Finance Act 2015

In consequence of paragraph 7(b) of this Schedule, omit paragraph 32 of Schedule 10 to FA 2005.

PART 2 — Income tax on beneficiaries' annuities etc

Exemption in certain cases for annuities for dependants, nominees and successors

17

• (1) In Chapter 17 of Part 9 of ITEPA 2003 (tax on pension income: exemptions) after section 646A insert—

(646B) (1) The charge to tax under this Part does not apply to a dependants' annuity, or nominees' annuity, payable to a person if— (a) it is paid in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death, (b) the member died on or after 3 December 2014, (c) either— (i) the annuity was purchased using unused drawdown funds or unused uncrystallised funds, or (ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity that was payable to the person by that other company, and was a dependants' annuity or nominees' annuity (as the case may be) purchased as mentioned in sub-paragraph (i) or this sub-paragraph, ceasing to be payable, (d) in a case where the annuity is purchased as mentioned in paragraph (c)(i) and using (whether or not exclusively) unused uncrystallised funds, the person became entitled to it before the end of the period of two years beginning with the earlier of— (i) the day on which the scheme administrator first knew of the member's death, and (ii) the day on which the scheme administrator could first reasonably have been expected to know of the death, (e) in a case where the annuity is purchased as mentioned in paragraph (c)(ii) and the prior annuity purchased as mentioned in paragraph (c)(i) was purchased using (whether or not exclusively) unused uncrystallised funds, the person became entitled to that prior annuity before the end of the period of two years specified in paragraph (d), (f) no payment of the annuity is made before 6 April 2015, and (g) in a case where the annuity is purchased as mentioned in paragraph (c)(ii), no payment is made before 6 April 2015 of— (i) the prior annuity purchased as mentioned in paragraph (c)(i), and (ii) any other annuity purchased as mentioned in paragraph (c)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity. (2) The charge to tax under this Part does not apply to a successor's annuity payable to a person if— (a) it is paid in respect of a deceased member of a registered pension scheme, (b) it is paid on the subsequent death of a dependant, nominee or successor of the member (“the beneficiary”), (c) the beneficiary had not reached the age of 75 at the date of the beneficiary's death, (d) the beneficiary died on or after 3 December 2014, (e) either— (i) the annuity was purchased using undrawn funds, or (ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity that was payable to the person by that other company, and was a successors' annuity purchased as mentioned in sub-paragraph (i) or this sub-paragraph, ceasing to be payable, (f) no payment of the annuity is made before 6 April 2015, and (g) in a case where the annuity is purchased as mentioned in paragraph (e)(ii), no payment is made before 6 April 2015 of— (i) the prior annuity purchased as mentioned in paragraph (e)(i), and (ii) any other annuity purchased as mentioned in paragraph (e)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity. (3) The charge to tax under this Part does not apply to a dependants' annuity or nominees' annuity payable to a person if— (a) it is paid in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death, (b) the member died on or after 3 December 2014, (c) the annuity— (i) was purchased together with a lifetime annuity payable to the member, or (ii) was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity that was payable to the person by that other company, and was a dependants' annuity or nominees' annuity (as the case may be) purchased as mentioned in sub-paragraph (i) or this sub-paragraph, ceasing to be payable, (d) no payment of the annuity is made before 6 April 2015, and (e) in a case where the annuity is purchased as mentioned in paragraph (c)(ii), no payment is made before 6 April 2015 of— (i) the prior annuity purchased as mentioned in paragraph (c)(i), and (ii) any other annuity purchased as mentioned in paragraph (c)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity. (4) The charge to tax under this Part does not apply to payments to a person of a lifetime annuity if— (a) the payments are payable to the person under pension rule 2 (see section 165 of FA 2004), (b) either— (i) a member of a registered pension scheme was entitled to be paid the annuity immediately before the member's death, or (ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity to which there was entitlement as mentioned in sub-paragraph (i), or which was purchased as mentioned in this sub-paragraph, ceasing to be payable, (c) the member had not reached the age of 75 at the date of the member's death, (d) the member died on or after 3 December 2014, (e) any payment of the annuity made before 6 April 2015 is made to the member, and (f) in a case where the annuity is one purchased as mentioned in paragraph (b)(ii), any payment made before 6 April 2015— (i) of the prior annuity to which there is entitlement as mentioned in paragraph (b)(i), or (ii) of any other annuity purchased as mentioned in paragraph (b)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity, is made to the member. (5) Paragraph 27E(3) to (5) of Schedule 28 to FA 2004 (meaning of “unused drawdown funds” and “unused uncrystallised funds”) apply for the purposes of subsection (1). (6) Paragraph 27FA(2) of Schedule 28 to FA 2004 (meaning of “undrawn funds”) applies for the purposes of subsection (2)(e). (7) For the purposes of subsection (3)(c), a dependants' annuity or nominees' annuity is purchased together with a lifetime annuity if the dependants' annuity or nominees' annuity (as the case may be) is related to the lifetime annuity, and paragraph 3(4A) and (4B) of Schedule 29 to FA 2004 (meaning of “related”) apply for the purposes of this subsection. (8) For the purposes of this section, a person becomes entitled to an annuity when the person first acquires an actual (rather than a prospective right) to receive the annuity. (646C) (1) The charge to tax under this Part does not apply to a dependants' short-term annuity, nominees' short-term annuity, dependants' annuity or nominees' annuity paid to a person if— (a) it is paid in respect of a deceased member of a registered pension scheme who had not reached the age of 75 at the date of the member's death, (b) the member died on or after 3 December 2014, and (c) the annuity was purchased using sums or assets out of the person's— (i) dependant's drawdown pension fund, (ii) dependant's flexi-access drawdown fund, or (iii) nominee's flexi-access drawdown fund, in respect of a money purchase arrangement under a registered pension scheme. (2) The charge to tax under this Part does not apply to a successors' short-term annuity, or successors' annuity, paid to a person if— (a) it is paid in respect of a deceased beneficiary of a deceased member of a registered pension scheme where the beneficiary had not reached the age of 75 at the date of the beneficiary's death, (b) the beneficiary died on or after 3 December 2014, and (c) the annuity was purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme, and here “beneficiary” means dependant, nominee or successor. (3) Subsection (1) is subject to subsections (4) to (6). (4) Subsection (1) does not exempt payments on or after 6 April 2015 to a person of a dependants' short-term annuity, or dependants' annuity, payable in respect of a deceased member of a registered pension scheme and purchased using sums or assets out of the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme (“the drawdown fund”) if before 6 April 2015— (a) any payment of the annuity was made, (b) any payment was made of any other dependants' short-term annuity, or dependants' annuity, purchased using sums or assets out of— (i) the drawdown fund, or (ii) any fund represented (to any extent) by the drawdown fund, or (c) any payment of dependants' income withdrawal was made from— (i) the drawdown fund, or (ii) any fund represented (to any extent) by the drawdown fund. (5) Subsection (1) does not exempt payments to a person of a dependants' short-term annuity, or dependants' annuity, payable in respect of a deceased member of a registered pension scheme and purchased using sums or assets out of the person's dependant's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme (“the new fund”) if— (a) any of the sums or assets that make up the new fund— (i) became newly-designated dependant funds under paragraph 22A(2)(b) of Schedule 28 to FA 2004 or as a result of the operation of any of paragraphs 22B to 22D of that Schedule, or (ii) arise, or (directly or indirectly) derive, from any such newly-designated funds or from sums or assets that to any extent so arise or derive, (b) before 6 April 2015— (i) any payment of dependants' income withdrawal in respect of the deceased member was made to the person from, or (ii) any payment in respect of the deceased member was made to the person of a dependants' short-term annuity, or dependants' annuity, purchased using sums or assets out of, the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme, and (c) any of the sums or assets that made up that fund at the time of the payment make up, or are represented by sums or assets that to any extent make up, the new fund. (6) Where relevant unused uncrystallised funds— (a) are designated on or after 6 April 2015 as available for the payment of dependants' drawdown pension or nominees' drawdown pension, and (b) as a result of the designation make up (to any extent) a person's dependant's flexi-access drawdown fund or nominee's flexi-access drawdown fund in respect of a money purchase arrangement under a registered pension scheme, but (c) are not so designated before the end of the relevant two-year period, subsection (1) does not exempt payments to the person of a dependants' short-term annuity, nominees' short-term annuity, dependants' annuity or nominees' annuity if any of the sums or assets used to purchase the annuity represent, at the time of the purchase, the whole or any part of those relevant unused uncrystallised funds. (7) In this section “the relevant two-year period”, in relation to relevant unused uncrystallised funds held for the purposes of a money purchase arrangement relating to a deceased individual under a registered pension scheme, means the period of two years beginning with the earlier of— (a) the day on which the scheme administrator first knew of the individual's death, and (b) the day on which the scheme administrator could first reasonably have been expected to know of it. (8) For the purposes of this section, sums or assets held after the death of a member of a registered pension scheme for the purposes of a money purchase arrangement relating to the member under the scheme are “relevant unused uncrystallised funds” if— (a) they are unused uncrystallised funds, and (b) the member had not reached the age of 75 at the date of the member's death. (9) Paragraph 27E(4) and (5) of Schedule 28 to FA 2004 (meaning of “unused uncrystallised funds”) apply for the purposes of subsection (8)(a). (646D) (1) The charge to tax under this Part does not apply to an annuity payable to a person if— (a) it is paid in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, who had not reached the age of 75 at the date of the member's death, (b) it would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be a dependants' annuity or nominees' annuity, (c) the member died on or after 3 December 2014, (d) either— (i) the annuity was purchased using sums or assets that would, if the scheme were a registered pension scheme, be unused drawdown funds or unused uncrystallised funds, or (ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity— (a) that was payable to the person by that other insurance company, (b) that was purchased as mentioned in sub-paragraph (i) or this sub-paragraph, and (c) that would have been a dependants' annuity or nominees' annuity (as the case may be) if the scheme had been a registered pension scheme, ceasing to be payable, (e) no payment of the annuity is made before 6 April 2015, and (f) in a case where the annuity is purchased as mentioned in paragraph (d)(ii), no payment is made before 6 April 2015 of— (i) the prior annuity purchased as mentioned in paragraph (d)(i), and (ii) any other annuity purchased as mentioned in paragraph (d)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity. (2) The charge to tax under this Part does not apply to an annuity payable to a person if— (a) it is paid in respect of a deceased member of an overseas pension scheme or relevant non-UK scheme, (b) it is paid on the subsequent death of an individual who would, if the scheme were a registered pension scheme, be a dependant, nominee or successor of the member (“the beneficiary”), (c) it would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be a successors' annuity, (d) the beneficiary had not reached the age of 75 at the date of the beneficiary's death, (e) the beneficiary died on or after 3 December 2014, (f) either— (i) the annuity was purchased using sums or assets that would, if the scheme were a registered pension scheme, be undrawn funds, or (ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity— (a) that was payable to the person by that other insurance company, (b) that was purchased as mentioned in sub-paragraph (i) or this sub-paragraph, and (c) that would have been a successors' annuity if the scheme had been a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), ceasing to be payable, (g) no payment of the annuity is made before 6 April 2015, and (h) in a case where the annuity is purchased as mentioned in paragraph (f)(ii), no payment is made before 6 April 2015 of— (i) the prior annuity purchased as mentioned in paragraph (f)(i), and (ii) any other annuity purchased as mentioned in paragraph (f)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity. (3) The charge to tax under this Part does not apply to an annuity payable to a person if— (a) it is paid in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, who had not reached the age of 75 at the date of the member's death, (b) it would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be a dependants' annuity payable to a dependant of the member or a nominees' annuity payable to a nominee of the member, (c) the member died on or after 3 December 2014, (d) the annuity— (i) was purchased together with an annuity payable to the member that would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), have been a lifetime annuity, or (ii) was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity— (a) that was payable to the person by that other insurance company, and (b) that would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), have been a dependants' annuity or nominees' annuity (as the case may be) purchased as mentioned in sub-paragraph (i) or this sub-paragraph, ceasing to be payable, (e) no payment of the annuity is made before 6 April 2015, and (f) in a case where the annuity is purchased as mentioned in paragraph (d)(ii), no payment is made before 6 April 2015 of— (i) the prior annuity purchased as mentioned in paragraph (d)(i), and (ii) any other annuity purchased as mentioned in paragraph (d)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity. (4) The charge to tax under this Part does not apply to payments to a person of an annuity if— (a) either— (i) a member of an overseas pension scheme, or relevant non-UK scheme, was entitled to be paid the annuity immediately before the member's death, or (ii) the annuity was purchased using sums or assets transferred to an insurance company by another insurance company in consequence of an annuity to which there was entitlement as mentioned in sub-paragraph (i), or which was purchased as mentioned in this sub-paragraph, ceasing to be payable, (b) the payments would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by subsection (8), be— (i) payments of a lifetime annuity, and (ii) payable to the person under pension rule 2 (see section 165 of FA 2004), (c) the member had not reached the age of 75 at the date of the member's death, (d) the member died on or after 3 December 2014, (e) any payment of the annuity made before 6 April 2015 is made to the member, and (f) in a case where the annuity is one purchased as mentioned in paragraph (a)(ii), any payment made before 6 April 2015— (i) of the prior annuity to which there is entitlement as mentioned in paragraph (a)(i), or (ii) of any other annuity purchased as mentioned in paragraph (a)(ii) that is in the chain of annuities beginning with that prior annuity and ending with the annuity, is made to the member. (5) Paragraph 27E(3) to (5) of Schedule 28 to FA 2004 (meaning of “unused drawdown funds” and “unused uncrystallised funds”) apply for the purposes of subsection (1). (6) Paragraph 27FA(2) of Schedule 28 to FA 2004 (meaning of “undrawn funds”) applies for the purposes of subsection (2)(f). (7) For the purposes of subsection (3)(d), an annuity is purchased together with another if they are purchased— (a) in the form of a joint life annuity, or (b) separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased. (8) In this section “insurance company” means— (a) an insurance company as defined by section 275 of FA 2004, or (b) a person— (i) whose normal business includes the activity of providing annuities, (ii) who carries on that activity in a country or territory outside the United Kingdom, and (iii) whose carrying on of that activity in any particular country or territory outside the United Kingdom— (a) is regulated in that country or territory, or (b) is lawful under the law of that country or territory because it is regulated in another country or territory, and for this purpose an activity is regulated in a country or territory if it is regulated by the government of that country or territory or by a body established under the law of that country or territory for the purpose of regulating the carrying-on of the activity. (646E) (1) The charge to tax under this Part does not apply to an annuity paid to a person if— (a) it is paid in respect of a deceased member of an overseas pension scheme, or a relevant non-UK scheme, who had not reached the age of 75 at the date of the member's death, (b) the person would, if that scheme were a registered pension scheme, be a dependant or nominee of the member, (c) the annuity was purchased using sums or assets held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme, and those sums or assets would if that scheme were a registered pension scheme form the whole or part of the person's— (i) dependant's drawdown pension fund, (ii) dependant's flexi-access drawdown fund, or (iii) nominee's flexi-access drawdown fund, in respect of the arrangement, (d) the annuity would, if the scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a dependants' short-term annuity or dependants' annuity or (as the case may be) a nominees' short-term annuity or nominees' annuity, and (e) the member died on or after 3 December 2014. (2) The charge to tax under this Part does not apply to an annuity payable to a person if— (a) it is paid in respect of a deceased individual (“the beneficiary”) who had not reached the age of 75 at the date of the beneficiary's death, (b) the beneficiary would have been a dependant, nominee or successor of a deceased member of an overseas pension scheme, or relevant non-UK scheme, if that scheme had been a registered pension scheme, (c) the person would, if that scheme were a registered pension scheme, be a successor of the member, (d) the annuity was purchased using sums or assets out of a fund held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme and would, if that scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a successors' short-term annuity, or successors' annuity, purchased using sums or assets out of the person's successor's flexi-access drawdown fund in respect of the arrangement, and (e) the beneficiary died on or after 3 December 2014. (3) Subsection (1) is subject to subsections (4) and (5). (4) Subsection (1) does not exempt payments on or after 6 April 2015 to a person of an annuity payable in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, if— (a) the annuity is purchased using sums or assets held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme, (b) the annuity would, if that scheme were a registered pension scheme and if “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a dependants' short-term annuity or dependants' annuity, (c) the annuity was purchased using sums or assets out of a fund that would, if that scheme were a registered pension scheme, be the person's dependant's drawdown pension fund in respect of the arrangement (“the drawdown fund”), and (d) before 6 April 2015— (i) any payment of the annuity was made, (ii) any payment was made to the person of any other annuity purchased using sums or assets out of the drawdown fund or out of any fund represented (to any extent) by the drawdown fund, or (iii) any payment was made to the person out of the drawdown fund, or out of any fund represented (to any extent) by the drawdown fund, of any pension that would be dependants' income withdrawal if the fund concerned were held for the purposes of a registered pension scheme. (5) Subsection (1) does not exempt payments to a person of an annuity payable in respect of a deceased member of an overseas pension scheme, or relevant non-UK scheme, if— (a) the annuity was purchased using sums or assets held for the purposes of a money purchase arrangement under an overseas pension scheme or relevant non-UK scheme and would, if that scheme were a registered pension scheme and “insurance company” in Part 4 of FA 2004 had the meaning given by section 646D(8), be a dependants' short-term annuity or dependants' annuity, (b) the annuity was purchased using sums or assets out of a fund (“the new fund”) that would, if that scheme were a registered pension scheme, be the person's dependant's flexi-access drawdown fund in respect of the arrangement, (c) before 6 April 2015— (i) any payment of pension in respect of the deceased member was made to the person from a fund held for the purposes of a money purchase arrangement under an overseas pension scheme, or relevant non-UK scheme, that would be a payment of dependants' income withdrawal from the person's dependant's drawdown pension fund in respect of the arrangement if the scheme were a registered pension scheme, or (ii) any payment in respect of the deceased member was made to the person of an annuity purchased using sums or assets out of a fund held for the purposes of a money purchase arrangement under an overseas pension scheme, or relevant non-UK scheme, that would be a payment of a dependants' short-term annuity, or dependants' annuity, purchased using sums or assets out of the person's dependant's drawdown pension fund in respect of the arrangement if the scheme were a registered pension scheme, and (d) any of the sums or assets that made up the fund mentioned in paragraph (c)(i) or (ii) make up, or are represented by sums or assets that to any extent make up, the new fund. (646F) In sections 646B to 646E, an expression listed in the first column of the table has the meaning given by the provision of FA 2004 listed against that expression in the second column of the table.

Expression	Provision of FA 2004
dependant	Schedule 28, paragraph 15
dependants' annuity	Schedule 28, paragraph 17
dependant's drawdown pension fund	Schedule 28, paragraph 22
dependant's flexi-access drawdown fund	Schedule 28, paragraph 22A
dependants' income withdrawal	Schedule 28, paragraph 21
dependants' short-term annuity	Schedule 28, paragraph 20
insurance company (in sections 646B and 646C)	section 275
lifetime annuity	Schedule 28, paragraph 3
money purchase arrangement	section 152
nominee	Schedule 28, paragraph 27A
nominees' annuity	Schedule 28, paragraph 27AA
nominee's flexi-access drawdown fund	Schedule 28, paragraph 27E
nominees' short-term annuity	Schedule 28, paragraph 27C
overseas pension scheme	section 150(1) and (7)
relevant non-UK scheme	Schedule 34, paragraph 1(5)
successor	Schedule 28, paragraph 27F
successors' annuity	Schedule 28, paragraph 27FA
successor's flexi-access drawdown fund	Schedule 28, paragraph 27K
successors' short-term annuity	Schedule 28, paragraph 27H

.

• (2) The amendment made by this paragraph has effect in relation to pension paid on or after 6 April 2015.

Exemption from tax under Part 9 of ITEPA 2003 not to give rise to tax under other provisions

18

In section 393B(2)(a) of ITEPA 2003 (tax on benefits under employer-financed retirement benefit schemes: “relevant benefits” do not include benefits charged to tax under Part 9) after “charged to tax under Part 9 (pension income)” insert “ , or that would be charged to tax under that Part but for section 573(2A) or (2B), 646D or 646E ”.

Annuity for dependant purchased before 6 April 2006 jointly with annuity for member

19

In Schedule 36 to FA 2004 (transitional provision etc in relation to pre-6 April 2006 pensions) after paragraph 45 insert—

(45A) (1) The charge to tax under Part 9 of ITEPA 2003 (taxation of pension income) does not apply to an annuity payable to a person (“the dependant”) if— (a) the annuity is payable on the death of a member of a pension scheme, (b) the annuity is paid in respect of the deceased member, (c) the member had not reached the age of 75 at the date of the member's death, (d) the member died on or after 3 December 2014, (e) no payment of the annuity is made before 6 April 2015, (f) the annuity has fulfilled the transitional conditions at all times on or after 6 April 2006, (g) the annuity was purchased together with an annuity payable to the member, and (h) that annuity payable to the member fulfilled the transitional conditions at all times in the period beginning with 6 April 2006 and ending with the member's death. (2) For the purposes of sub-paragraph (1)(g), an annuity is purchased together with another if they are purchased— (a) in the form of a joint life annuity, or (b) separately in circumstances in which the day on which the one is purchased is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased. (3) In sub-paragraph (1) “the transitional conditions” means the conditions specified in the subsection (3A) set out in article 2(3) of the Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572).

Minor and consequential amendments

20

In section 573 of ITEPA 2003 (foreign pensions to which other provisions of Part 9 of ITEPA 2003 do not apply) after subsection (2D) insert—

(2E) Chapter 17 of this Part provides exemptions for certain annuities (see sections 646D and 646E: certain beneficiaries' annuities purchased out of unused or drawdown funds). (2F) See also paragraph 45A of Schedule 36 to FA 2004 (exemption in certain cases for payments on or after 6 April 2015 to beneficiaries under joint-life or similar annuities purchased before 6 April 2006).

21

In Chapter 10 of Part 9 of ITEPA 2003 (other employment-related annuities) after section 611 insert—

(611A) (1) Chapter 17 of this Part provides exemptions for certain annuities (see sections 646B to 646E: certain beneficiaries' annuities purchased out of unused or drawdown funds). (2) See also paragraph 45A of Schedule 36 to FA 2004 (exemption in certain cases for payments on or after 6 April 2015 to beneficiaries under joint-life or similar annuities purchased before 6 April 2006).

22

In section 579A of ITEPA 2003 (section applies to pensions under registered pension schemes, with exceptions) after subsection (2) insert—

(3) Chapter 17 of this Part provides exemptions for certain annuities (see sections 646B and 646C: certain beneficiaries' annuities purchased out of unused or drawdown funds).

23

• (1) For section 579CZA(5)(b) of ITEPA 2003 (tax exemption for dependants' income withdrawal overridden where any paid before 6 April 2015) substitute—

(b) before 6 April 2015— (i) any payment of dependants' income withdrawal in respect of the deceased member was made to the person from, or (ii) any payment in respect of the deceased member was made to the person of a dependants' short-term annuity purchased using sums or assets out of, the person's dependant's drawdown pension fund in respect of a money purchase arrangement under a registered pension scheme, and

.

• (2) The amendment made by this paragraph has effect in relation to pension paid on or after 6 April 2015.

SCHEDULE 5

Income tax: trade profits

1

In Chapter 5 of Part 2 of ITTOIA 2005 (trade profits: rules allowing deductions), after section 86 insert—

(86A) (1) This section applies if— (a) a person carrying on a trade (“the contributor”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project, and (b) a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade. (2) In determining whether the condition in subsection (1)(b) is satisfied, a deduction giving effect to a capital allowance is to be disregarded. (3) In calculating the profits of the trade, a deduction is allowed under this section for the expenses. (4) But if, in connection with the making of the contribution, the contributor or a connected person— (a) receives a disqualifying benefit, or (b) is entitled to receive such a benefit, no deduction is allowed. (5) For the purposes of subsection (4) it does not matter whether a person receives, or is entitled to receive, the benefit— (a) from the carrying out of the project, or (b) from any person. (6) Subsection (7) applies if— (a) a deduction has been made under this section in relation to the contribution, and (b) the contributor or a connected person receives— (i) a refund of any part of the contribution, if the contribution is a sum of money, or (ii) compensation for any part of the contribution, if the contribution is the provision of services, in money or money's worth. (7) The amount of, or an amount equal to the value of, the refund or compensation (so far as not otherwise brought into account in calculating the profits of the trade or treated as a post-cessation receipt)— (a) is brought into account in calculating the profits of the trade, as a receipt arising on the date on which the refund or compensation is received, or (b) if the contributor has permanently ceased to carry on the trade before that date, is treated as a post-cessation receipt (see Chapter 18). (8) In this section “disqualifying benefit” means a benefit consisting of money or other property, but it does not include— (a) a refund of the contribution, if the contribution is a sum of money; (b) compensation for the contribution, if the contribution is the provision of services; (c) a structure that— (i) is or is to be used for the purposes of flood or coastal erosion risk management, and (ii) is put in place in carrying out the project; (d) an addition to a structure where— (i) the structure is or is to be used for the purposes of flood or coastal erosion risk management, and (ii) the addition is made in carrying out the project; (e) land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management; (f) a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management. (9) In subsection (8) “structure” includes road, path, pipe, earthwork, plant and machinery. (86B) (1) This section applies for the purposes of section 86A. (2) A flood or coastal erosion risk management project is a qualifying project if— (a) an English risk management authority has applied to the Environment Agency for a grant under section 16 of the Flood and Water Management Act 2010 in order to fund the project, or (b) the Environment Agency has determined that it will carry out the project, and the Environment Agency has allocated funding by way of grant-in-aid to the project. (3) A contribution to a flood or coastal erosion risk management project is a qualifying contribution if the contribution is made— (a) for the purposes of the project, and (b) under an agreement between— (i) the person making the contribution, and (ii) the applicant authority or (as the case may be) the Environment Agency, or between those two persons and other persons. (4) References to a flood risk management project or a coastal erosion risk management project are to be interpreted in accordance with sections 1 to 3 of the Flood and Water Management Act 2010. (5) In section 86A and this section— - “contribution”, in relation to a period of account, means— 1. a sum of money paid in that period of account, or 2. any services provided in that period of account; - “English risk management authority” has the meaning given by section 6(14) of the Flood and Water Management Act 2010.

Income tax: profits of a property business

2

In section 272 of ITTOIA 2005 (application of trading income rules), in the table in subsection (2), after the entry for sections 82 to 86 insert—

sections 86A and 86B	contributions to flood and coastal erosion risk management projects

Corporation tax: trading income and trade profits

3

In Chapter 5 of Part 3 of CTA 2009 (trading income and trade profits: rules allowing deductions), after section 86 insert—

(86A) (1) This section applies if— (a) a company carrying on a trade (“the contributor”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project, and (b) a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade. (2) In determining whether the condition in subsection (1)(b) is satisfied, a deduction giving effect to a capital allowance is to be disregarded. (3) In calculating the profits of the trade, a deduction is allowed under this section for the expenses. (4) But if, in connection with the making of the contribution, the contributor or a connected person— (a) receives a disqualifying benefit, or (b) is entitled to receive such a benefit, no deduction is allowed. (5) For the purposes of subsection (4) it does not matter whether a person receives, or is entitled to receive, the benefit— (a) from the carrying out of the project, or (b) from any person. (6) Subsection (7) applies if— (a) a deduction has been made under this section in relation to the contribution, and (b) the contributor or a connected person receives— (i) a refund of any part of the contribution, if the contribution is a sum of money, or (ii) compensation for any part of the contribution, if the contribution is the provision of services, in money or money's worth. (7) The amount of, or an amount equal to the value of, the refund or compensation (so far as not otherwise brought into account in calculating the profits of the trade or treated as a post-cessation receipt)— (a) is brought into account in calculating the profits of the trade, as a receipt arising in the accounting period in which the refund or compensation is received, or (b) if the contributor has permanently ceased to carry on the trade before the refund or compensation is received, is treated as a post-cessation receipt (see Chapter 15). (8) In this section “disqualifying benefit” means a benefit consisting of money or other property, but it does not include— (a) a refund of the contribution, if the contribution is a sum of money; (b) compensation for the contribution, if the contribution is the provision of services; (c) a structure that— (i) is or is to be used for the purposes of flood or coastal erosion risk management, and (ii) is put in place in carrying out the project; (d) an addition to a structure where— (i) the structure is or is to be used for the purposes of flood or coastal erosion risk management, and (ii) the addition is made in carrying out the project; (e) land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management; (f) a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management. (9) In subsection (8) “structure” includes road, path, pipe, earthwork, plant and machinery. (86B) (1) This section applies for the purposes of section 86A. (2) A flood or coastal erosion risk management project is a qualifying project if— (a) an English risk management authority has applied to the Environment Agency for a grant under section 16 of the Flood and Water Management Act 2010 in order to fund the project, or (b) the Environment Agency has determined that it will carry out the project, and the Environment Agency has allocated funding by way of grant-in-aid to the project. (3) A contribution to a flood or coastal erosion risk management project is a qualifying contribution if the contribution is made— (a) for the purposes of the project, and (b) under an agreement between— (i) the company making the contribution, and (ii) the applicant authority or (as the case may be) the Environment Agency, or between those two bodies and other persons. (4) References to a flood risk management project or a coastal erosion risk management project are to be interpreted in accordance with sections 1 to 3 of the Flood and Water Management Act 2010. (5) In section 86A and this section— - “contribution”, in relation to an accounting period, means— 1. a sum of money paid in that accounting period, or 2. any services provided in that accounting period; - “English risk management authority” has the meaning given by section 6(14) of the Flood and Water Management Act 2010.

Corporation tax: profits of a property business

4

In section 210 of CTA 2009 (application of trading income rules), in the table in subsection (2), after the entry for sections 82 to 86 insert—

sections 86A and 86B	contributions to flood and coastal erosion risk management projects

Corporation tax: investment business

5

In Chapter 2 of Part 16 of CTA 2009 (investment business: management expenses), in section 1221 (amounts treated as expenses of management), in subsection (3), after paragraph (i) insert—

(ia) section 1244A (contributions to flood and coastal erosion risk management projects),

.

6

In Chapter 3 of Part 16 of CTA 2009 (investment business: amounts treated as expenses of management), after section 1244 insert—

(1244A) (1) This section applies if a company with investment business (“the contributor”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project. (2) The expenses are treated for the purposes of Chapter 2 as expenses of management. (3) But if, in connection with the making of the contribution, the contributor or a connected person— (a) receives a disqualifying benefit, or (b) is entitled to receive such a benefit, no deduction is allowed under section 1219. (4) For the purposes of subsection (3) it does not matter whether a person receives, or is entitled to receive, the benefit— (a) from the carrying out of the project, or (b) from any person. (5) In this section “disqualifying benefit” means a benefit consisting of money or other property, but it does not include— (a) a refund of the contribution, if the contribution is a sum of money; (b) compensation for the contribution, if the contribution is the provision of services; (c) a structure that— (i) is or is to be used for the purposes of flood or coastal erosion risk management, and (ii) is put in place in carrying out the project; (d) an addition to a structure where— (i) the structure is or is to be used for the purposes of flood or coastal erosion risk management, and (ii) the addition is made in carrying out the project; (e) land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management; (f) a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management. (6) In subsection (5) “structure” includes road, path, pipe, earthwork, plant and machinery. (7) Section 86B applies for the purposes of this section as it applies for the purposes of section 86A.

7

In Chapter 5 of Part 16 of CTA 2009 (investment business: receipts), after section 1253 insert—

(1253A) (1) This section applies if— (a) a deduction has been made under section 1219 by virtue of section 1244A (contributions to flood and coastal erosion risk management projects: expenses of management), and (b) the contributor or a connected person receives— (i) a refund of any part of the contribution, if the contribution is a sum of money, or (ii) compensation for any part of the contribution, if the contribution is the provision of services, in money or money's worth. (2) The contributor is to be treated as receiving, when the refund or compensation is received, an amount— (a) which is equal to so much of the refund or compensation, or so much of the value of the refund or compensation, as is not otherwise taken into account for corporation tax purposes, and (b) to which the charge to corporation tax on income applies.

8

In section 253 of CAA 2001 (companies with investment business), in subsection (6), after “1233” insert “ or 1244A ”.

Commencement

9

The amendments made by this Schedule have effect in relation to contributions paid or provided on or after 1 January 2015.

SCHEDULE 6

PART 1 — Part 5B of ITA 2007: amendment coming into force on passing of Act

Tax relief for social investments: power to amend excluded activities

1

In Part 5B of ITA 2007 (tax relief for social investments), after section 257MV insert—

(257MW) (1) The Treasury may by regulations add to, repeal or otherwise amend any provision of sections 257MQ to 257MT (excluded activities). (2) Regulations under this section may— (a) make different provision for different cases or purposes; (b) contain incidental, supplemental, consequential and transitional provision and savings. (3) So far as they cause an activity to cease to be an excluded activity, amendments made by regulations under this section may have effect in relation to times before they come into force, but not times before 6 April 2015. (4) This section is without prejudice to any other power to amend any provision of this Part.

PART 2 — Part 5 of ITA 2007: excluded activities from 6 April 2015

Introductory

2

The following provisions of Part 5 of ITA 2007 (enterprise investment scheme) are amended as set out in paragraphs 3 and 4—

• (a) section 198A (excluded activities for purposes of Part 5 (and, by virtue of section 257DA(9), Part 5A): subsidised generation or export of electricity), and

• (b) section 198B (excluded activities for those purposes: subsidised generation of heat and subsidised production of gas or fuel).

Generation of electricity involving contracts for difference

3

In section 198A—

• (a) in subsection (3), omit “or” at the end of paragraph (b) and for paragraph (c) substitute—

(ba) a contract for difference has been entered into in connection with the generation of the electricity, or (c) a scheme established in a territory outside the United Kingdom that— (i) corresponds to one set out in a renewables obligation order under section 32 of the Electricity Act 1989, or (ii) is similar to one established by virtue of regulations under Chapter 2 of Part 2 of the Energy Act 2013 (contracts for difference), operates to incentivise the generation of the electricity.

, and

• (b) in subsection (9), at the appropriate place insert—

“contract for difference” means a contract for difference within the meaning of Chapter 2 of Part 2 of the Energy Act 2013 (see section 6(2) of that Act);

.

Subsidised energy-related activities: anaerobic digestion and hydroelectric power

4

• (1) In section 198A—

• (a) in subsection (5), omit “, B or C” (exceptions for generation involving anaerobic digestion and hydroelectric power),

• (b) omit subsections (7) and (8), and

• (c) in subsection (9), omit the definition of “anaerobic digestion”.

• (2) In section 198B—

• (a) in subsection (3), omit “or B” (exception for generation or production involving anaerobic digestion), and

• (b) omit subsection (5).

Application

5

The amendments made by this Part of this Schedule have effect in relation to shares issued on or after 6 April 2015.

PART 3 — Part 6 of ITA 2007: excluded activities from 6 April 2015

Introductory

6

The following provisions of Part 6 of ITA 2007 (venture capital trusts) are amended as set out in paragraphs 7 and 8—

• (a) section 309A (excluded activities for purposes of Part 6: subsidised generation or export of electricity), and

• (b) section 309B (excluded activities for those purposes: subsidised generation of heat and subsidised production of gas or fuel).

Generation of electricity involving contracts for difference

7

In section 309A—

• (a) in subsection (3), omit “or” at the end of paragraph (b) and for paragraph (c) substitute—

(ba) a contract for difference has been entered into in connection with the generation of the electricity, or (c) a scheme established in a territory outside the United Kingdom that— (i) corresponds to one set out in a renewables obligation order under section 32 of the Electricity Act 1989, or (ii) is similar to one established by virtue of regulations under Chapter 2 of Part 2 of the Energy Act 2013 (contracts for difference), operates to incentivise the generation of the electricity.

, and

• (b) in subsection (9), at the appropriate place insert—

“contract for difference” means a contract for difference within the meaning of Chapter 2 of Part 2 of the Energy Act 2013 (see section 6(2) of that Act);

.

Subsidised energy-related activities: anaerobic digestion and hydroelectric power

8

• (1) In section 309A—

• (a) in subsection (5), omit “, B or C” (exceptions for generation involving anaerobic digestion and hydroelectric power),

• (b) omit subsections (7) and (8), and

• (c) in subsection (9), omit the definition of “anaerobic digestion”.

• (2) In section 309B—

• (a) in subsection (3), omit “or B” (exception for generation or production involving anaerobic digestion), and

• (b) omit subsection (5).

Application

9

The amendments made by this Part of this Schedule have effect in relation to relevant holdings issued on or after 6 April 2015.

PART 4 — Further amendments of Parts 5 to 6 of ITA 2007

Parts 5 and 6: certain community-based activities to be excluded activities

10

• (1) Part 5 of ITA 2007 is further amended as follows.

• (2) In section 198A—

• (a) omit subsections (5) and (6) (exception for community-based generation), and

• (b) in subsection (9), omit the definitions of “community benefit society”, “co-operative society” and “NI industrial and provident society”.

• (3) In section 198B—

• (a) omit subsections (3) and (4) (exception for community-based generation or production), and

• (b) omit subsection (6) (interpretation of section).

11

• (1) Part 6 of ITA 2007 is further amended as follows.

• (2) In section 309A—

• (a) omit subsections (5) and (6) (exception for community-based generation), and

• (b) in subsection (9), omit the definitions of “community benefit society”, “co-operative society” and “NI industrial and provident society”.

• (3) In section 309B—

• (a) omit subsections (3) and (4) (exception for community-based generation or production), and

• (b) omit subsection (6) (interpretation of section).

12

In consequence of paragraphs 10 and 11—

• (a) in FA 2014, omit section 56(3)(b) and (6)(b), and

• (b) in the Co-operative and Community Benefit Societies Act 2014, omit paragraphs 106 and 107 of Schedule 4.

Part 5B: subsidised generation or export of electricity to cease to be excluded activity

13

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

Application of Part

14

• (1) The amendments made by this Part of this Schedule have effect in accordance with regulations made by the Treasury.

• (2) Regulations under this paragraph may make different provision for different purposes.

• (3) Section 1014(4) of ITA 2007 (regulations etc subject to annulment) does not apply in relation to regulations under this paragraph.

• (4) Regulations under this paragraph may not provide for amendments of ITA 2007 to have effect—

• (a) in the case of amendments of Part 5 of that Act, in relation to shares issued before 6 April 2015;

• (b) in the case of amendments of Part 6 of that Act, in relation to relevant holdings issued before 6 April 2015.

SCHEDULE 7

PART 1 — Amendments of TCGA 1992

1

TCGA 1992 is amended in accordance with paragraphs 2 to 40.

2

In section 1 (the charge to tax), in subsection (2A), for the words from “gains are” to the end substitute

gains are— (a) ATED-related gains in respect of which the companies are chargeable to capital gains tax under section 2B, or (b) NRCGT gains in respect of which the companies are chargeable to capital gains tax under section 14D or 188D.

3

• (1) Section 2 (persons and gains chargeable to capital gains tax, and allowable losses) is amended as follows.

• (2) After subsection (2) insert—

(2A) Where subsection (1B) applies, the amounts that may be deducted under subsection (2)(a) include any allowable NRCGT losses accruing to the person in the overseas part of the tax year concerned (see section 14B(4)). (2B) The amounts that may be deducted under subsection (2)(b) include any allowable NRCGT losses (other than group losses, as defined in section 188E(4)) accruing to the person in a tax year (“year P”) previous to the year mentioned in subsection (2)(a) (so far as those losses have not been allowed as a deduction from chargeable gains accruing in year P or any previous year).

• (3) After subsection (7A) insert—

(7B) Except where otherwise specified (see subsections (2A) and (2B)), nothing in this section applies in relation to an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D.

4

In section 2B (persons chargeable to capital gains tax on ATED-related gains), in subsection (10), in paragraph (b) of the definition of “ring-fenced ATED-related allowable losses”, for “from ATED-related chargeable gains accruing in any previous tax year on relevant high value disposals,” substitute “ from chargeable gains accruing in any previous tax year, ”.

5

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

• (2) In subsection (5), for the words from “is the amount” to the end substitute

is (what would apart from this section be) the total of the amounts for that year on which that individual is chargeable to capital gains tax in accordance with either (or both) of— (a) section 2 (gains, other than ATED-related gains and NRCGT gains, chargeable to capital gains tax), and (b) section 14D (NRCGT gains chargeable to capital gains tax).

• (3) After subsection (5B) insert—

(5BA) In this section, “adjusted net gains”, in relation to a tax year and an individual, means— (a) if the residence condition is met (see section 2(1A)) and the year is not a split year as respects the individual, the section 2 adjusted net gains; (b) if the residence condition is not met, the section 14D adjusted net gains; (c) if the residence condition is met and the year is a split year as respects the individual, the total of the section 2 adjusted net gains (if any) and the section 14D adjusted net gains (if any).

• (4) In subsection (5C), for the words from “In subsections” to “in his case by—” substitute “ In subsection (5BA) “section 2 adjusted net gains”, in relation to an individual and a tax year, means the amount given in the individual's case by— ”.

• (5) After subsection (5C) insert—

(5D) In subsection (5BA) “section 14D adjusted net gains”, in relation to an individual and a tax year, means the amount given in the individual's case by— (a) taking the amount from which the deductions provided for by paragraphs (a) and (b) of subsection (2) of section 14D are to be made, and (b) deducting only the amounts falling to be deducted in accordance with paragraph (a) of that subsection.

• (6) In subsection (7), for “(5C)” substitute “ (5D) ”.

6

In section 4 (rates of capital gains tax), after subsection (3A) insert—

(3B) The rate of capital gains tax is 20% in respect of— (a) gains chargeable under section 14D accruing to a company in a tax year, and (b) gains chargeable under section 188D accruing in a tax year to the relevant body of an NRCGT group (as defined in that section).

7

For section 4B (deduction of losses etc in most beneficial way) substitute—

(4B) (1) Where it is necessary to determine— (a) from which chargeable gains an allowable loss accruing to a person is to be deducted, or (b) which allowable losses are to be deducted from any chargeable gains accruing to a person, (including in a case falling within subsection (2)), the losses concerned may be used in whichever way is most beneficial to that person. (2) Where the gains accruing to a person in a tax year are (apart from this section) chargeable to capital gains tax at different rates, the exempt amount under section 3 may be used in respect of those gains in whichever way is most beneficial to that person. (3) This section is subject to any enactment which contains a limitation on the gains from which allowable losses may be deducted.

8

• (1) Section 8 (company's profits for corporation tax purposes to include chargeable gains) is amended as follows.

• (2) In subsection (1), in paragraph (b), omit the words from “period” to the end and insert

period— (i) any allowable losses previously accruing to the company while it has been within the charge to corporation tax, and (ii) any allowable NRCGT losses previously accruing to the company.

• (3) After subsection (4A) insert—

(4B) Subject to subsection (1)(b)(ii), nothing in this section applies in relation to an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D.

9

In section 10A (temporary non-residents), as that section has effect where the year of departure (as defined in Part 4 of Schedule 45 to FA 2013) is the tax year 2012-13 or an earlier tax year, in subsection (5) after “section 10” insert “ , 14D ”.

10

In section 13 (attribution of gains to members of non-resident companies), in subsection (1A), for the words from “an ATED-related gain” to the end substitute—

(a) an ATED-related gain chargeable to capital gains tax by virtue of section 2B (capital gains tax on ATED-related gains), or (b) an NRCGT gain chargeable to capital gains tax by virtue of section 14D or 188D (capital gains tax on NRCGT gains).

11

After section 14A insert—

(14B) (1) For the purposes of this Act a disposal made by a person is a “non-resident CGT disposal” if— (a) it is a disposal of a UK residential property interest, and (b) condition A or B is met. But see also subsection (5). (2) Condition A is— (a) in the case of an individual, that the individual is not resident in the United Kingdom for the tax year in question (see subsection (3)), (b) in the case of personal representatives of a deceased person, that the single and continuing body mentioned in section 62(3) is not resident in the United Kingdom, (c) in the case of the trustees of a settlement, that the single person mentioned in section 69(1) is not resident in the United Kingdom during any part of the tax year in question, and (d) in any other case, that the person is not resident in the United Kingdom at the relevant time. (3) In subsection (2)— (a) “the tax year in question” means the tax year in which any gain on the disposal accrues (or would accrue were there to be such a gain); (b) “the relevant time” means the time at which any gain on the disposal accrues (or would accrue were there to be such a gain). (4) Condition B is that— (a) the person is an individual, and (b) any gain accruing to the individual on the disposal would accrue in the overseas part of a tax year which is a split year as respects the individual. (5) A disposal by a person of a UK residential property interest is not a non-resident CGT disposal so far as any chargeable gains accruing to the person on the disposal— (a) would be gains in respect of which the person would be chargeable to capital gains tax— (i) under section 10(1) (non-resident with UK branch or agency), or (ii) under section 2 as a result of subsection (1C) of that section (corresponding provision relating to the overseas part of a split year), or (b) would be gains forming part of the person's chargeable profits for corporation tax purposes by virtue of section 10B (non-resident company with UK permanent establishment). (14C) Schedule B1 gives the meaning in this Act of “disposal of a UK residential property interest”. (14D) (1) A person is chargeable to capital gains tax in respect of any chargeable NRCGT gain accruing to the person in the tax year on a non-resident CGT disposal. See also section 188D(1). (2) Capital gains tax is charged on the total amount of chargeable NRCGT gains accruing to the person in the tax year, after deducting— (a) any allowable losses accruing to the person in the tax year on disposals of UK residential property interests, and (b) so far as they have not been allowed as a deduction from chargeable gains accruing in any previous tax year, any allowable losses accruing to the person in any previous tax year (not earlier than the tax year 1965-66) on disposals of UK residential property interests. (3) In subsection (2), the reference to chargeable NRCGT gains does not include any such gains which accrue to a member of an NRCGT group. (4) The only deductions that can be made from chargeable NRCGT gains to which subsection (2) applies are those permitted by this section. This is subject to section 62(2AA) (carry-back of losses accruing in year of death). (5) See section 57B and Schedule 4ZZB for how to determine— (a) whether an NRCGT gain (or loss) accrues on a non-resident CGT disposal, and (b) the amount of any NRCGT gain (or loss) so accruing. (14E) (1) Subsections (2) to (4) apply in relation to an allowable NRCGT loss accruing to a person in a tax year on a non-resident CGT disposal. (2) The loss is not allowable as a deduction from chargeable gains accruing in any earlier tax year. This is subject to section 62(2) and (2AA) (carry-back of losses accruing in year of death). (3) Relief is not to be given under this Act more than once in respect of the loss or any part of the loss. (4) Relief is not to be given under this Act in respect of the loss if, and so far as, relief has been or may be given in respect of it under the Tax Acts. (14F) (1) A person is not chargeable to capital gains tax under section 14D in respect of a chargeable NRCGT gain accruing to the person on a non-resident CGT disposal if the person— (a) is an eligible person in relation to the disposal, and (b) makes a claim under this section with respect to the disposal. (2) A diversely-held company which makes a non-resident CGT disposal is an eligible person in relation to the disposal. (3) A scheme (see subsection (7)) which makes a non-resident CGT disposal is an eligible person in relation to the disposal if condition A or B is met. (4) Condition A is that the scheme is a widely-marketed scheme throughout the relevant ownership period. (5) Condition B is that— (a) an investor in the scheme is an offshore fund, an open-ended investment company or an authorised unit trust (“the feeder fund”), (b) the scheme is a widely-marketed scheme throughout the alternative period, after taking into account— (i) the scheme documents relating to the feeder fund, and (ii) the intended investors in the feeder fund, and (c) the scheme and the feeder fund have the same manager. (6) A company carrying on life assurance business (as defined in section 56 of the Finance Act 2012) which makes a non-resident CGT disposal is an eligible person if immediately before the time of the disposal the interest in UK land which is the subject of that disposal is held for the purpose of providing benefits to policyholders in the course of that business. (7) In this section “scheme” means any of the following— (a) a unit trust scheme; (b) a company which is an open-ended investment company incorporated by virtue of regulations under section 262 of the Financial Services and Markets Act 2000; (c) a company incorporated under the law of a territory outside the United Kingdom which is, under that law, the equivalent of an open-ended investment company. (8) In this section “the relevant ownership period”, in relation to a scheme, means— (a) the period beginning with the day on which the scheme acquired the interest in UK land which (or part of which) is the subject of the non-resident CGT disposal and ending with the day on which that disposal occurs, or (b) if shorter, the period of 5 years ending with the day on which that disposal occurs. (9) For the purposes of subsection (5), the “alternative period”, in relation to a scheme, is the shorter of— (a) the relevant ownership period, and (b) the period beginning when the feeder fund first became an investor in the scheme and ending with the date of the disposal. (10) In this section— - “diversely-held company” means a company which is not a closely-held company; - “interest in UK land” has the same meaning as in Schedule B1; - “open-ended investment company” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000 (see section 236 of that Act). (11) In Schedule C1— (a) Part 1 sets out the rules for determining whether or not a company is a closely-held company; (b) Part 2 sets out how to determine whether or not a scheme is a widely-marketed scheme at any time. (14G) (1) This section applies where a company which makes a non-resident CGT disposal— (a) is a divided company, and (b) would, without this section, be an eligible person for the purposes of section 14F in relation to the disposal. (2) In determining for the purposes of section 14F whether or not the company is an eligible company in relation to the disposal, the company is to be treated as if it were a closely-held company if the conditions in subsection (3) are met. (3) The conditions are that— (a) the gain or loss accruing on the disposal is primarily or wholly attributable to a particular division of the company, and (b) if that division were a separate company, that separate company would be a closely-held company. (4) For the purposes of this section a company is a “divided company” if, under the law under which the company is formed, under the company's articles of association or other document regulating the company or under arrangements entered into by or in relation to the company— (a) some or all of the assets of the company are available primarily, or only, to meet particular liabilities of the company, and (b) some or all of the members of the company, and some or all of its creditors, have rights primarily, or only, in relation to particular assets of the company. (5) References in this section to a “division” of a divided company are to an identifiable part of the company that carries on distinct business activities and to which particular assets and liabilities of the company are primarily or wholly attributable. (14H) (1) Subsection (2) applies where— (a) arrangements are entered into, and (b) the main purpose, or one of the main purposes, of any party entering into them (or any part of them) is to avoid capital gains tax being charged under section 14D as a result of a person not being an eligible person in relation to the disposal by virtue of subsection (2) (diversely-held companies) or, as the case may be, subsection (3) (widely-marketed schemes) of section 14F (persons not chargeable under section 14D if a claim is made). (2) The arrangements (or that part of the arrangements) are to be disregarded in determining whether or not the company is an eligible person by virtue of that subsection. (3) In this section “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

12

In section 16 (computation of losses), in subsection (3), for “or 10B,” substitute “ , 10B, 14D or 188D ”.

13

After section 25 insert—

(25ZA) (1) This section applies if, ignoring subsections (3) and (4)— (a) a gain or loss would accrue to a person on a disposal of a UK residential property interest deemed to have been made by virtue of section 25(3), and (b) on the assumptions in subsection (2), that gain or loss would be an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D (see section 57B and Schedule 4ZZB). (2) The assumptions are— (a) the disposal is a non-resident CGT disposal, and (b) if the person is a company, any claim which the company could make under section 14F is made. (3) No gain or loss accrues to the person on that disposal. (4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the gain or loss which would have accrued to the person were it not for subsection (3)— (a) is deemed to accrue to the person (in addition to any gain or loss that actually accrues on that subsequent disposal), and (b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal. (5) A person may make an election for subsections (3) and (4) not to apply in relation to the disposal mentioned in subsection (1)(a). (6) If the person is a company, such an election must be made within 2 years after the day on which the company ceases to carry on a trade in the United Kingdom through a branch or agency. (7) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.

14

After section 48 insert—

(48A) (1) This section applies where— (a) a person (“P”) has made a non-resident CGT disposal in relation to which there accrued to P an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D (“the original disposal”), (b) P acquired a right as the whole or part of the consideration for that disposal, (c) on P's acquisition of the right, there was no corresponding disposal of it, and (d) the right is a right to unascertainable consideration (see subsections (4) to (6)). (2) If P subsequently receives consideration (“the ascertained consideration”) representing the whole or part of the consideration referred to in subsection (1)(d) and condition A in section 14B would have been met in relation to the original disposal had a gain on that disposal accrued at the time of the receipt of the ascertained consideration— (a) the ascertained consideration is treated as not accruing on the disposal of the right, (b) the costs of P's acquisition of the right (or, in the case of a part disposal of the right, those costs so far as referable to the part disposed of) are taken to be nil, and (c) the following steps are taken. - Step 1 Any amount by which the ascertained consideration exceeds the relevant original consideration is treated as consideration (or further consideration) accruing on the original disposal. If the relevant original consideration exceeds the ascertained consideration, the consideration accruing on the original disposal is treated as reduced by the amount of the excess. - Step 2 Compute the difference that the adjustment under step 1 makes to what (if any) NRCGT gain or loss, ATED-related gain or loss or other gain or loss accrues on the original disposal (computing this separately for each type of gain or loss). The difference is “positive” if a loss is decreased (to nil or otherwise) or a gain created or increased. The difference is “negative” if a gain is reduced (to nil or otherwise) or a loss created or increased. - Step 3 Any positive amount computed under step 2 is treated for the purposes of this Act and the Management Act as a gain (of the type appropriate to the computation) accruing to P at the time of the receipt of the ascertained consideration. Any negative amount computed under step 2 is treated for the purposes of this Act and the Management Act as a loss (of the type appropriate to the computation) accruing to P at the time of the receipt of the ascertained consideration. (3) In step 1 in subsection (2), “the relevant original consideration” means the consideration accruing on the original disposal, so far as referable to the right mentioned in subsection (1)(b) (or, in the case of a part disposal of the right, referable to the part disposed of). (4) A right is a right to unascertainable consideration if, and only if— (a) it is a right to consideration the amount or value of which is unascertainable at the time when the right is conferred, and (b) that amount or value is unascertainable at that time on account of its being referable, in whole or in part, to matters which are uncertain at that time because they have not yet occurred. This subsection is subject to subsections (5) and (6). (5) The amount or value of any consideration is not to be regarded as being unascertainable by reason only— (a) that the right to receive the whole or any part of the consideration is postponed or contingent, if the consideration or, as the case may be, that part of it is, in accordance with section 48, brought into account in the computation of the gain accruing to a person on the disposal of an asset, or (b) in a case where the right to receive the whole or any part of the consideration is postponed and is to be, or may be, to any extent satisfied by the receipt of property of one description or property of some other description, that some person has a right to select the property, or the description of property, that is to be received. (6) A right is not to be taken to be a right to unascertainable consideration by reason only that either the amount or the value of the consideration has not been fixed, if— (a) the amount will be fixed by reference to the value, and the value is ascertainable, or (b) the value will be fixed by reference to the amount, and the amount is ascertainable.

15

In section 57A (gains and losses on relevant high value disposals), after subsection (2) insert—

(3) Subsection (2) does not apply where Part 4 of Schedule 4ZZB applies (non-resident CGT disposals which are or involve relevant high value disposals).

16

In Part 2, after Chapter 5 insert—

(57B) (1) Schedule 4ZZB makes provision about the computation of— (a) NRCGT gains or losses, and (b) other gains or losses, on non-resident CGT disposals. (2) For further provision about non-resident CGT disposals and NRCGT gains and losses see sections 14B to 14H and 188D and 188E.

17

• (1) Section 62 (death: general provisions) is amended as follows.

• (2) In subsection (2A), for the words from “are gains” to the end substitute

are— (a) gains that are treated as accruing by virtue of section 87 or 89(2) (read, where appropriate, with section 10A), or (b) NRCGT gains (see section 57B and Schedule 4ZZB).

• (3) After subsection (2A) insert—

(2AA) Where allowable NRCGT losses (see section 57B and Schedule 4ZZB) are sustained by an individual in the year of assessment in which the individual dies, the losses may, so far as they cannot be deducted from chargeable gains accruing to the individual in that year, be deducted from any gains such as are mentioned in subsection (2A)(b) that accrued to the deceased in the 3 years of assessment preceding the year of assessment in which the death occurs, taking chargeable gains accruing in a later year before those accruing in an earlier year.

18

After section 80 insert—

(80A) (1) Subsection (2) applies if, ignoring subsections (2) to (4)— (a) a gain or loss would accrue to the trustees of a settlement on a disposal of a UK residential property interest deemed to have been made by virtue of section 80(2), and (b) on the assumption that the disposal is a non-resident CGT disposal, that gain or loss would be a chargeable NRCGT gain or an allowable NRCGT loss (see section 57B and Schedule 4ZZB). (2) The trustees may elect for subsections (3) and (4) to have effect. (3) No gain or loss accrues to the trustees on that disposal. (4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the gain or loss which would have accrued to the trustees were it not for subsection (3)— (a) is deemed to accrue to the trustees (in addition to any gain or loss that actually accrues on that subsequent disposal), and (b) (if that would not otherwise be the case) is to be treated as a chargeable NRCGT gain or an allowable NRCGT loss accruing on a non-resident CGT disposal. (5) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.

19

In section 86 (attribution of gains to settlors with interest in non-resident or dual-resident settlements), after subsection (4) insert—

(4ZA) Where a disposal of any settled property (which would apart from this subsection meet the condition in subsection (1)(e) with respect to the tax year) is a non-resident CGT disposal— (a) any chargeable gain or allowable loss accruing on the disposal, other than an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D, is to be treated as if it were a chargeable gain or (as the case requires) allowable loss falling to be taken into account in calculating the amount mentioned in subsection (1)(e) for the tax year, and (b) the disposal is otherwise to be disregarded for the purposes of subsection (1)(e).

20

In section 87 (non-UK resident settlements: attribution of gains to beneficiaries), after subsection (5) insert—

(5A) For the purpose of determining the section 2(2) amount for a settlement for a tax year— (a) any chargeable gain or allowable loss accruing in that tax year on a non-resident CGT disposal made (or treated as made) by the trustees, other than an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D, is to be treated as if it were a chargeable gain or (as the case requires) allowable loss falling to be taken into account in calculating the amount mentioned in subsection (4)(a), and (b) such a disposal is otherwise to be disregarded.

21

• (1) Section 139 (reconstruction involving transfer of business) is amended as follows.

• (2) In subsection (1A)—

• (a) in paragraph (a), after “chargeable assets” insert “ or NRCGT assets ”;

• (b) in paragraph (b), after “chargeable assets” insert “ or NRCGT assets ”.

• (3) After subsection (1A) insert—

(1AA) For the purposes of subsection (1A), an asset is an “NRCGT asset” in relation to a company at any time if— (a) the disposal of the asset by the company at that time would be a non-resident CGT disposal, and (b) the company would not be, in relation to that disposal, an eligible person (as defined in section 14F).

22

After section 159 insert—

(159A) (1) Section 152 does not apply in relation to a person who would (apart from that section) be chargeable to capital gains tax under section 14D or 188D in respect of NRCGT gains accruing on the disposal of the old assets, unless the new assets are qualifying residential property interests immediately after the time they are acquired. (2) For the purposes of this section an asset is a “qualifying residential property interest” at any time if it— (a) is an interest in UK land, and (b) consists of or includes a dwelling. (3) In this section— (a) “dwelling” has the meaning given by paragraph 4 of Schedule B1; (b) “interest in UK land” has the meaning given by paragraph 2 of Schedule B1; (c) “the old assets” and “the new assets” have the same meaning as in section 152; (d) the reference to disposal of the old assets includes a reference to disposal of an interest in them; (e) the reference to acquisition of the new assets includes a reference to acquisition of an interest in them or entering into an unconditional contract for the acquisition of them.

23

• (1) Section 165 (relief for gifts of business assets) is amended as follows.

• (2) In subsection (1), after “167,” insert “ 167A, ”.

• (3) After subsection (7) insert—

(7A) Subsections (7B) and (7C) apply in any case where— (a) the disposal is a non-resident CGT disposal, and (b) the transferee is resident in the United Kingdom. (7B) Subsections (4) and (6) have effect in relation to the disposal as if the references to “chargeable gain” were references to “chargeable NRCGT gain”. (7C) Subsection (7) has effect in relation to the disposal as if the reference to “the excess referred to in paragraph (b) above” were a reference to “the chargeable NRCGT gain which, ignoring this section and section 17(1), would accrue to the transferor on the disposal”.

24

In section 166 (gifts to non-residents), in subsection (1), for “Section 165(4)” substitute “ Subject to section 167A, section 165(4) ”.

25

In section 167 (gifts to foreign-controlled companies), in subsection (1), for “Section 165(4)” substitute “ Subject to section 167A, section 165(4) ”.

26

After section 167 insert—

(167A) (1) This section applies where the disposal in relation to which a claim could be made under section 165 is a disposal of a UK residential property interest to a transferee who is not resident in the United Kingdom and, ignoring section 165— (a) a gain would accrue to the transferor on the disposal, and (b) on the assumption that the disposal is a non-resident CGT disposal (whether or not that is the case), that gain would be a chargeable NRCGT gain (see section 57B and Schedule 4ZZB). (2) Section 165(4) has effect in relation to the disposal as if it read— (4) Where a claim for relief is made under this section in respect of the disposal, the amount of any chargeable gain which, apart from this section, would accrue to the transferor on the disposal, shall be reduced by an amount equal to the held-over gain on the disposal. (3) Where the disposal is a non-resident CGT disposal— (a) section 165(4), as modified by subsection (2) of this section, has effect in relation to the disposal as if the reference to “chargeable gain” were a reference to “chargeable NRCGT gain”, (b) section 165(6) has effect in relation to the disposal as if the references to “chargeable gain” were references to “chargeable NRCGT gain”, and (c) section 165(7) has effect in relation to the disposal as if the reference to “the excess referred to in paragraph (b) above” were a reference to “the chargeable NRCGT gain which, ignoring this section and section 17(1), would accrue to the transferor on the disposal”. (4) Where a claim for relief is made under section 165 in relation to the disposal mentioned in subsection (1), on a subsequent disposal by the transferee of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1), the whole or a corresponding part of the held-over gain (see section 165(6))— (a) is deemed to accrue to the transferee (in addition to any gain or loss that actually accrues on that subsequent disposal), and (b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal. (5) Where the subsequent disposal mentioned in subsection (4) is (or proves to be) a chargeable transfer for inheritance tax purposes, section 165(10) has effect in relation to the disposal as if— (a) the reference to “the chargeable gain accruing to the transferee on the disposal of the asset” were a reference to the chargeable gain accruing on the disposal as computed apart from subsection (4), and (b) the reference in section 165(10)(b) to “the chargeable gain” were a reference to— (i) the chargeable gain chargeable to capital gains tax by virtue of any provision of this Act accruing on the disposal, and (ii) the held-over gain deemed to accrue under subsection (4). (6) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.

27

In section 168 (emigration of donee), in subsection (1), after paragraph (a) insert—

(aa) the transferee is resident in the United Kingdom at the time of that disposal; and

.

28

After section 168 insert—

(168A) (1) Subsection (2) applies if, ignoring subsections (2) to (4)— (a) a gain would accrue to a transferee on a disposal of a UK residential property interest deemed to have been made by virtue of section 168(1), and (b) on the assumption that the disposal is a non-resident CGT disposal, that gain would be an NRCGT gain chargeable to capital gains tax by virtue of section 14D (see section 57B and Schedule 4ZZB). (2) The transferee may elect for subsections (3) and (4) to have effect. (3) The held-over gain (within the meaning of section 165 or 260) does not accrue to the transferee on that disposal. (4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the held-over gain which would have accrued to the transferee were it not for subsection (3)— (a) is deemed to accrue to the transferee (in addition to any gain or loss that actually accrues on that subsequent disposal), and (b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal. (5) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.

29

After section 187A insert—

(187B) (1) This section applies if, ignoring subsections (3) and (4)— (a) a gain or loss would accrue to a company on a disposal of a UK residential property interest deemed to have been made by virtue of section 185(2), and (b) on the assumptions in subsection (2), that gain or loss would be an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D or 188D (see section 57B and Schedule 4ZZB). (2) The assumptions are that— (a) the disposal is a non-resident CGT disposal, and (b) any claim which the company could make under section 14F is made. (3) No gain or loss accrues to the company on that disposal. (4) But, on a subsequent disposal of the whole or part of the interest in UK land which is the subject of the disposal mentioned in subsection (1)(a), the whole or a corresponding part of the gain or loss which would have accrued to the company were it not for subsection (3)— (a) is deemed to accrue to the company (in addition to any gain or loss that actually accrues on that subsequent disposal), and (b) (if that would not otherwise be the case) is to be treated as an NRCGT gain chargeable to, or an NRCGT loss allowable for the purposes of, capital gains tax by virtue of section 14D accruing on a non-resident CGT disposal. (5) A company may make an election for subsections (3) and (4) not to apply in relation to the disposal mentioned in subsection (1)(a). (6) Such an election must be made within 2 years after the day on which the company ceases to be resident in the United Kingdom. (7) In this section, “interest in UK land” has the meaning given by paragraph 2 of Schedule B1.

30

Before section 189 (and the italic heading before it), insert—