Finance Act 2015

• (1) Section 217 (persons liable to lifetime allowance charge) is amended as follows.

• (2) In subsection (2A) (cases where dependant or nominee liable) after “event 5C,” insert “ or by reason of a person becoming entitled to an annuity as mentioned in the description of benefit crystallisation event 5D, ”.

• (3) In subsection (4A) (events 5C and 7 are “relevant post-death” events) after “benefit crystallisation event 5C” insert “ , 5D ”.

6

In section 219(7A) (events 5C and 7 are “relevant post-death” events) after “benefit crystallisation event 5C” insert “ , 5D ”.

7

In Schedule 32 (supplementary provisions about benefit crystallisation events)—

• (a) in paragraph 1 (meaning of “the relevant pension schemes”: in certain cases means schemes of which the individual was a member immediately before death) after “5C” insert “ or 5D ”,

• (b) in paragraph 4(1) (further provision about benefit crystallisation event 4) for the words from “if” to “purchased” substitute

if— (a) the lifetime annuity or a related dependants' annuity or a related nominees' annuity is, or (b) the lifetime annuity and a related dependants' annuity are, or (c) the lifetime annuity and a related nominees' annuity are, or (d) a related dependants' annuity and a related nominees' annuity are, or (e) the lifetime annuity and a related dependants' annuity and a related nominees' annuity are, purchased

,

• (c) in paragraph 14B (event 5C: meaning of “relevant two-year period”), and in the italic heading before that paragraph, for “event 5C” substitute “ events 5C and 5D ”, and

• (d) in paragraph 14C(1) (event 5C: meaning of “relevant unused uncrystallised funds”), and in the italic heading before paragraph 14C, for “event 5C” substitute “ events 5C and 5D ”.

Minor and consequential amendments

8

In section 172(6A)(b) (“benefit” in section 172 includes rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

9

• (1) Section 172A (surrenders of benefits and rights) is amended as follows.

• (2) In subsection (1)(aa) (surrender of rights to payments under certain annuities triggers operation of subsection (2)) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

• (3) In subsection (9A)(b) (references to benefits include references to rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

10

• (1) Section 172B (increase of rights of connected person on death) is amended as follows.

• (2) In subsection (2)(aa) (relevant member includes person who has rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

• (3) In subsection (7A) (section does not apply to certain increases in rights) after “dependants' annuity”, in both places, insert “, nominees' annuity, successors' annuity”.

• (4) In subsection (7B)(b) (“benefit” in section 172B includes rights to payments under certain annuities) after “lifetime annuity or dependants' annuity” insert “, or nominees' annuity or successors' annuity,”.

11

In section 273B(1) (power of trustees or managers to make certain payments) after paragraph (f) insert—

(fa) paid to purchase a nominees' annuity, (fb) paid to purchase a successors' annuity,

.

12

In section 280(2) (index of defined expressions) at the appropriate places insert—

nominees' annuity	paragraph 27AA of Schedule 28”
related nominees' annuity	paragraph 3(4B) of Schedule 29
---	---
successors' annuity	paragraph 27FA of Schedule 28
---	---

13

• (1) Schedule 28 (interpretation of the pension rules and the pension death benefit rules) is amended as follows.

• (2) In paragraph 3(2B)(a) (power to make regulations about cases where lifetime annuity ceases to be payable by insurance company) after “dependants' annuity” insert “, nominees' annuity”.

• (3) In paragraph 6(1B)(a) (power to make regulations about cases where short-term annuity ceases to be payable by insurance company) after “dependants' annuity” insert “, nominees' annuity”.

• (4) In paragraph 27E(3) (meaning of “unused drawdown funds”)—

• (a) in paragraph (b), for “derive.” substitute “ derive, ”, and

• (b) after paragraph (b) (but not as part of it) insert—

and since the member's death they have not been designated as available for the payment of dependants' drawdown pension, not been designated as available for the payment of nominees' drawdown pension, not been applied towards the provision of a dependants' annuity, not been applied towards the provision of a nominees' annuity and not been applied towards the provision of a dependants' scheme pension.

• (5) In paragraph 27E(4)(b) and (5) (meaning of “unused uncrystallised funds”) after “not been applied towards the provision of a dependants' annuity” insert “, not been applied towards the provision of a nominees' annuity”.

• (6) In paragraph 27K(3) (meaning of “unused drawdown funds of the beneficiary's”)—

• (a) in paragraph (b) for “derive.” substitute “ derive, ”, and

• (b) after paragraph (b) (but not as part of it) insert—

and since the beneficiary's death they have not been designated as available for the payment of successors' drawdown pension and not been applied towards the provision of a successors' annuity.

14

• (1) Paragraph 3 of Schedule 29 (interpretation of the lump sum rule: meaning of “the applicable amount”) is amended as follows.

• (2) In sub-paragraph (4) (amount applied to purchase certain annuities) after “any related dependants' annuity” insert “and any related nominees' annuity”.

• (3) After sub-paragraph (4A) (when a dependants' annuity is related to a lifetime annuity) insert—

(4B) For the purposes of this Part a nominees' annuity is related to a lifetime annuity payable to a member of a registered pension scheme— (a) if they are purchased either in the form of a joint life annuity or 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, and (b) the nominees' annuity will be payable to a nominee of the member.

• (4) In sub-paragraph (5) (deductions in calculating applicable amount) after “any related dependants' annuity”, in both places, insert “or any related nominees' annuity”.

15

In paragraph 15(2)(a) of Schedule 29 (uncrystallised funds lump sum death benefit is sum paid in respect of funds not spent on certain annuities and other pensions) after “lifetime annuity,” insert “a nominees' annuity,”.

Consequential repeal

16

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—