long-term business of the company consists of— (a) basic life assurance and general annuity business, and (b) non-BLAGAB long-term business. (2) In that case— (a) any allowance to which the company is entitled for a chargeable period in respect of a management asset, and (b) any charge to which it is liable for a chargeable period in respect of a management asset, must be apportioned between the businesses in accordance with Chapter 7 of Part 2 of FA 2012.

99

(1) Section 256 (different giving effect rules for different categories of business) is amended as follows.

(2) In subsection (1)(b)—

(a) for “under the I minus E basis” substitute “ in accordance with the I - E rules ”, and

(b) for “its life assurance business” substitute “ that business ”.

(3) In subsection (2)(a), for the words from “as expenses payable” to “section 76(7) of ICTA” substitute “ for the purposes of section 76 of FA 2012 as deemed BLAGAB management expenses for the chargeable period in question ”.

(4) Omit subsections (3) and (4).

(5) In the heading, for “different categories of business” substitute “ BLAGAB ”.

100

In section 257(2) (supplementary), for paragraphs (a) and (b) substitute—

(a) section 93(5) of FA 2012 (minimum profits test), or (b) section 103 of FA 2012 (rules for determining policyholders' share of I - E profit).

101

(1) Section 261 (special leasing: life assurance business) is amended as follows.

(2) For “life assurance business” substitute “ long-term business ”.

(3) In the heading, for “life assurance business” substitute “ long-term business ”.

102

In the heading for Chapter 1 of Part 12, for “LIFE ASSURANCE” substitute “ LONG-TERM ”.

103

(1) Section 544 (management assets) is amended as follows.

(2) In subsections (1) and (2), for “life assurance business” substitute “ long-term business ”.

(3) Omit subsection (3).

104

(1) Section 545 (investment assets) is amended as follows.

(2) In subsection (1), for “life assurance business” substitute “ long-term business ”.

(3) For subsections (3) to (5) substitute—

(3) No allowance in respect of an investment asset is to be taken into account in calculating for corporation tax purposes the profits of any non-BLAGAB long-term business carried on by the company.

105

(1) Section 560 (transfer of insurance company business) is amended as follows.

(2) In subsection (1)(b)(ii), omit the words from “within” to the end.

(3) In subsection (5), after paragraph (d) insert—

(e) qualifying overseas transfer” means so much of a transfer of the whole or any part of the business of an overseas life insurance company carried on through a permanent establishment in the United Kingdom as takes place in accordance with an authorisation granted outside the United Kingdom for the purposes of Article 14 of the Council Directive of 5 November 2002 concerning life assurance (2002/83/EC).

106

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

107

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

(2) Omit the entry for “life assurance business”.

(3) Insert the following entries at the appropriate places—

basic life assurance and general annuity business	sections 57 and 67(5) of FA 2012 (as applied by section 141(2) of that Act)
I - E rules	section 70(1) and (2) of FA 2012 (as applied by section 141(2) of that Act)
---	---
insurance company	section 65 of FA 2012 (as applied by section 141(2) of that Act)
---	---
long-term business	section 63(1) of FA 2012 (as applied by section 141(2) of that Act)
---	---
non-BLAGAB long-term business	sections 66 and 67 of FA 2012 (as applied by section 141(2) of that Act)
---	---

Finance Act 2003

108

FA 2003 is amended as follows.

109

Omit section 156 (overseas life insurance companies).

Income Tax (Earnings and Pensions) Act 2003

110

ITEPA 2003 is amended as follows.

111

In section 357(3) (business entertainment and gifts: exception where employer's expenses disallowed), for paragraph (b) substitute—

(b) the ordinary BLAGAB management expenses of the employer for the purposes of section 76 of FA 2012.

Finance Act 2004

112

FA 2004 is amended as follows.

113

In section 196(4) (relief for employers in respect of contributions paid)—

(a) in the opening words, for “section 76 of ICTA” substitute “ section 76 of FA 2012 ”, and

(b) in paragraph (a), for “brought into account at Step 1 in subsection (7) of that section to the extent that they otherwise would not be” substitute “ treated as meeting the conditions in section 77(2)(a) and (c) of that Act to the extent that they would otherwise not meet them ”.

114

In section 196A(4)(c) (power to restrict relief), for “brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies) in respect of the employer” substitute “ ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012 ”.

115

In section 196L(2) (employer asset-backed contributions: supplementary), as inserted by Part 3 of Schedule 13 to this Act, for paragraph (c) substitute—

(c) the contribution being ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012.

116

In section 197(10)(b) (spreading of relief), for “section 76 of ICTA” substitute “ section 76 of FA 2012 ”.

117

In section 199 (deemed contributions), for subsection (5) substitute—

(5) And, for the purposes of section 76 of FA 2012, it is to be treated as meeting the conditions in section 77(2)(a) and (c) of that Act to the extent that it would otherwise not meet them.

118

In section 199A(10)(c) (indirect contributions), for “brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies) in respect of E” substitute “ ordinary BLAGAB management expenses of E for an accounting period for the purposes of section 76 of FA 2012 ”.

119

In section 200 (no other relief for employers in connection with contributions), for paragraph (c) substitute—

(c) are to count as ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012,

120

(1) Section 246 (restriction of deduction for non-contributory provision) is amended as follows.

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

(c) are not to count as ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012.

(3) In subsection (3)(b), for “section 76 of ICTA” substitute “ section 76 of FA 2012 ”.

121

In section 246A(4)(c) (case where no relief for provision by an employer), for “brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies) in respect of the employer” substitute “ ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012 ”.

122

In section 280(1) (abbreviations)—

(a) omit the “and” before the definition of “CTA 2009”, and

(b) after that definition insert—

“FA 2012” means the Finance Act 2012.

Finance (No.2) Act 2005

123

F(No.2)A 2005 is amended as follows.

124

In section 18(3)(b) (specific powers relating to authorised unit trusts and open-ended investment companies), for sub-paragraph (iii) (but not the “or” at the end of it) substitute—

(iii) by an insurance company (within the meaning of section 65 of FA 2012) as assets for the purposes of its long-term business (within the meaning of section 63 of that Act),

Income Tax (Trading and Other Income) Act 2005

125

ITTOIA 2005 is amended as follows.

126

In section 48(4A) (car hire)—

(a) at the end of paragraph (a) insert “ or ”,

(b) in paragraph (b), after “management),” insert “ including as applied by section 82(4) of FA 2012. ”, and

127

In section 473(2) (policies and contracts to which Chapter 9 of Part 4 applies: general), in the definition of “capital redemption policy”, for “within the meaning of Chapter 1 of Part 12 of ICTA” substitute “ within the meaning given by section 56(3) of FA 2012 ”.

128

In section 476(3) (special rules: foreign policies), in the definition of “overseas life assurance business”, for “same meaning as in Part 12 of ICTA (see section 431D of that Act)” substitute “ meaning given by section 61 of FA 2012 ”.

129

In section 504(7) (part surrenders: payments under guaranteed income bonds etc), in the definition of “pension business”, for “section 431B of ICTA” substitute “ section 58 of FA 2012 ”.

130

(1) Section 531 (gains from contracts for life insurance etc: cases where income tax not treated as paid) is amended as follows.

(2) In subsection (3), after paragraph (b) insert—

(ba) a contract the effecting or carrying out of which constitutes protection business within the meaning of section 62 of FA 2012, (bb) a contract which is not within paragraph (ba) but which, as a result of subsection (4) of that section, is treated for the purposes of that section as being made at any time,

(3) In subsection (4), in the definition of “basic life assurance and general annuity business”, for “Chapter 1 of Part 12 of ICTA (see section 431F)” substitute “ Part 2 of FA 2012 (see sections 57 and 67(5)) ”.

131

In paragraph 118(2) of Schedule 2 (pre-1 January 2005 contracts for immediate needs annuities: income tax treated as paid), for the words from “means” to the end substitute “ means the application of section 57(2)(d) of FA 2012 ”.

Income Tax Act 2007

132

ITA 2007 is amended as follows.

133

In section 564B(1) (meaning of “financial institution”)—

(a) in paragraph (g), for “section 431(2) of ICTA” substitute “ section 65 of FA 2012 ”, and

(b) in paragraph (h), for “section 431(2) of ICTA” substitute “ section 139(1) of FA 2012 ”.

134

In section 681DP (relevant tax relief), for paragraph (c) substitute—

(c) a deduction of an amount which for the purposes of section 73 of FA 2012 is adjusted BLAGAB management expenses of an insurance company for an accounting period,

Corporation Tax Act 2009

135

CTA 2009 is amended as follows.

136

In section A1(2) (overview of the Corporation Tax Acts)—

(a) omit paragraph (a), and

(b) omit the “and” before paragraph (j) and after that paragraph insert—

(k) Part 2 of FA 2012 (insurance companies carrying on long-term business),

137

(1) Section 18Q (UK resident insurance companies: profits of foreign permanent establishments) is amended as follows.

(2) In subsection (1), omit “(as defined in section 431(2) of ICTA)”.

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

138

For section 24 substitute—

(24) (1) This section makes provision in a case where the non-UK resident company mentioned in subsection (1) of section 21 is an insurance company. (2) In accordance with the principle in that subsection, the permanent establishment is treated as holding— (a) the same or a similar quantity of assets, and (b) assets of the same or similar description, as would have been held by a distinct and separate enterprise acting as mentioned in paragraphs (a) and (b) of that subsection. (3) The assets which the permanent establishment is treated as holding in accordance with the principle in that subsection may include a proportion of assets held by the company. (4) Nothing in subsection (2) or (3) is to be read as preventing the application of similar principles to those provided for by that subsection in a case where the non-UK resident company mentioned in section 21(1) is not an insurance company. (5) The Commissioners for Her Majesty's Revenue and Customs may by regulations make other provision about the application of section 21(1) in a case where the non-UK resident company mentioned there is an insurance company. (6) The regulations may, in particular, make provision in place of section 21(2)(b) as to the basis on which, in the case of an insurance company, capital is to be attributed to a permanent establishment in the United Kingdom.

139

In section 36(3) (farming and market gardening), for “of the company's long-term insurance fund” substitute “ held by the company for the purposes of its long-term business ”.

140

In section 38(3)(d) (commercial occupation of land other than woodlands), for “of the company's long-term insurance fund” substitute “ held by the company for the purposes of its long-term business ”.

141

In section 39(5)(a) (profits of mines, quarries and other concerns), for “of the company's long-term insurance fund” substitute “ held by the company for the purposes of its long-term business ”.

142

In section 46(3)(a) (generally accepted accounting practice), omit sub-paragraph (ii) (together with the “or” before it).

143

In section 56(5) (car hire)—

(a) at the end of paragraph (a), insert “ including as applied by section 82(4) of FA 2012, or ”, and

(b) omit paragraph (c) (together with the “or” before that paragraph).

144

In section 130(1)(a) (insurers receiving distributions etc), for “life assurance business” substitute “ business in relation to which section 111 of FA 2012 applies ”.

145

In section 201 (priority rules: provisions which must be given priority over Part 3 of Act), after subsection (1) insert—

(1A) Subsection (1) does not apply in the case of the long-term business of an insurance company.

146

In section 203(4) (property businesses)—

(a) for “section 432AA of ICTA” substitute “ section 86 of FA 2012 ”, and

(b) for “in the case of” substitute “ for the purpose of applying the I - E rules in relation to ”.

147

(1) Section 298 (meaning of trade and purposes of trade) is amended as follows.

(2) In subsection (3)—

(a) at the end of paragraph (a), insert “ or ”, and

(b) omit paragraph (c) (together with the “or” before it).

(3) After subsection (5) insert—

(6) In the case of activities carried on by a company in the course of any basic life assurance and general annuity business, provision corresponding to that made by subsection (3) is made by section 88 of FA 2012 for the purpose of applying the I - E rules.

148

(1) Section 336 (transfers of loans on group transactions) is amended as follows.

(2) In subsection (4), for “is within one of the categories set out in section 440(4)(a), (d) and (e) of ICTA (assets held for certain categories of long-term business)” substitute “ is held for the purposes of a company's long-term business ”.

(3) After that subsection insert—

(4A) For the purposes of subsection (4)— (a) in the case of an overseas life insurance company, ignore transfers in relation to assets which are not UK assets (within the meaning of section 117 of FA 2012), and (b) section 122 of that Act applies as it applies for the purposes of Chapter 8 of Part 2 of that Act.

149

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Finance Act 2012

30

31

PART 5 — Other provision relating to finance arrangements

Chapter 5B of Part 13 of ITA 2007

32

33

34

35

36

Chapter 2 of Part 16 of CTA 2010

37

38

39

40

41

Commencement

42

SCHEDULE 14

PART 1 — Introduction

Qualifying gifts

1

PART 2 — Income tax and capital gains tax

Taxes affected

2

The basic rule

3

The portion treated as satisfied

4

Order in which benefit is applied

5

Effect of basic rule on interest and penalties

6

Changes to N’s tax liability

7

Gifts set aside etc

8

Suspension pending negotiations

9

10

Conclusion of negotiations

11

PART 3 — Corporation tax

Taxes affected

12

The basic rule

13

The portion treated as satisfied

14

Effect of basic rule on interest and penalties

15

Changes to C’s tax liability

16

Gifts set aside etc

17

Suspension pending negotiations

18

19

Conclusion of negotiations

20

PART 4 — General provision

Orders

21

Pre-eminent property

22

The relevant Minister

23

General interpretation

24

25

PART 5 — Related changes

IHTA 1984

26

27

28

29

30

31

32

Estate duty etc