Finance Act 2016

Tax treatment of supplementary welfare payments: Northern Ireland

44

• (1) In this section “supplementary welfare payment” means a payment made under regulations under—

• (a) Article 135(1)(a) of the Welfare Reform (Northern Ireland) Order 2015 (S.I. 2015/2006 (N.I. 1)) (“the Order”) (discretionary support),

• (b) Article 137 of the Order (payments to persons suffering financial disadvantage), or

• (c) any provision (including future provision) of the Order which enables provision to be made for payments to persons who suffer financial disadvantage as a result of relevant housing benefit changes.

• (2) In subsection (1)(c) “relevant housing benefit changes” means changes to social security benefits consisting of or including changes contained in the Housing Benefit (Amendment No. 2) Regulations (Northern Ireland) 2016 (S.R. (N.I.) 2016 No. 326).

• (3) The Treasury may by regulations amend any provision of Chapters 1 to 5 of Part 10 of ITEPA 2003 so as to—

• (a) provide that no liability to income tax arises on supplementary welfare payments of a specified description;

• (b) impose a charge to income tax under Part 10 of ITEPA 2003 on payments of a specified description made under regulations under Article 137 of the Order (payments to persons suffering financial disadvantage).

• (4) The regulations may make—

• (a) different provision for different cases;

• (b) incidental or supplementary provision;

• (c) consequential provision (which may include provision amending any provision made by or under the Income Tax Acts).

• (5) Regulations made before 6 April 2017 may, so far as relating to the tax year 2016-17, have effect in relation to times before they are made.

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

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

• (8) In section 655(2) of ITEPA 2003 (other provisions about the taxation of social security payments) after the entry relating to section 782 of ITTOIA 2005 insert

; section 44 of FA 2016 (tax treatment of supplementary welfare payments: Northern Ireland).

PART 2 — Corporation tax

Charge and rates

Charge for financial year 2017

45

Corporation tax is charged for the financial year 2017.

Rate of corporation tax for financial year 2020

46

In section 7(2) of F(No.2)A 2015 (main rate of corporation tax for the financial year 2020) for “18%” substitute “ 17% ”.

Research and development

Abolition of vaccine research relief

47

• (1) CTA 2009 is amended in accordance with subsections (2) to (9).

• (2) Omit Chapter 7 of Part 13 (vaccine research relief).

• (3) In section 1039 (overview of Part 13) omit—

• (a) subsection (6), and

• (b) in subsection (8) “or 7”.

• (4) In section 1042 (meaning of “relevant research and development”) omit subsection (3).

• (5) In section 1113 (cap on aid under Chapters 2 and 7)—

• (a) in the heading omit “or 7”, and

• (b) in subsection (4) omit—

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

• (ii) paragraph (b).

• (6) In section 1118(2) (meaning of “qualifying expenditure”) omit—

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

• (b) paragraph (b).

• (7) In section 1133(3) (sub-contractor payments) omit “and section 1102(2).”

• (8) In section 1137(1)(b) (accounting periods) omit “or qualifying Chapter 7 expenditure”.

• (9) In Schedule 4 (index of defined expressions) omit the entries for—

• (a) qualifying Chapter 7 expenditure (in Part 13), and

• (b) qualifying R&D activity (in Chapter 7 of Part 13).

• (10) CTA 2010 is amended in accordance with subsections (11) to (13).

• (11) In section 357P (research and development expenditure: introduction and interpretation)—

• (a) in subsection (1) omit—

• (i) the “and” at the end of paragraph (b), and

• (ii) paragraph (c), and

• (b) omit subsection (2)(d) and (e).

• (12) Omit section 357PF (additional deduction under section 1087 CTA 2009).

• (13) In Schedule 4 (index of defined expressions) omit the entries for—

• (a) Northern Ireland qualifying Chapter 7 expenditure (in Chapter 9 of Part 8B), and

• (b) qualifying Chapter 7 expenditure (in Chapter 9 of Part 8B).

• (14) In consequence of the amendments made by subsections (1) to (13)—

• (a) in Schedule 3 to FA 2012 omit paragraphs 7, 12 to 14, 16(2), 17, 20 to 30, and 31(2), and

• (b) in FA 2015 omit section 28(4)(o) and (p).

• (15) The amendments made by this section have effect in relation to expenditure incurred on or after 1 April 2017.

Cap on R&D aid

48

• (1) CTA 2009 is amended as follows.

• (2) In section 1114 (calculation of total R&D aid)—

• (a) in the formula for “(N x CT)” substitute “ N ”, and

• (b) in the definition of “N” for “relief” substitute “ R&D expenditure credit ”.

• (3) In section 1118(1) (meaning of “notional relief”)—

• (a) for “relief” in the first two places it occurs substitute “ R&D expenditure credit ”,

• (b) for “Chapter 5 (relief for large companies)” substitute “ Chapter 6A of Part 3 (trade profits: R&D expenditure credits) ”, and

• (c) in the heading for “relief” substitute “ R&D expenditure credit ”.

• (4) The amendments made by this section have effect in relation to expenditure incurred on or after 1 April 2016.

Loan relationships

Loan relationships and derivative contracts

49

Schedule 7 contains amendments relating to loan relationships and derivative contracts.

Loans to participators etc: rate of tax

50

• (1) In section 455 of CTA 2010 (charge to tax in case of loan to participator), in subsection (2), for “25% of the amount of the loan or advance” substitute “ such percentage of the amount of the loan or advance as corresponds to the dividend upper rate specified in section 8(2) of ITA 2007 for the tax year in which the loan or advance is made ”.

• (2) The amendment made by subsection (1) has effect in relation to a loan or advance made on or after 6 April 2016.

• (3) In section 464A of CTA 2010 (charge to tax: arrangements conferring benefit on participator), in subsection (3), for “25% of the value of the benefit conferred” substitute “ such percentage of the value of the benefit conferred as corresponds to the dividend upper rate specified in section 8(2) of ITA 2007 for the tax year in which the benefit is conferred ”.

• (4) The amendment made by subsection (3) has effect in relation to a benefit conferred on or after 6 April 2016.

Loans to participators etc: trustees of charitable trusts

51

• (1) In section 456 of CTA 2010 (exceptions to the charge to tax in case of loan to participator), after subsection (2) insert—

(2A) Section 455 does not apply to a loan or advance made to a trustee of a charitable trust if the loan or advance is applied to the purposes of the charitable trust only.

• (2) The amendment made by subsection (1) has effect in relation to a loan or advance made on or after 25 November 2015.

Intangible fixed assets

Intangible fixed assets: pre-FA 2002 assets

52

• (1) Chapter 16 of Part 8 of CTA 2009 (pre-FA 2002 assets) is amended as follows.

• (2) In section 882 (application of Part 8 to assets created or acquired on or after 1 April 2002), after subsection (5) insert—

(5A) References in this section to one person being (or not being) a related party in relation to another person are to be read as including references to the participation condition being met (or, as the case may be, not met) as between those persons. (5B) References in subsection (5A) to a person include a firm in a case where, for section 1259 purposes, references in this section to a company are read as references to the firm. (5C) In subsection (5B) “section 1259 purposes” means the purposes of determining under section 1259 the amount of profits or losses to be allocated to a partner in a firm. (5D) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (5A) as it applies for the purposes of section 147(1)(b) of TIOPA 2010.

• (3) In section 894 (preserved status condition etc), after subsection (6) insert—

(6A) Section 882(5A) to (5D) applies for the purposes of section 893 and this section.

• (4) In section 895 (assets acquired in connection with disposals of pre-FA 2002 assets), at the end insert—

(5) Section 882(5A) to (5D) applies for the purposes of this section.

• (5) The amendments made by this section have effect in relation to accounting periods beginning on or after 25 November 2015.

• (6) For the purposes of subsection (5), an accounting period beginning before and ending on or after 25 November 2015 is to be treated as if so much of the accounting period as falls before that date, and so much of the accounting period as falls on or after that date, were separate accounting periods.

• (7) An apportionment for the purposes of subsection (6) must be made—

• (a) in accordance with section 1172 of CTA 2010 (time basis), or

• (b) if that method produces a result that is unjust or unreasonable, on a just and reasonable basis.

Intangible fixed assets: transfers treated as at market value

53

• (1) In section 845 of CTA 2009 (transfer between company and related party treated as at market value), after subsection (4) insert—

(4A) References in subsection (1) to a related party in relation to a company are to be read as including references to a person in circumstances where the participation condition is met as between that person and the company. (4B) References in subsection (4A) to a company include a firm in a case where, for section 1259 purposes, references in subsection (1) to a company are read as references to the firm. (4C) Section 148 of TIOPA 2010 (when the participation condition is met) applies for the purposes of subsection (4A) as it applies for the purposes of section 147(1)(b) of TIOPA 2010. (4D) Subsection (4E) applies where— (a) a gain on the disposal of an intangible asset by a firm is a gain to be taken into account for section 1259 purposes, and (b) for those purposes, references in subsection (1) to a company are read as references to the firm. (4E) Where this subsection applies, the gain referred to in subsection (4D)(a) is to be treated for the purposes of this section as if it were a chargeable realisation gain for the purposes of section 741(1) (meaning of “chargeable intangible asset”). (4F) In this section, “section 1259 purposes” means the purposes of determining under section 1259 the amount of profits or losses to be allocated to a partner in a firm.

• (2) The amendment made by this section applies in relation to a transfer which takes place on or after 25 November 2015, unless it takes place pursuant to an obligation, under a contract, that was unconditional before that date.

• (3) For the purposes of subsection (2), an obligation is “unconditional” if it may not be varied or extinguished by the exercise of a right (whether under the contract or otherwise).

Creative industry reliefs

Tax relief for production of orchestral concerts

54

Schedule 8 contains provision about relief in respect of the production of orchestral concerts.

Television and video games tax relief: consequential amendments

55

In the following provisions, for “section 1218” substitute “ section 1218B ”

• (a) paragraph 8(2)(c) of Schedule 7A to TCGA 1992,

• (b) section 63(1) of CTA 2010, and

• (c) section 729 of CTA 2010.

Banking companies

Banking companies: excluded entities

56

• (1) Section 133F of CTA 2009 (“excluded company”) has effect, and is to be deemed always to have had effect, with the amendments set out in subsections (2) to (4).

• (2) After subsection (2) insert—

(2A) A company is also an “excluded company” at any time (in an accounting period) if— (a) the company would fall within a relevant relieving provision but for one (and only one) line of business which it carries on, (b) that line of business does not involve the relevant regulated activity described in the provision mentioned in section 133G(1)(a), and (c) the company's activities in that line of business would not, on their own, result in it being both a 730k firm and a full scope investment firm. (2B) For the purposes of subsection (2A) the “relevant relieving provisions” are paragraphs (b), (c), (e), (g) and (h) of subsection (2).

• (3) In subsection (7), before the definition of “authorised corporate director” insert—

“730k firm”— (a) in relation to any time on or after 1 January 2014, means an IFPRU 730k firm, (b) in relation to any time before that date, means a BIPRU 730k firm;

.

• (4) In subsection (7), at the appropriate places insert—

“BIPRU 730k firm” and “full scope BIPRU investment firm” have the same meaning as in subsections (2) to (4) of section 133H;

“IFPRU 730k firm” and full scope IFPRU investment firm” have the meaning given by the FCA Handbook at the time in question;

“full scope investment firm”— (a) in relation to any time on or after 1 January 2014, means a full scope IFPRU investment firm, (b) in relation to any time before that date, means a full scope BIPRU investment firm;

.

• (5) Section 133M of CTA 2009 has effect, and is to be deemed always to have had effect, with the amendment set out in subsection (6).

• (6) For subsection (5)(b)(ii) substitute—

(ii) the firm would not (if references in section 133F(2) and (3) to companies included firms) be an excluded company for the purposes of section 133E.

• (7) Part 7A of CTA 2010 has effect, and is to be deemed always to have had effect, with the amendments set out in subsections (8) and (9).

• (8) In section 269BA (excluded entities), after subsection (1) insert—

(1A) For the purposes of section 269B an entity is also an “excluded entity” if— (a) the entity would fall within a relevant relieving provision but for one (and only one) line of business which it carries on, (b) that line of business does not involve the relevant regulated activity described in the provision mentioned in section 269BB(a), and (c) the entity's activities in that line of business would not, on their own, result in it being both an IFPRU 730k firm and a full scope IFPRU investment firm. (1B) For the purposes of subsection (1A) the “relevant relieving provisions” are paragraphs (b), (c), (e), (g) and (h) of subsection (1).

• (9) In section 269DO (interpretation)—

• (a) after subsection (5) insert—

(5A) For the purposes of section 269BA(1A) (extension of certain exclusions under subsection (1) of that section) a line of business carried on by a company is not regarded as involving the relevant regulated activity described in the provision mentioned in section 269BB(a) if— (a) the carrying on of that activity is ancillary to asset management activities the company carries on, and (b) the company would not carry that activity on but for the fact that it carries on asset management activities.

;

• (b) in subsection (6) for “subsection (5)” substitute “ subsections (5) and (5A) ”.

• (10) In Schedule 19 to FA 2011 (the bank levy), paragraph 73 is amended in accordance with subsections (11) and (12).

• (11) In sub-paragraph (1), omit “or” at the end of paragraph (j) and after paragraph (k) insert

, or (l) an entity falling within sub-paragraph (1A).

• (12) After sub-paragraph (1) insert—

(1A) An entity falls within this sub-paragraph if— (a) it would fall within a relevant relieving provision but for one (and only one) line of business which it carries on, (b) that line of business does not involve the relevant regulated activity described in the provision mentioned in paragraph 79(a), and (c) the entity's activities in that line of business would not, on their own, result in it being both an IFPRU 730k firm and a full scope IFPRU investment firm. (1B) For the purposes of sub-paragraph (1A) the “relevant relieving provisions” are paragraphs (b), (c), (e), (g) and (h) of sub-paragraph (1).

• (13) Subsections (10) to (12) have effect in relation to chargeable periods beginning on or after the day on which this Act is passed.

• (14) But for the purposes of determining what groups and entities must be listed under subsection (4) of section 285 of FA 2014 (Code of Practice on Taxation for Banks: HMRC reports) in any relevant report under that section—

• (a) subsection (13) is to be disregarded, and

• (b) Schedule 19 to FA 2011 is to be deemed to have effect, and always to have had effect, with the amendments set out in subsections (10) to (12).

• (15) In subsection (14) “relevant report” means a report for the reporting period beginning with 1 April 2015 or any subsequent reporting period.

Banking companies: restrictions on loss relief etc

57

• (1) Chapter 3 of Part 7A of CTA 2010 (restrictions on banking companies obtaining certain deductions) is amended as follows.

• (2) In section 269CA (restriction on deductions for trading losses), in subsection (2), for “50%” substitute “ 25% ”.

• (3) In section 269CB (restriction on deductions for non-trading deficits from loan relationships), in subsection (2), for “50%” substitute “ 25% ”.

• (4) In section 269CC (restriction on deductions for management expenses etc), in step 1 in subsection (7), for “50%” substitute “ 25% ”.

• (5) The amendments made by this section have effect for the purposes of determining the taxable total profits of companies for accounting periods beginning on or after 1 April 2016.

• (6) For the purposes of subsection (5), where a company has an accounting period beginning before 1 April 2016 and ending on or after that date (“the straddling period”)—

• (a) so much of the straddling period as falls before 1 April 2016, and so much of that period as falls on or after that date, are treated as separate accounting periods, and

• (b) profits or losses of the company for the straddling period are apportioned to the two separate accounting periods—

• (i) in accordance with section 1172 of CTA 2010 (time basis), or

• (ii) if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.

Oil and gas

Reduction in rate of supplementary charge

58

• (1) In section 330 of CTA 2010 (supplementary charge in respect of ring fence trades), in subsection (1), for “20%” substitute “ 10% ”.

• (2) The amendment made by subsection (1) has effect in relation to accounting periods beginning on or after 1 January 2016 (but see also subsection (3)).

• (3) Subsections (4) and (5) apply where a company has an accounting period beginning before 1 January 2016 and ending on or after that date (“the straddling period”).

• (4) For the purpose of calculating the amount of the supplementary charge on the company for the straddling period—

• (a) so much of that period as falls before 1 January 2016, and so much of that period as falls on or after that date, are treated as separate accounting periods, and

• (b) the company's adjusted ring fence profits for the straddling period are apportioned to the two separate accounting periods in proportion to the number of days in those periods.

• (5) The amount of the supplementary charge on the company for the straddling period is the sum of the amounts of supplementary charge that would, in accordance with subsection (4), be chargeable on the company for those separate accounting periods.

• (6) In this section—

• “adjusted ring fence profits” has the same meaning as in section 330 of CTA 2010;

• “supplementary charge” means any sum chargeable under section 330(1) of CTA 2010 as if it were an amount of corporation tax.

Investment allowance: disqualifying conditions

59

• (1) Section 332D of CTA 2010 (expenditure on acquisition of asset: disqualifying conditions) is amended as follows.

• (2) In subsection (1) after “an asset” insert “ (“the acquisition concerned”) ”.

• (3) In subsection (2)—

• (a) for “acquisition,” substitute “ acquisition concerned, ” and

• (b) after “acquiring,” insert “ leasing, ”.

• (4) In subsection (3)(b)—

• (a) for “acquisition,” substitute “ acquisition concerned, ”, and

• (b) after “acquiring,” insert “ leasing, ”.

• (5) After subsection (4) insert—

(5) In subsection (3)(c) “this Chapter” means the provisions of this Chapter, and of any regulations made under this Chapter, as those provisions have effect at the time when the investment expenditure mentioned in subsection (1) is incurred. (6) Subsections (7) and (8) apply where investment expenditure mentioned in subsection (1) would, in the absence of this section, be relievable under section 332C by reason of section 332CA (treatment of expenditure incurred before field is determined). (7) Where this subsection applies— (a) subsection (2) is to be read as if after “was” there were inserted “ , or has become, ”, and (b) in determining for the purposes of subsection (2) or (3)(b) whether particular expenditure was incurred “before” the acquisition concerned— (i) paragraph (b) of section 332CA(3) is to be ignored, and (ii) accordingly, that expenditure is to be taken (for the purposes of determining whether it was incurred before the acquisition concerned) to have been incurred when it was actually incurred. (8) Where this subsection applies, in determining whether the second disqualifying condition applies to the asset— (a) the reference in subsection (3)(a)(i) to a qualifying oil field is to be read as including an area which, at the time of the acquisition concerned, had not been determined to be an oil field but which has subsequently become a qualifying oil field, (b) the reference in subsection (3)(a)(ii) to a qualifying oil field is to be read as including an area which, at the time of the transfer, had not been determined to be an oil field but which has subsequently become a qualifying oil field, (c) the reference in subsection (3)(c)(i) to “the qualifying oil field” is to be read accordingly, and (d) the following sub-paragraph is to be treated as substituted for subsection (3)(c)(ii)— (ii) would have been relievable under section 332C if this Chapter had been fully in force and had applied to expenditure incurred at the time when that expenditure was actually incurred and the area in question had been a qualifying oil field at that time. (9) In subsection (8)(a) and (b) “determined” means determined under Schedule 1 to OTA 1975. (10) In this section any reference to expenditure which was incurred by a company in “leasing” an asset is to expenditure incurred by the company under an agreement under which the asset was leased to the company.

• (6) The amendments made by this section have effect for the purposes of determining whether any expenditure—

• (a) incurred by a company on or after 16 March 2016 on the acquisition of an asset, or

• (b) treated under section 332CA of CTA 2010 as so incurred,

is relievable expenditure for the purposes of section 332C of CTA 2010.

Investment allowance: power to expand meaning of “relevant income”

60

• (1) Section 332F of CTA 2010 (activation of investment allowance) is amended as follows.

• (2) In subsection (2)(b) before “the company's relevant income” insert “ the total amount of ”.

• (3) For subsection (3) substitute—

(3) For the purposes of this Chapter, income is relevant income of a company from a qualifying oil field for an accounting period if it is— (a) production income of the company from any oil extraction activities carried on in that oil field that is taken into account in calculating the company's adjusted ring fence profits for the accounting period, or (b) income that— (i) is income of such description (whether or not relating to the oil field) as may be prescribed by the Treasury by regulations, and (ii) is taken into account as mentioned in paragraph (a). (4) The Treasury may by regulations make such amendments of this Chapter as the Treasury consider appropriate in consequence of, or in connection with, any provision contained in regulations under subsection (3)(b). (5) Regulations under subsection (3)(b) or (4) may provide for any of the provisions of the regulations to have effect in relation to accounting periods ending before (or current when) the regulations are made. (6) But subsection (5) does not apply to— (a) any provision of amending or revoking regulations under subsection (3)(b) which has the effect that income of any description is to cease to be treated as relevant income of a company from a qualifying oil field for an accounting period, or (b) provision made under subsection (4) in consequence of or in connection with provision within paragraph (a). (7) Regulations under this section may make transitional provision or savings. (8) Regulations under this section may not be made unless a draft of the instrument containing them has been laid before, and approved by a resolution of, the House of Commons.

Onshore allowance: disqualifying conditions

61

• (1) CTA 2010 is amended as follows.

• (2) In section 356C after subsection (4) insert—

(4A) Subsections (1) to (4) are subject to section 356CAA (which prevents expenditure on the acquisition of an asset from being relievable in certain circumstances).

• (3) After section 356CA insert—

(356CAA) (1) Capital expenditure incurred by a company (“the acquiring company“) on the acquisition of an asset (“the acquisition concerned”) is not relievable capital expenditure for the purposes of section 356C if subsection (2), (3) or (8) applies to the asset. (2) This subsection applies to the asset if capital expenditure incurred before the acquisition concerned, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset was relievable under section 356C. (3) This subsection applies to the asset if— (a) the asset— (i) is the whole or part of the equity in a qualifying site, or (ii) is acquired in connection with a transfer to the acquiring company of the whole or part of the equity in a qualifying site, (b) capital expenditure was incurred before the acquisition concerned, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, and (c) any of that expenditure— (i) related to the qualifying site, and (ii) would have been relievable under section 356C if this Chapter had been fully in force and had applied to expenditure incurred at that time. (4) For the purposes of subsection (3)(a)(ii) it does not matter whether the asset is acquired at the time of the transfer. (5) In subsection (3)(c) “this Chapter” means the provisions of this Chapter as those provisions have effect at the time when the capital expenditure mentioned in subsection (1) is incurred. (6) The reference in subsection (3)(c)(i) to the qualifying site includes an area that, although not a qualifying site when the expenditure mentioned in subsection (3)(b) was incurred, subsequently became the qualifying site. (7) Where expenditure mentioned in subsection (3)(b) related to an area which subsequently became the qualifying site, the following sub-paragraph is to be treated as substituted for subsection (3)(c)(ii)— (ii) would have been relievable under section 356C if the area in question had been a qualifying site when the expenditure was incurred, or if the area in question had been such a site at that time and this Chapter had been fully in force and had applied to expenditure incurred at that time. (8) This subsection applies to the asset if— (a) capital expenditure mentioned in subsection (1) would, in the absence of this section, be relievable under section 356C by reason of an election under section 356CB (treatment of expenditure not related to an established site), and (b) capital expenditure which was incurred before the acquisition concerned, by the acquiring company or another company, in acquiring, bringing into existence or enhancing the value of the asset, either— (i) has become relievable under section 356C by reason of an election under section 356CB, or (ii) would be so relievable if such an election were made in respect of that expenditure. (9) In determining for the purposes of subsection (8)(b) whether particular expenditure was incurred “before” the acquisition concerned— (a) paragraph (b) of section 356CB(6) is to be ignored, and (b) accordingly, that expenditure is to be taken (for the purposes of determining whether it was incurred before the acquistion concerned) to have been incurred when it was actually incurred. (10) For the purposes of subsection (8)(b)(ii) it does not matter if an election is not in fact capable of being made.

• (4) The amendments made by this section have effect for the purposes of determining whether any expenditure—

• (a) incurred by a company on or after 16 March 2016 on the acquisition of an asset, or

• (b) treated by reason of an election under section 356CB as so incurred,

is relievable expenditure for the purposes of section 356C of CTA 2010.

Cluster area allowance: disqualifying conditions

62

• (1) Section 356JFA of CTA 2010 (expenditure on acquisition of asset: disqualifying conditions) is amended as follows.

• (2) In subsection (2) after “acquiring,” insert “ leasing, ”.

• (3) In subsection (3)(b) after “acquiring,” insert “ leasing, ”.

• (4) After subsection (4) insert—

(5) In this section any reference to expenditure which was incurred by a company in “leasing” an asset is to expenditure incurred by the company under an agreement under which the asset was leased to the company.

• (5) The amendments made by this section have effect for the purposes of determining whether any expenditure incurred by a company on or after 16 March 2016 on the acquisition of an asset is relievable expenditure for the purposes of section 356JF of CTA 2010.

Cluster area allowance: power to expand meaning of “relevant income”

63

• (1) Section 356JH of CTA 2010 (activation of cluster area allowance) is amended as follows.

• (2) In subsection (2)(b) before “the company's relevant income” insert “ the total amount of ”.

• (3) For subsection (3) substitute—

(3) For the purposes of this Chapter, income is relevant income of a company from a cluster area for an accounting period if it is— (a) production income of the company from any oil extraction activities carried on in that area that is taken into account in calculating the company's adjusted ring fence profits for the accounting period, or (b) income that— (i) is income of such description (whether or not relating to the cluster area) as may be prescribed by the Treasury by regulations, and (ii) is taken into account as mentioned in paragraph (a). (4) The Treasury may by regulations make such amendments of this Chapter as the Treasury consider appropriate in consequence of, or in connection with, any provision contained in regulations under subsection (3)(b). (5) Regulations under subsection (3)(b) or (4) may provide for any of the provisions of the regulations to have effect in relation to accounting periods ending before (or current when) the regulations are made. (6) But subsection (5) does not apply to— (a) any provision of amending or revoking regulations under subsection (3)(b) which has the effect that income of any description is to cease to be treated as relevant income of a company from a cluster area for an accounting period, or (b) provision made under subsection (4) in consequence of or in connection with provision within paragraph (a). (7) Regulations under this section may make transitional provision or savings. (8) Regulations under this section may not be made unless a draft of the instrument containing them has been laid before, and approved by a resolution of, the House of Commons.

Exploitation of patents etc

Profits from the exploitation of patents etc

64

• (1) Part 8A of CTA 2010 (profits arising from the exploitation of patents etc) is amended as follows.

• (2) In section 357A (election for special treatment of profits from patents etc)—

• (a) for subsections (6) and (7) substitute—

(6) Chapter 2A makes provision for determining the relevant IP profits or relevant IP losses of a trade of a company for an accounting period in a case where— (a) the accounting period begins on or after 1 July 2021, or (b) the company is a new entrant (see subsection (11)). (7) Chapters 2B, 3 and 4 make provision for determining the relevant IP profits or relevant IP losses of a trade of a company for an accounting period in various cases where— (a) the accounting period begins before 1 July 2021, and (b) the company is not a new entrant.

, and

• (b) after subsection (10) insert—

(11) A company is a “new entrant” for the purposes of this Part if— (a) the first accounting period for which the company's election (or most recent election) under subsection (1) has effect begins on or after 1 July 2016, or (b) the company elects to be treated as a new entrant for the purposes of this Part.

• (3) After section 357BE insert—