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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

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(2) In relation to any time after the incorporation of the society, the assets are to be treated for the purposes of the Tax Acts as assets of the society (and, accordingly, any corporation tax or income tax liability arising in respect of them is a liability of the society rather than of the branch).

(3) If, as a result of this section, corporation tax or income tax in respect of any of the assets becomes chargeable on and is paid by the society, the society may recover from the trustees in whom those assets are vested the amount of the tax paid.

Exemption for unregistered friendly societies

171

(1) A friendly society which is neither a registered friendly society nor an incorporated friendly society is not liable to pay corporation tax (whether on income or chargeable gains) on its profits if its income does not exceed £160 a year.

(2) The exemption applies only if the society makes a claim.

Interpretation

Minor definitions

172

(1) In this Part—

“friendly society”, without qualification, means (except in section 171) a registered friendly society or an incorporated friendly society,

“incorporated friendly society” means a society incorporated under FSA 1992,

“policy”, in relation to BLAGAB or eligible PHI business, includes an instrument evidencing a contract to pay an annuity upon human life,

“registered branch” has the same meaning as in FSA 1992 (and includes any branch that as a result of section 96(3) of FSA 1992 is treated as a registered branch), and

“registered friendly society” has the same meaning as in FSA 1992 (and includes any society that as a result of section 96(2) of FSA 1992 is treated as a registered friendly society).

(2) Any other expression which is used in this Part and in Part 2 has the same meaning in this Part as in that Part.

(3) References in this Part to a friendly society include, in the case of a registered friendly society, references to any branch of that society.

(4) It is declared that for the purposes of this Part (except where provision to the contrary is made) a friendly society formed on the amalgamation of two or more friendly societies is treated as different from the amalgamated societies.

(5) A registered friendly society formed on the amalgamation of two or more friendly societies is treated for the purposes of this Part as registered not later than 3 May 1966 if at the time of the amalgamation—

(a) all the societies amalgamated were registered friendly societies eligible for the exemption conferred by section 153, and

(b) at least one of them was an old society,

or, if the amalgamation took place before 19 March 1985, the society was treated as registered not later than 3 May 1966 as a result of the proviso to section 337(4) of the Income and Corporation Taxes Act 1970.

(6) An incorporated friendly society formed on the amalgamation of two or more friendly societies is treated for the purposes of this Part as a society which, before its incorporation, was a registered friendly society registered not later than 3 May 1966 if at the time of the amalgamation—

(a) all the societies amalgamated were registered friendly societies eligible for the exemption conferred by section 153, and

(b) at least one of them was an old society.

Abbreviations

173

(1) In this Part—

“FSA 1992” means the Friendly Societies Act 1992, and

“FISMA (Regulated Activities) Order 2001” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.

(2) For abbreviations of other Acts, see section 228.

Index of defined terms

174

In this Part the following expressions are defined or otherwise explained by the provisions indicated—

Regulations

175

(1) Any power of the Treasury to make any regulations under this Part is exercisable by statutory instrument.

(2) Any statutory instrument containing any regulations made by the Treasury under this Part is subject to annulment in pursuance of a resolution of the House of Commons.

(3) Nothing in this Part that authorises the inclusion of any particular kind of provision in any regulations under this Part is to be read as restricting the generality of the provision that may be included in the regulations.

Consequential amendments and transitional provision

Consequential amendments

176

Schedule 18 contains consequential amendments.

Transitional provision

177

Schedule 19 contains transitional provision in connection with the coming into force of this Part.

Commencement etc

Commencement

178

The provisions of this Part (other than section 179) have effect in relation to accounting periods of companies beginning on or after 1 January 2013.

Accounting periods straddling 1 January 2013

179

(1) If, apart from this section, a friendly society would have had an accounting period beginning before 1 January 2013 and ending on or after that date, the accounting period of the society is to end instead on 31 December 2012.

(2) Accordingly, the rules in section 10 of CTA 2009 (end of accounting period) are subject to this section.

PART 4 — Controlled foreign companies and foreign permanent establishments

Controlled foreign companies and foreign permanent establishments

180

Schedule 20 makes—

(a) provision for and in connection with a charge on UK resident companies which have interests in non-UK resident companies controlled by UK resident persons, and

(b) provision about foreign permanent establishments of UK resident companies.

PART 5 — Oil

Transfers within a group by companies carrying on ring fence trade

181

(1) Section 171A of TCGA 1992 (election to reallocate gain or loss to another member of group) is amended as follows.

(2) In subsection (4), at the end insert “ (but see subsection (4A)) ”.

(3) After subsection (4) insert—

(4A) An election may not be made under this section to transfer the whole or part of a ring fence chargeable gain from a company carrying on a ring fence trade to a company not carrying on such a trade. (4B) In subsection (4A)— - “ring fence chargeable gain”, in relation to a company, means— 1. a chargeable gain accruing to the company on a material disposal within the meaning of section 197 (disposals of interests in oil fields etc: ring fence provisions), or 2. a chargeable gain treated as accruing to the company by virtue of section 197(4); - “ring fence trade” has the same meaning as in Part 8 of CTA 2010 (see section 277 of that Act).

(4) The amendments made by this section have effect in relation to chargeable gains accruing, or treated by virtue of section 197(4) of TCGA 1992 as accruing, in chargeable periods ending on or after 6 December 2011 (but see also subsection (5)).

(5) In relation to a chargeable period of a company beginning before 6 December 2011 and ending on or after that date (“the straddling period”), the amendments made by this section have effect as if, for the purposes of section 197 of TCGA 1992, so much of the straddling period as falls before 6 December 2011, and so much of that period as falls on or after that date, were separate chargeable periods.

Supplementary charge

182

(1) In section 330 of CTA 2010 (supplementary charge in respect of ring fence trades), in subsection (2), for “profits of the company's ring fence trade” substitute “ company's ring fence profits ”.

(2) This section is treated as having come into force on 6 December 2011.

Relief in respect of decommissioning expenditure

183

Schedule 21 contains provision about the relief available in respect of decommissioning expenditure.

Reduction of supplementary charge for certain oil fields

184

Schedule 22 contains provision extending the availability of field allowances for oil fields.

PART 6 — Excise duties

Tobacco products duty

Rates of tobacco products duty

185

(1) For the table in Schedule 1 to TPDA 1979 substitute—

1. Cigarettes	An amount equal to 16.5 per cent of the retail price plus £167.41 per thousand cigarettes
2. Cigars	£208.83 per kilogram
3. Hand-rolling tobacco	£164.11 per kilogram
4. Other smoking tobacco and chewing tobacco	£91.81 per kilogram

(2) The amendment made by this section is treated as having come into force at 6 pm on 21 March 2012.

Alcoholic liquor duties

Rates of alcoholic liquor duties

186

(1) ALDA 1979 is amended as follows.

(2) In section 5 (rate of duty on spirits), for “£25.52” substitute “ £26.81 ”.

(3) In section 36(1AA) (rates of general beer duty)—

(a) in paragraph (za) (rate of duty on lower strength beer), for “£9.29” substitute “ £9.76 ”, and

(b) in paragraph (a) (standard rate of duty on beer), for “£18.57” substitute “ £19.51 ”.

(4) In section 37(4) (rate of high strength beer duty), for “£4.64” substitute “ £4.88 ”.

(5) In section 62(1A) (rates of duty on cider)—

(a) in paragraph (a) (rate of duty per hectolitre on sparkling cider of a strength exceeding 5.5 per cent), for “£233.55” substitute “ £245.32 ”,

(b) in paragraph (b) (rate of duty per hectolitre on cider of a strength exceeding 7.5 per cent which is not sparkling cider), for “£53.84” substitute “ £56.55 ”, and

(6) For the table in Schedule 1 substitute—

Description of wine or made-wine	Rates of duty per hectolitre £
Wine or made-wine of a strength not exceeding 4 per cent	78.07
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent	107.36
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not being sparkling	253.39
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent	245.32
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent	324.56
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent	337.82
Description of wine or made-wine	Rates of duty per litre of alcohol in wine or made-wine £
---	---
Wine or made-wine of a strength exceeding 22 per cent	26.81

(7) The amendments made by this section are treated as having come into force on 26 March 2012.

Repeal of drawback on British compounds and spirits of wine

187

(1) Section 22 of ALDA 1979 (drawback on British compounds and spirits of wine) is repealed.

(2) In consequence of the provision made by subsection (1), omit the following provisions—

(a) in Schedule 1 to the Isle of Man Act 1979, paragraph 29;

(b) in Schedule 8 to FA 1981, paragraph 16;

(d) in Schedule 5 to that Act, paragraph 3(1)(ha);

(e) in Schedule 42 to FA 2008, paragraph 2(2).

Hydrocarbon oil etc duties

Rates of duty and rebates from 1 August 2012 to 31 December 2012

188

In relation to products charged with duty under HODA 1979 on or after 1 August 2012 but before 1 January 2013, that Act has effect as if the amendments made by section 20 of FA 2011 had never been made.

Rebated fuel: private pleasure craft

189

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

Air passenger duty

190

Schedule 23 amends, and makes amendments connected with, Chapter 4 of Part 1 of FA 1994 (air passenger duty).

Gambling duties

Machine games duty

191

Schedule 24 contains provision replacing amusement machine licence duty with a new excise duty and making related changes to VATA 1994.

Amusement machine licence duty

192

(1) In section 23(2) of BGDA 1981 (amount of duty payable on amusement machine licence), for the table substitute—

Months for which licence granted	Category A £	Category B1 £	Category B2 £	Category B3 £	Category B4 £	Category C £
1	555	280	220	220	200	85
2	1105	555	435	435	395	165
3	1655	830	655	655	595	250
4	2205	1105	870	870	790	330
5	2755	1380	1085	1085	985	410
6	3305	1655	1305	1305	1185	495
7	3860	1930	1520	1520	1380	575
8	4410	2205	1740	1740	1575	655
9	4960	2485	1955	1955	1775	740
10	5510	2760	2170	2170	1970	820
11	6060	3035	2390	2390	2170	900
12	6295	3150	2480	2480	2250	935

(2) The amendment made by this section has effect in relation to cases where the application for the amusement machine licence is received by the Commissioners for Her Majesty's Revenue and Customs after 4 pm on 23 March 2012.

Rates of gaming duty

193

(1) In section 11(2) of FA 1997 (rates of gaming duty), for the table substitute—

Part of gross gaming yield	Rate
The first £2,175,000	15 per cent
The next £1,499,500	20 per cent
The next £2,626,000	30 per cent
The next £5,542,500	40 per cent
The remainder	50 per cent

(2) The amendment made by this section has effect in relation to accounting periods beginning on or after 1 April 2012.

Remote gambling: double taxation relief

194

Schedule 25 contains provision for double taxation relief in respect of remote gambling.

Vehicle excise duty

VED rates for light passenger vehicles, light goods vehicles, motorcycles etc

195

(1) Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.

(2) In paragraph 1 (general)—

(a) in sub-paragraph (2) (vehicle not covered elsewhere in Schedule otherwise than with engine cylinder capacity not exceeding 1,549cc), for “£215” substitute “ £220 ”, and

(b) in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£130” substitute “ £135 ”.

(3) In paragraph 1B (graduated rates of duty for light passenger vehicles)—

(a) for the tables substitute—

CO₂ emissions figure	CO₂ emissions figure	Rate	Rate
(1)	(2)	(3)	(4)
Exceeding	Not exceeding	Reduced rate	Standard rate
g/km	g/km	£	£
130	140	110	120
140	150	125	135
150	165	160	170
165	175	265	275
175	185	315	325
185	200	450	460
200	225	590	600
225	255	805	815
255		1020	1030
CO₂ emissions figure	CO₂ emissions figure	Rate	Rate
---	---	---	---
(1)	(2)	(3)	(4)
Exceeding	Not exceeding	Reduced rate	Standard rate
g/km	g/km	£	£
100	110	10	20
110	120	20	30
120	130	90	100
130	140	110	120
140	150	125	135
150	165	160	170
165	175	185	195
175	185	205	215
185	200	240	250
200	225	260	270
225	255	450	460
255		465	475

;

(b) in the sentence immediately following the tables, for paragraphs (a) and (b) substitute—

(a) in column (3), in the last two rows, “260” were substituted for “450” and “ 465 ”, and (b) in column (4), in the last two rows, “270” were substituted for “460” and “ 475 ”.

(4) In paragraph 1J (VED rates for light goods vehicles)—

(a) in paragraph (a), for “£210” substitute “ £215 ”, and

(b) in paragraph (b), for “£130” substitute “ £135 ”.

(5) In paragraph 2(1) (VED rates for motorcycles)—

(a) in paragraph (b), for “£35” substitute “ £36 ”,

(b) in paragraph (c), for “£53” substitute “ £55 ”, and

(6) The amendments made by this section have effect in relation to licences taken out on or after 1 April 2012.

PART 7 — Value added tax

Changes to the categorisation of supplies

196

(1) Schedule 26 contains provision about the categorisation of supplies for the purposes of value added tax.

(2) Schedule 27 contains provision for an anti-forestalling charge to value added tax related to changes in the descriptions of exempt or zero-rated supplies.

Exempt supplies

197

(1) In Part 1 of Schedule 9 to VATA 1994 (index to exempt supplies of goods and services), at the appropriate place in the table insert—

Supplies of services by groups involving cost sharing	Group 16

(2) In Part 2 of that Schedule (the groups), at the end insert—

(1) The supply of services by an independent group of persons where each of the following conditions is satisfied— (a) each of those persons is a person who is carrying on an activity (“the relevant activity”) which is exempt from VAT or in relation to which the person is not a taxable person within the meaning of Article 9 of Council Directive 2006/112/EC, (b) the supply of services is made for the purpose of rendering the members of the group the services directly necessary for the exercise of the relevant activity, (c) the group merely claims from its members exact reimbursement of their share of the joint expenses, and (d) the exemption of the supply is not likely to cause distortion of competition.

(3) In section 31 of that Act (exempt supplies and acquisitions), after subsection (2) insert—

(3) The Treasury may by regulations make an exemption of a group 16 supply of a description specified in the regulations subject to conditions. (4) Regulations under subsection (3) may— (a) make different provision for different cases, and (b) make consequential or transitional provision (including provision amending this Act). (5) In subsection (3) “group 16 supply” means a supply falling within Group 16 of Schedule 9.

Supply of goods or services by public bodies

198

(1) VATA 1994 is amended as follows.

(2) In section 41 (application to the Crown)—

(a) omit subsection (2), and

(b) in subsection (3)(b) for “a direction under subsection (2) above,” substitute “ section 41A, ”.

(3) After that section insert—

(41A) (1) This section applies where goods or services are supplied by a body mentioned in Article 13(1) of the VAT Directive (status of public bodies as taxable persons) in the course of activities or transactions in which it is engaged as a public authority. (2) If the supply is in respect of an activity listed in Annex I to the VAT Directive (activities in respect of which public bodies are to be taxable persons), it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business unless it is on such a small scale as to be negligible. (3) If the supply is not in respect of such an activity, it is to be treated for the purposes of this Act as a supply in the course or furtherance of a business if (and only if) not charging VAT on the supply would lead to a significant distortion of competition. (4) In this section “the VAT Directive” means Council Directive 2006/112/EC on the common system of value added tax.

Relief from VAT on low value goods: restriction relating to Channel Islands

199

(1) In Schedule 2 to the Value Added Tax (Imported Goods) Relief Order 1984 (S.I. 1984/746) (reliefs for goods of certain descriptions), Group 8 (articles sent for miscellaneous purposes) is amended as follows.

(2) The existing Note becomes Note (1) (and accordingly “ Note ” in Group 8 becomes “ Notes ”).

(3) After that Note insert—

(2) Item 8 does not apply in relation to any goods sent from the Channel Islands under a distance selling arrangement. (3) For the purposes of Note (2)— - “distance selling arrangement”, in relation to any goods, means any transaction, or series of transactions, under which the person to whom the goods are sent receives them from a supplier without the simultaneous physical presence of the person and the supplier at any time during the transaction or series of transactions, and - “supplier” means any person who is acting in a commercial or professional capacity.

(4) The amendment of that Schedule by this section is without prejudice to any power to amend that Schedule by subordinate legislation.

(5) The amendments made by this section have effect in relation to goods imported on or after 1 April 2012.

Group supplies using an overseas member

200

(1) VATA 1994 is amended as follows.

(2) In section 43 (groups of companies), in subsection (2C)(c), after “above” insert “ and paragraph 8A of Schedule 6 ”.

(3) In section 83 (appeals), in subsection (1)(v) for “or 2” substitute “ , 2 or 8A ”.

(4) In section 97(4) (orders requiring Parliamentary approval within 28 days of being made), in paragraph (f), after “1A(7)” insert “ or 8A(7) ”.

(5) Schedule 6 (valuation: special cases) is amended as follows.

(6) In paragraph 1 (cases where Commissioners may direct value is open market value), in sub-paragraph (5), after “paragraph”, in the second place it occurs, insert “ 8A or ”.

(7) After paragraph 8 insert—

(8A) (1) This paragraph applies where— (a) a supply (“the intra-group supply”) made by a member of a group (“the supplier”) to another member of the group is, by virtue of section 43(2A), excluded from the supplies disregarded under section 43(1)(a), and (b) the representative member of the group satisfies the Commissioners as to the value of each bought-in supply. (2) “Bought-in supply”, in relation to the intra-group supply, means a supply of services to the supplier to which section 43(2A)(c) to (e) refers, so far as that supply is used by the supplier for making the intra-group supply. (3) The value of the intra-group supply shall be taken to be the total of the relevant amounts in relation to the bought-in supplies. (4) The relevant amount in relation to a bought-in supply is the value of the bought-in supply, unless a direction is made under sub-paragraph (5). (5) If the value of a bought-in supply is less than its open market value, the Commissioners may direct that the relevant amount in relation to that supply is its open market value. (6) A direction under this paragraph must be given by notice in writing to the representative member, but no direction may be given more than 3 years after the time of the intra-group supply. (7) The Treasury may by order vary the provision made by this Schedule about the value of supplies of the kind mentioned in sub-paragraph (1)(a). (8) An order under sub-paragraph (7) may include incidental, supplemental, consequential or transitional provision (including provision amending section 43 or 83).

(8) The amendments made by this section have effect in relation to supplies made on or after the day on which this Act is passed.

Face-value vouchers

201

(1) In Schedule 10A to VATA 1994 (face-value vouchers), after paragraph 7 insert—

(7A) Paragraphs 2 to 4, 6 and 7 do not apply in relation to the issue, or any subsequent supply, of a face-value voucher that represents a right to receive goods or services of one type which are subject to a single rate of VAT.

(2) The amendment made by subsection (1) has effect in relation to supplies of face-value vouchers issued on or after 10 May 2012.

(3) Subsection (4) applies where—

(a) a face-value voucher issued before 10 May 2012 is used on or after that date to obtain goods or services,

(b) paragraphs 2 to 4, 6 and 7 of Schedule 10A to VATA 1994 would not have applied in relation to the issue, or any subsequent supply, of the voucher because of paragraph 7A of that Schedule if the voucher had been issued on or after 10 May 2012, and

(4) The use of the voucher is to be treated for the purposes of VATA 1994 as a supply of the goods or services by the person from whom they are obtained to the user of the voucher.

Power to require notification of arrival of means of transport in UK

202

In Schedule 11 to VATA 1994 (administration, collection and enforcement), in paragraph 2 (accounting for VAT and payment of VAT), after sub-paragraph (5) insert—

(5A) Regulations under this paragraph may make provision— (a) for requiring the relevant person to give to the Commissioners such notification of the arrival in the United Kingdom of goods consisting of a means of transport, at such time and in such form and manner, as may be specified in the regulations or by the Commissioners in accordance with the regulations, and (b) where notification of the arrival of a means of transport acquired from another member State, or imported from a place outside the member States, is required by virtue of paragraph (a), for requiring any VAT on the acquisition or importation to be paid at such time and in such manner as may be specified in the regulations. (5B) The provision that may be made by regulations made by virtue of sub-paragraph (5A) includes— (a) provision for a notification required by virtue of that sub-paragraph to contain such particulars relating to the notified arrival of the means of transport and any VAT chargeable on its acquisition or importation as may be specified in the regulations or by the Commissioners in accordance with the regulations, (b) provision for such a notification to be given by a person who is not the relevant person and is so specified, or is of a description so specified, (c) provision for such a notification to contain a declaration, given in such form and by such person as may be so specified, as to the information contained in the notification, and (d) supplementary, incidental, consequential or transitional provision (including provision amending any provision made by or under this Act or any other enactment). (5C) Subsection (3) of section 97 (orders subject to Commons approval) applies to a statutory instrument containing any regulations made by virtue of sub-paragraph (5A) which amend an enactment as it applies to an order within subsection (4) of that section. (5D) For the purposes of sub-paragraph (5A)— - “means of transport” has the same meaning as it has in this Act in the expression “new means of transport” (see section 95); - “relevant person”, in relation to the arrival of a means of transport in the United Kingdom, means— 1. where the means of transport has been acquired in the United Kingdom from another member State, the person who so acquires it, 2. where it has been imported from a place outside the member States, the person liable to pay VAT on the importation, and 3. in any other case— 1. the owner of the means of transport at the time of its arrival in the United Kingdom, or 2. where it is subject to a lease or hire agreement, the lessee or hirer of the means of transport at that time.

Non-established taxable persons

203

Schedule 28 contains provision about non-established taxable persons.

Administration of VAT

204

Schedule 29 contains provision about the administration of VAT.

PART 8 — Other taxes

Landfill tax

Standard rate of landfill tax

205

(1) In section 42(1)(a) and (2) of FA 1996 (amount of landfill tax) for “£64” substitute “ £72 ”.

(2) The amendments made by this section have effect in relation to disposals made (or treated as made) on or after 1 April 2013.

Landfill sites in Scotland

206

The following provisions are to be treated as having come into force, in so far as they extend to Scotland, on 21 March 2000—

(a) paragraph 19 of Schedule 2 to the Pollution Prevention and Control Act 1999 (which inserts paragraph (ba) into section 66 of FA 1996 (landfill sites)), and

(b) section 6(1) of the Pollution Prevention and Control Act 1999, so far as relating to paragraph 19 of that Schedule.

Climate change levy

207

The following Schedules amend, or make amendments connected with, Schedule 6 to FA 2000 (climate change levy)—

(a) Schedule 30 (reduced-rate supplies, rates etc);

(b) Schedule 31 (climate change agreements);

Inheritance tax

Indexation of rate bands

208

(1) Section 8 of IHTA 1984 (indexation of rate bands) is amended as follows.

(2) In subsection (1), for “retail prices index for the month of September in 1993 or any later year” substitute “ consumer prices index for the month of September in any year ”.

(3) In subsection (2), for “retail prices index” substitute “ consumer prices index ”.

(4) For subsection (3) substitute—

(3) In this section, “consumer prices index” means the all items consumer prices index published by the Statistics Board.

(5) The amendments made by this section have effect for the purposes of chargeable transfers made on or after 6 April 2015.

Gifts to charities etc

209

Schedule 33 contains provision for a lower rate of inheritance tax to be charged on transfers made on death that include sufficient gifts to charities or registered clubs.

Settled property: effect of certain arrangements

210

(1) IHTA 1984 is amended as follows.

(2) In section 48 (settled property: excluded property)—

(a) in subsection (1), after paragraph (c) insert

or, (d) in a case where paragraphs (a), (b) and (d) of section 74A(1) are satisfied— (i) it is a reversionary interest, in the relevant settled property, to which the individual is beneficially entitled, and (ii) the individual has or is able to acquire (directly or indirectly) another interest in that relevant settled property. Terms used in paragraph (d) have the same meaning as in section 74A.

(b) in subsection (3), for “subsection (3B)” substitute “ subsections (3B) and (3D) ”, and

(3D) Where paragraphs (a) to (d) of section 74A(1) are satisfied, subsection (3)(a) above does not apply at the time they are first satisfied or any later time to make the relevant settled property (within the meaning of section 74A) excluded property.

(3) After section 74 insert—

(74A) (1) This section applies where— (a) one or more persons enter into arrangements, (b) in the course of the arrangements— (i) an individual (“the individual”) domiciled in the United Kingdom acquires or becomes able to acquire (directly or indirectly) an interest in property comprised in a settlement ( “ the relevant settled property ”), and (ii) consideration in money or money's worth is given by one or more of the persons mentioned in paragraph (a) (whether or not in connection with the acquisition of that interest or the individual becoming able to acquire it), (c) there is a relevant reduction in the value of the individual's estate, and (d) condition A or condition B is met. (2) Condition A is that— (a) the settlor was not domiciled in the United Kingdom at the time the settlement was made, and (b) the relevant settled property is situated outside the United Kingdom at any time during the course of the arrangements. (3) Condition B is that— (a) the settlor was not an individual or a close company at the time the settlement was made, and (b) condition A is not met. (4) Subsection (6) applies if all or a part of a relevant reduction (“amount A”) is attributable to the value of the individual's section 49(1) property being less than it would have been in the absence of the arrangements. (5) “The individual's section 49(1) property” means settled property to which the individual is treated as beneficially entitled under section 49(1) by reason of the individual being beneficially entitled to an interest in possession in the property. (6) Where this subsection applies— (a) a part of that interest in possession is deemed, for the purposes of section 52, to come to an end at the relevant time, and (b) that section applies in relation to the coming to an end of that part as if the reference in subsection (4)(a) of that section to a corresponding part of the whole value of the property in which the interest in possession subsists were a reference to amount A. (7) Subsection (8) applies to so much (if any) of a relevant reduction as is not amount A (“amount B”). (8) Tax is to be charged as if the individual had made a transfer of value at the relevant time and the value transferred by it had been equal to amount B. (74B) (1) A transfer of value arising by virtue of section 74A is to be taken to be a transfer which is not a potentially exempt transfer. (2) For the purposes of section 74A— (a) when determining the value transferred by a transfer of value arising by virtue of that section, no account is to be taken of section 3(2), (b) nothing in section 10(1) applies to prevent such a transfer, and (c) nothing in sections 102 to 102C of the Finance Act 1986 applies in relation to such a transfer. (3) Where, ignoring this subsection, a transfer of value would arise by virtue of section 74A (“the current transfer”), the value transferred by a relevant related transfer is to be treated as reducing the value transferred by the current transfer. But this subsection does not apply if and to the extent that the relevant related transfer has already been applied to reduce another transfer of value arising by virtue of that section. (4) “Relevant related transfer” means— (a) where the arrangements consist of a series of operations, any transfer of value constituted by one or more of those operations which occur before or at the same time as the current transfer, other than a transfer of value arising by virtue of section 74A, and (b) where the arrangements consist of a single operation, any transfer of value which arises from that operation, other than a transfer of value arising by virtue of section 74A. (5) Section 268(3) does not apply to a transfer of value arising by virtue of section 74A. (6) Where— (a) a transfer of value has arisen by virtue of section 74A, (b) in the course of the arrangements the individual acquires an interest in possession in settled property, and (c) section 5(1B) applies to the interest in possession so that it forms part of the individual's estate, this Act has effect as if that transfer of value had never arisen. (74C) (1) Subsections (2) to (4) have effect for the purposes of sections 74A and 74B. (2) An individual has an interest in property comprised in a settlement if— (a) the property, or any derived property, is or will or may become payable to, or applicable for the benefit of— (i) the individual, (ii) the individual's spouse or civil partner, or (iii) a close company in relation to which the individual or the individual's spouse or civil partner is a participator or a company which is a 51% subsidiary of such a close company, in any circumstances whatsoever, or (b) a person within sub-paragraph (i), (ii) or (iii) of paragraph (a) enjoys a benefit deriving (directly or indirectly) from the property or any derived property. (3) A “relevant reduction” in the value of the individual's estate occurs— (a) if and when the value of the individual's estate first becomes less than it would have been in the absence of the arrangements, and (b) on each subsequent occasion when the value of that estate becomes less than it would have been in the absence of the arrangements and that difference in value is greater than the sum of any previous relevant reductions. (4) The amount of a relevant reduction is— (a) in the case of a reduction within subsection (3)(a), the difference between the value of the estate and its value in the absence of the arrangements, and (b) in the case of a reduction within subsection (3)(b), the amount by which the difference in value mentioned in that provision exceeds the sum of any previous relevant reductions. (5) In sections 74A and 74B and this section— - “arrangements” includes any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable, and any associated operations; - “close company” has the meaning given in section 102; - “derived property”, in relation to any property, means— 1. income from that property, 2. property directly or indirectly representing— 1. proceeds of that property, or 2. proceeds of income from that property, or 3. income from property which is derived property by virtue of paragraph (b); - “operation” includes an omission; - “participator” has the meaning given in section 102; - “the relevant time” means— 1. the time the relevant reduction occurs, or 2. if later, the time section 74A first applied; - “51% subsidiary” has the same meaning as in the Corporation Tax Acts (see Chapter 3 of Part 24 of the Corporation Tax Act 2010).

(4) In section 201 (liability for tax: settled property), after subsection (4) insert—

(4A) Where— (a) a charge to tax arises under or by virtue of section 74A, or (b) in a case where paragraphs (a) to (d) of section 74A are satisfied, a charge to tax arises under section 64 or 65 in respect of the relevant settled property (within the meaning of section 74A), subsection (1) of this section has effect as if the persons listed in that subsection included the individual mentioned in section 74A(1)(b)(i).

(5) The amendments made by this section are treated as having come into force on 20 June 2012 and have effect in relation to arrangements entered into on or after that day.

Bank levy

The bank levy

211

Schedule 34 contains provision about the bank levy.

Stamp duty land tax, stamp duty reserve tax and stamp duty

Prevention of avoidance: subsales etc

212

(1) In section 45 of FA 2003 (contract and conveyance: effect of transfer of rights), after subsection (1) insert—

(1A) The reference in subsection (1)(b) to an assignment, subsale or other transaction does not include the grant or assignment of an option.

(2) The amendment made by this section has effect in relation to grants or assignments of options on or after 21 March 2012.

Rate in respect of residential property where consideration over £2m

213

(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) The amendment made by this section has effect in relation to any land transaction of which the effective date is on or after 22 March 2012.

(3) But that amendment does not have effect in relation to any transaction—

(a) effected in pursuance of a contract entered into and substantially performed before 22 March 2012, or

(b) effected in pursuance of a contract entered into before that date and not excluded by subsection (4).

(4) A transaction effected in pursuance of a contract entered into before 22 March 2012 is excluded by this subsection if—

(a) there is any variation of the contract, or assignment (or assignation) of rights under the contract, on or after 22 March 2012,

(b) the transaction is effected in consequence of the exercise on or after that date of any option, right of pre-emption or similar right, or

(c) on or after that date there is an assignment (or assignation), subsale or other transaction relating to the whole or part of the subject-matter of the contract as a result of which a person other than the purchaser under the contract becomes entitled to call for a conveyance.

Higher rate for certain transactions

214

Schedule 35 contains provision about the amount of tax chargeable on certain transactions involving higher threshold interests in dwellings.

Disclosure of stamp duty land tax avoidance schemes

215

In section 308 of FA 2004 (duties of promoter), after subsection (5) insert—

(6) The Treasury may by regulations provide for this section to apply with modifications in relation to proposals or arrangements that— (a) enable, or might be expected to enable, a person to obtain an advantage in relation to stamp duty land tax, and (b) are of a description specified in the regulations.

Health service bodies

216

(1) In Part 4 of FA 2003 (stamp duty land tax), after section 67 insert—

(67A) (1) A land transaction is exempt from charge if the purchaser is any of the following— (a) the National Health Service Commissioning Board; (b) a clinical commissioning group established under section 14D of the National Health Service Act 2006; (c) an NHS foundation trust; (d) a Local Health Board established under section 11 of the National Health Service (Wales) Act 2006; (e) a National Health Service trust established under section 18 of that Act; (f) a Health and Social Services trust established under the Health and Personal Social Services (Northern Ireland) Order 1991. (2) Any relief under this section must be claimed in a land transaction return or an amendment of such a return.

(2) The following provisions are repealed—

(a) section 61(3) to (3C) of the National Health Service and Community Care Act 1990 (stamp duty and stamp duty land tax reliefs for health service bodies);

(b) section 58 of the National Health Service Act 2006 (which applies those stamp duty and stamp duty land tax reliefs to NHS foundation trusts);

(3) The repeals in subsection (2), to the extent that they relate to stamp duty, have effect in relation to any instrument executed on or after the day on which this Act is passed.

(4) Subject to that, the amendments made by this section have effect in relation to any land transaction of which the effective date is on or after the day on which this Act is passed.

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Collective investment schemes: stamp duty and stamp duty reserve tax

217

(1) The Treasury may by regulations confer an exemption or other relief from stamp duty or stamp duty reserve tax for transactions relating to collective investment schemes.

(2) The regulations may, in particular—

(a) specify descriptions of collective investment scheme in relation to which the exemption or relief is available, and

(b) specify the cases in which the exemption or relief is available.

(3) Regulations under this section may make different provision for different cases or different purposes.

(4) Regulations under this section—

(a) may modify any enactment or instrument (whenever passed or made), and

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

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

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

(7) In this section—

“collective investment scheme” has the meaning given by section 235 of the Financial Services and Markets Act 2000, and

“modify” includes amend, repeal or revoke.

PART 9 — Miscellaneous matters

International matters

Agreement between UK and Switzerland

218

(1) Schedule 36 contains provision giving effect to—

(a) an agreement signed on 6 October 2011 between the United Kingdom and the Swiss Confederation on co-operation in the area of taxation, as amended by a protocol signed by them on 20 March 2012 and by a mutual agreement signed by them on 18 April 2012 implementing article XVIII of that protocol, and

(b) the joint declaration (concerning a tax finality payment) forming an integral part of that protocol.

(2) Schedule 36 comes into force on the day on which the agreement of 6 October 2011 enters into force.

(3) In section 23 of the Constitutional Reform and Governance Act 2010, after subsection (2A) insert—

(2B) Section 20 does not apply to any treaty referred to in section 218(1) of the Finance Act 2012.

Penalties: offshore income etc

219

In paragraph 21A of Schedule 24 to FA 2007 (classification of territories), in sub-paragraph (4)—

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

(b) at the end of paragraph (c) insert—

(d) the existence of any other arrangements between the UK and that territory for co-operation in the area of taxation, and (e) the quality of any such other arrangements (in particular, the extent to which the co-operation provided for in them assists or is likely to assist in the protection of revenue raised from taxation in the UK).

International military headquarters, EU forces, etc

220

Schedule 37 contains provision about the tax treatment of international military headquarters, EU forces, etc.

Financial sector regulation

Tax consequences of financial sector regulation

221

(1) The Treasury may by regulations make provision about the tax consequences in relation to securities of any regulatory requirement imposed, or which appears to the Treasury likely to be imposed, by any EU legislation (whenever adopted) or enactment on—

(a) persons who are authorised persons for the purposes of the Financial Services and Markets Act 2000 (see section 31 of that Act), or

(b) parent undertakings (as defined in section 420 of that Act) of such persons.

(2) Regulations under this section may, in particular, make provision—

(a) charging any tax or granting, withdrawing or restricting an exemption or other relief from any tax, and

(b) about the treatment of arrangements the purpose, or one of the main purposes, of which is to secure a tax advantage.

(3) Regulations under this section may provide that a reference in the regulations—

(a) to any EU legislation or enactment,

(b) to any document, or

is to be construed as a reference to that legislation, enactment, document or provision as amended from time to time.

(4) Regulations under this section—

(a) may apply (with or without modifications) or disapply any enactment,

(b) may modify, amend, repeal or revoke any enactment,

(d) may include incidental, consequential, supplementary or transitional provision.

(4A) Where regulations under this section make provision about the tax consequences of any regulatory requirement which appears to the Treasury likely to be imposed by any EU legislation or enactment—

(a) the regulations may be made (and, accordingly, may have effect) before the proposed legislation or enactment is adopted, passed or made, and

(b) failure after the regulations are made to adopt, pass or make the proposed legislation or enactment does not affect the validity of the regulations.

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

(6) No regulations may be made under this section unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of the House of Commons.

(7) In this section—

“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;

“enactment” includes an enactment contained in subordinate legislation (within the meaning of the Interpretation Act 1978), and includes an enactment whenever passed or made;

“tax” includes stamp duty;

“tax advantage” means—a relief from tax (including a tax credit) or increased relief from tax,a repayment of tax or increased repayment of tax,the avoidance, reduction or delay of a charge to tax or an assessment to tax, orthe avoidance of a possible assessment to tax.

Incapacitated persons and minors

Removal of special provision for incapacitated persons and minors

222

(1) In TMA 1970 omit—

(a) section 42(8) (procedure for making claims etc on behalf of incapacitated persons),

(b) section 72 (trustees, guardians, etc of incapacitated persons), and

(2) In Part 4 of FA 2003 (stamp duty land tax), omit section 106(1) and (2) (persons acting in a representative capacity on behalf of incapacitated persons and minors).

(3) Accordingly, incapacitated persons are (and minors remain) assessable and chargeable to the taxes in question.

(4) In consequence of the amendments made by subsections (1) and (2)—

(a) in section 118(1) of TMA 1970, omit the definitions of “incapacitated person” and “infant”,

(b) omit paragraphs 33 and 34 of Schedule 1 to the Age of Legal Capacity (Scotland) Act 1991,

(i) omit paragraph (a) (and the “or” after it), and

(ii) in paragraph (b), for “such” substitute “ Class 4 ”,

(d) in paragraph 5 of Schedule 2 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992—

(i) omit paragraph (a) (and the “or” after it), and

(ii) in paragraph (b), for “such” substitute “ Class 4 ”, and

(e) in section 81B(4) of FA 2003, omit paragraph (b) (and the “or” before it).

(5) The amendments made by subsections (1) and (4)(a) to (d) have effect for the tax year 2012-13 and subsequent tax years.

(6) The amendments made by subsections (2) and (4)(e) have effect in relation to land transactions of which the effective date is on or after the day on which this Act is passed.

Administration

Tax agents: dishonest conduct

223

(1) Schedule 38 contains provision about tax agents who engage in dishonest conduct.

(2) That Schedule comes into force on such day as the Treasury may by order appoint.

(3) An order under subsection (2)—

(a) may make different provision for different purposes, and

(b) may include transitional provision and savings.

(4) The Treasury may by order make any incidental, supplemental, consequential, transitional or saving provision in consequence of Schedule 38.

(5) An order under subsection (4) may—

(a) make different provision for different purposes, and

(b) make provision amending, repealing or revoking any provision made by or under an Act (whenever passed or made).

(6) An order under this section is to be made by statutory instrument.

(7) A statutory instrument containing an order under subsection (4) is subject to annulment in pursuance of a resolution of the House of Commons.

Information powers

224

(1) Schedule 36 to FA 2008 (information and inspection powers) is amended as follows.

(2) After paragraph 5 insert—

(5A) (1) An authorised officer of Revenue and Customs may by notice in writing require a person to provide relevant information about another person (“the taxpayer”) if conditions A to D are met. (2) Condition A is that the information is reasonably required by the officer for the purpose of checking the tax position of the taxpayer. (3) Condition B is that— (a) the taxpayer's identity is not known to the officer, but (b) the officer holds information from which the taxpayer's identity can be ascertained. (4) Condition C is that the officer has reason to believe that— (a) the person will be able to ascertain the taxpayer's identity from the information held by the officer, and (b) the person obtained relevant information about the taxpayer in the course of carrying on a business. (5) Condition D is that the taxpayer's identity cannot readily be ascertained by other means from the information held by the officer. (6) “Relevant information” means all or any of the following— (a) name, (b) last known address, and (c) date of birth (in the case of an individual). (7) This paragraph applies for the purpose of checking the tax position of a class of persons as for the purpose of checking the tax position of a single person (and references to “the taxpayer” are to be read accordingly).

(3) In paragraph 6 (notices), in sub-paragraph (1), for “or 5” substitute “ , 5 or 5A ”.

(4) In paragraph 31 (right to appeal against notice given under paragraph 5), after “paragraph 5” insert “ or 5A ”.

(5) Accordingly, in the heading immediately before paragraph 31, at the end insert “ or 5A ”.

(6) In section 18D of TMA 1970 (savings income: content of regulations under section 18B), in subsection (1), for “sections 17 and 18” substitute “ paragraph 1 of Schedule 23 to the Finance Act 2011 (data-gathering powers) ”.

(7) The amendments made by subsections (1) to (5) apply for the purpose of checking the tax position of a taxpayer as regards periods or tax liabilities whenever arising (whether before, on or after the day on which this Act is passed).

(8) The amendment made by subsection (6) is treated as having come into force on 1 April 2012.

PAYE regulations: information

225

(1) Section 684 of ITEPA 2003 (PAYE regulations) is amended as follows.

(2) In the list in subsection (2)—

(a) after item 4 insert—

(4ZA) Provision— (a) for authorising or requiring a person who provides with respect to payments of or on account of PAYE income a service that is specified or of a specified description (“a relevant payment service”) to supply to Her Majesty's Revenue and Customs information about payments with respect to which the service is provided, or any information the Commissioners may request about features of the service provided or to be provided with respect to particular payments; (b) for conferring power on the Commissioners to specify by directions circumstances in which provision made by virtue of paragraph (a) or subsection (4ZB) is not to apply in relation to a payment; (c) for securing that a supply of information that is authorised by regulations under paragraph (a) is not treated as breaching any obligation of confidence owed in respect of the information by the person supplying it; (d) for prohibiting or restricting the disclosure, otherwise than to Her Majesty's Revenue and Customs, of information by a person to whom it was supplied pursuant to a requirement imposed by virtue of subsection (4ZB); (e) for requiring a person who provides, or is to provide, a relevant payment service to take steps (including any steps that may be specified, or further specified, in accordance with item 8A(b)) for facilitating the meeting by persons making payments of obligations imposed by virtue of subsection (4ZB).

, and

(b) after item 8 insert—

(8A) Provision requiring compliance with any directions the Commissioners may give— (a) about the form and manner in which any information is to be provided under the regulations; (b) specifying, or further specifying, steps for the purposes of item 4ZA(e); (c) specifying information that a person making payments of or on account of PAYE income must provide about the method by which the payments are made.

(3) After subsection (3B) insert—

(3C) References in items 4ZA and 8A of the above list to directions include directions making different provision for different cases.

(4) After subsection (4) insert—

(4ZA) Item 8A in the above list does not prejudice the power of the Commissioners under subsection (1) to make provision in PAYE regulations about the matters mentioned in that item. (4ZB) The persons to whom PAYE information regulations may require information to be supplied include, in the case of information about a payment, a person who provides, or is to provide, with respect to the payment a service such as is mentioned in item 4ZA(a) in the above list. (4ZC) In subsection (4ZB) “PAYE information regulations” means PAYE regulations that require information to be supplied for any purpose authorised by subsections (1) and (2).

High value residential property or dwellings

New tax on ownership of high-value residential properties or dwellings

226

The Commissioners for Her Majesty's Revenue and Customs may incur expenditure in preparing for the introduction of a new tax to be charged in respect of high-value residential properties or dwellings owned otherwise than by individuals.

Miscellaneous reliefs etc

Repeals of miscellaneous reliefs etc

227

Schedule 39 contains repeals of miscellaneous reliefs etc.

PART 10 — Final provisions

Interpretation

228

(1) In this Act—

“ALDA 1979” means the Alcoholic Liquor Duties Act 1979,

“BGDA 1981” means the Betting and Gaming Duties Act 1981,

“CAA 2001” means the Capital Allowances Act 2001,

“CEMA 1979” means the Customs and Excise Management Act 1979,

“CRCA 2005” means the Commissioners for Revenue and Customs Act 2005,

“CTA 2009” means the Corporation Tax Act 2009,

“CTA 2010” means the Corporation Tax Act 2010,

“F(No.3)A 2010” means the Finance (No. 3) Act 2010,

“HODA 1979” means the Hydrocarbon Oil Duties Act 1979,

“ICTA” means the Income and Corporation Taxes Act 1988,

“IHTA 1984” means the Inheritance Tax Act 1984,

“ITA 2007” means the Income Tax Act 2007,

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

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

“OTA 1975” means the Oil Taxation Act 1975,

“PRTA 1980” means the Petroleum Revenue Tax Act 1980,

“TCGA 1992” means the Taxation of Chargeable Gains Act 1992,

“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010,

“TMA 1970” means the Taxes Management Act 1970,

“TPDA 1979” means the Tobacco Products Duty Act 1979,

“VATA 1994” means the Value Added Tax Act 1994, and

“VERA 1994” means the Vehicle Excise and Registration Act 1994.

(2) In this Act—

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

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

Short title

229

This Act may be cited as the Finance Act 2012.

SCHEDULE 1

The high income child benefit charge

1

In Part 10 of ITEPA 2003 (social security benefits), after Chapter 7 insert—

(681B) (1) A person (“P”) is liable to a charge to income tax for a tax year if— (a) P's adjusted net income for the year exceeds £50,000, and (b) one or both of conditions A and B are met. (2) The charge is to be known as a “high income child benefit charge”. (3) Condition A is that— (a) P is entitled to an amount in respect of child benefit for a week in the tax year, and (b) there is no other person who is a partner of P throughout the week and has an adjusted net income for the year which exceeds that of P. (4) Condition B is that— (a) a person (“Q”) other than P is entitled to an amount in respect of child benefit for a week in the tax year, (b) Q is a partner of P throughout the week, and (c) P has an adjusted net income for the year which exceeds that of Q. (681C) (1) The amount of the high income child benefit charge to which a person (“P”) is liable for a tax year is the appropriate percentage of the total of— (a) any amounts in relation to which condition A is met, and (b) any amounts in relation to which condition B is met. For conditions A and B, see section 681B. (2) “The appropriate percentage” is— (a) 100%, or (b) if less, the percentage determined by the formula— $$ANI – L X %$Where—ANI is P's adjusted net income for the tax year;L is £50,000;X is £100.$ (3) If— (a) the total of the amounts mentioned in paragraphs (a) and (b) of subsection (1), or the amount of the charge determined under that subsection, is not a whole number of pounds, or (b) the percentage determined under subsection (2)(b) is not a whole number, it is to be rounded down to the nearest whole number. (681D) (1) This section applies where— (a) a person (“R”) is entitled to an amount in respect of child benefit for a child for a week in a tax year by virtue of section 143(1)(b) of SSCBA 1992 or section 139(1)(b) of SSCB(NI)A 1992 (persons contributing to the cost of providing for a child), (b) neither R, nor any person who is a partner of R throughout that week, is liable for a charge to income tax in respect of that amount under section 681B, and (c) there is another person (“S”) who, for the purposes of section 143(1)(a) of SSCBA 1992 or section 139(1)(a) of SSCB(NI)A 1992 (persons with whom child is living), is a person who has the child living with him or her in that week. (2) Section 681B applies as if S were entitled to the amount of child benefit mentioned in subsection (1)(a). (3) Where there is more than one person to whom subsection (1)(c) applies in relation to an amount of child benefit for a week, subsection (2) applies only to the one with the highest adjusted net income for the tax year. (4) For the purposes of subsection (1)(a), an amount of child benefit to which R is entitled for a week is to be ignored if— (a) the period (which includes that week) for which R is entitled to child benefit by virtue of section 143(1)(b) of SSCBA 1992 or section 139(1)(b) of SSCB(NI)A 1992 in respect of the same child does not exceed 52 weeks, and (b) R is entitled to child benefit in respect of the child for the week immediately before and the week immediately after that period by virtue of section 143(1)(a) of SSCBA 1992 or section 139(1)(a) of SSCB(NI)A 1992. (5) In this section “child” means— (a) a child within the meaning of section 142 of SSCBA 1992 or section 138 of SSCB(NI)A 1992, or (b) a qualifying young person within the meaning of either of those sections. (681E) (1) The following amounts are to be disregarded for the purposes of this Chapter— (a) amounts to which a person is entitled but in respect of which an election under section 13A of the Social Security Administration Act 1992 or section 11A of the Social Security Administration (Northern Ireland) Act 1992 (election for payment of child benefit not to be made if high income child benefit charge would be triggered) has effect; (b) amounts to which a person is entitled by virtue of section 145A of SSCBA 1992 or section 141A of SSCB(NI)A 1992 (entitlement to child benefit after death of child or qualifying young person). (2) Subsection (3) applies if— (a) a person (“T”) is entitled to an amount in respect of child benefit for a week in a tax year or is treated as so entitled by virtue of section 681D(2), (b) two or more other persons are partners of T throughout the week, and (c) two or more of those persons would, apart from subsection (3), each be liable to a charge under section 681B(1) in relation to that amount. (3) Only one of those persons is liable, namely the person with the highest adjusted net income for the tax year. (681F) (1) The Treasury may by order— (a) substitute another amount for the amount for the time being specified in section 681B(1)(a) and defined as “L” in section 681C(2), or (b) substitute another amount for the amount defined as “X” in section 681C(2). (2) An order under this section has effect for tax years beginning after the order is made. (3) A statutory instrument containing an order under this section which increases any person's liability to income tax may not be made unless a draft of it has been laid before and approved by a resolution of the House of Commons. (681G) (1) For the purposes of this Chapter a person is a “partner” of another person at any time if any of conditions A to D is met at that time. (2) Condition A is that the persons are a man and a woman who are married to each other and are neither— (a) separated under a court order, nor (b) separated in circumstances in which the separation is likely to be permanent. (3) Condition B is that the persons are a man and a woman who are not married to each other but are living together as husband and wife. (4) Condition C is that the persons are two men, or two women, who are civil partners of each other and are neither— (a) separated under a court order, nor (b) separated in circumstances in which the separation is likely to be permanent. (5) Condition D is that the persons are two men, or two women, who are not civil partners of each other but are living together as if they were civil partners. (681H) (1) This section applies for the purposes of this Chapter. (2) “Adjusted net income” of a person for a tax year means the person's adjusted net income for that tax year as determined under section 58 of ITA 2007. (3) “Week” means a period of 7 days beginning with a Monday; and a week is in a tax year if (and only if) the Monday with which it begins is in the tax year.

Consequential amendments

2

In section 7 of TMA 1970 (notice of liability to income tax and capital gains tax), in subsection (3), for the words from “his total income” to the end substitute

— (a) the person's total income consists of income from sources falling within subsections (4) to (7) below, (b) the person has no chargeable gains, and (c) the person is not liable to a high income child benefit charge.

3

After section 13 of the Social Security Administration Act 1992 insert—

(13A) (1) A person (“P”) who is entitled to child benefit in respect of one or more children may elect for all payments of the benefit to which P is entitled not to be made. (2) An election may be made only if P reasonably expects that, in the absence of the election, P or another person would be liable to a high income child benefit charge in respect of the payments to which the election relates made for weeks in the first tax year. (3) An election has effect in relation to payments made for weeks beginning after the election is made. (4) But where entitlement to child benefit is backdated, an election may have effect in relation to payments for weeks beginning in the period of three months ending immediately before the claim for the benefit was made. (5) An election may be revoked. (6) A revocation has effect in relation to payments made for weeks beginning after the revocation is made. (7) But if— (a) P makes an election which results in all payments, in respect of child benefit, to which P is entitled for one or more weeks in a tax year not being paid, and (b) had no election been made, neither P nor any other person would have been liable to a high income child benefit charge in relation to the payments, P may, no later than two years after the end of the tax year, revoke the election so far as it relates to the payments. (8) Subsections (2) to (7) are subject to directions under subsection (9). (9) The Commissioners for Her Majesty's Revenue and Customs may give directions as to— (a) the form of elections and revocations under this section, the manner in which they are to be made and the time at which they are to be treated as made, and (b) the circumstances in which, if child benefit is not being paid to a person at the full rate or the Commissioners are satisfied that there are doubts as to a person's entitlement to child benefit for a child, an election or revocation is not to have effect or its effect is to be postponed. (10) For the purposes of this section— - “child” includes a qualifying young person; - “first tax year”, in relation to an election, means the tax year in which the first week beginning after the election is made falls; - “week” means a period of 7 days beginning with a Monday; and a week is in a tax year if (and only if) the Monday with which it begins is in the tax year.

4

After section 11 of the Social Security Administration (Northern Ireland) Act 1992 insert—

(11A) (1) A person (“P”) who is entitled to child benefit in respect of one or more children may elect for all payments of the benefit to which P is entitled not to be made. (2) An election may be made only if P reasonably expects that, in the absence of the election, P or another person would be liable to a high income child benefit charge in respect of the payments to which the election relates made for weeks in the first tax year. (3) An election has effect in relation to payments made for weeks beginning after the election is made. (4) But where entitlement to child benefit is backdated, an election may have effect in relation to payments for weeks beginning in the period of three months ending immediately before the claim for the benefit was made. (5) An election may be revoked. (6) A revocation has effect in relation to payments made for weeks beginning after the revocation is made. (7) But if— (a) P makes an election which results in all payments, in respect of child benefit, to which P is entitled for one or more weeks in a tax year not being paid, and (b) had no election been made, neither P nor any other person would have been liable to a high income child benefit charge in relation to the payments, P may, no later than two years after the end of the tax year, revoke the election so far as it relates to the payments. (8) Subsections (2) to (7) are subject to directions under subsection (9). (9) The Commissioners for Her Majesty's Revenue and Customs may give directions as to— (a) the form of elections and revocations under this section, the manner in which they are to be made and the time at which they are to be treated as made, and (b) the circumstances in which, if child benefit is not being paid to a person at the full rate or the Commissioners are satisfied that there are doubts as to a person's entitlement to child benefit for a child, an election or revocation is not to have effect or its effect is to be postponed. (10) For the purposes of this section— - “child” includes a qualifying young person; - “first tax year”, in relation to an election, means the tax year in which the first week beginning after the election is made falls; - “week” means a period of 7 days beginning with a Monday; and a week is in a tax year if (and only if) the Monday with which it begins is in the tax year.

5

(1) ITEPA 2003 is amended as follows.

(2) In section 1 (overview of contents of Act)—

(a) in subsection (1)(c), after “see” insert “ Chapters 1 to 7 of ”, and

(b) in subsection (3), after paragraph (a) insert—

(aa) makes provision for the high income child benefit charge (see Chapter 8 of Part 10),

(3) In section 655 (structure of Part 10), in subsection (1), at the end insert—

Chapter 8 makes provision for the high income child benefit charge.

(4) In section 684 (PAYE regulations), in subsection (2), after Item 2 insert—

2ZA Provision— (a) for deductions to be made, if and to the extent that the payee does not object, with a view to securing that income tax payable for a tax year by the payee by virtue of section 681B (high income child benefit charge) is deducted from PAYE income of the payee paid during that year, (b) for repayments to be made in a tax year, if and to the extent that the payee does not object, in respect of any amounts overpaid on account of income tax under that section for that tax year, and (c) as to the circumstances and manner in which a payee may object to the making of deductions or repayments.

(5) In section 685 (tax tables), in subsection (2)(b), after “2” insert “ , 2ZA ”.

(6) In section 717 (orders and regulations made by Treasury or Commissioners), in subsection (4), after “companies)” insert “ or to which section 681F(3) (variation of income limit etc for high income child benefit charge: orders increasing liability to tax) applies ”.

(7) In Part 2 of Schedule 1 (index of defined expressions), insert at the appropriate places—

adjusted net income (in Chapter 8 of Part 10)	section 681H”
“partner (in Chapter 8 of Part 10)	section 681G”
“week (in Chapter 8 of Part 10)	section 681H

6

(1) ITA 2007 is amended as follows.

(2) In section 1 (overview of the Income Tax Acts), in subsection (1)(a), after “social security income” insert “ and makes provision for the high income child benefit charge ”.

(3) In section 30 (additional tax), in subsection (1), after “section 809ZO (tainted charity donations by trustees: charge to tax),” insert—

Chapter 8 of Part 10 of ITEPA 2003 (high income child benefit charge),

Commencement

7

(1) The amendments made by this Schedule have effect for the tax year 2012-13 and subsequent tax years.

(2) In relation to the tax year 2012-13, references in section 681B of ITEPA 2003 (as inserted by paragraph 1) to an amount to which a person is entitled in respect of child benefit for a week in the tax year do not include any amount to which the person is entitled in respect of child benefit for a week beginning before 7 January 2013.

(3) In sub-paragraph (2), “week” means a period of 7 days beginning with a Monday.

SCHEDULE 2

PART 1 — Amendments of CTA 2010

1

(1) In CTA 2010, after Part 8 insert—

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