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Finance Act 2024

Current text a fecha 2024-11-18

Part 1 — Income tax and corporation tax

Chapter 1 — Reliefs for businesses etc

Capital allowances for companies

Permanent full expensing etc for expenditure on plant or machinery

1

Research and development

New regime for research and development carried out by companies

2

Schedule 1—

Films, television programmes, video games etc

Films, television programmes and video games produced by companies

3

Schedule 2 replaces Parts 15 to 15B of CTA 2009 with a new regime for the taxation of companies producing films, television programmes and video games, including relief in the form of payable credits arising from expenditure on production activities.

Theatrical productions made by companies

4

Schedule 3 amends the regime for the taxation of companies producing theatrical productions in Part 15C of CTA 2009.

Orchestral concerts produced by companies

5

Schedule 4 amends the regime for the taxation of companies producing orchestral concerts in Part 15D of CTA 2009.

Museum and gallery exhibitions produced by companies

6

Schedule 5 amends the regime for the taxation of companies producing museum and gallery exhibitions in Part 15E of CTA 2009.

Sections 3 to 6: administration of reliefs

7

Schedule 6 amends Schedule 18 to FA 1998 (company tax returns etc) in relation to the reliefs introduced or amended by sections 3 to 6.

Real Estate Investment Trusts

Miscellaneous amendments relating to REITs

8

Schedule 7 makes miscellaneous amendments to the corporation tax regime for Real Estate Investment Trusts.

Tonnage tax

Managers of ships

9

Schedule 8 amends Schedule 22 to FA 2000 to make provision to enable companies, and groups of companies, that manage qualifying ships to make a tonnage tax election (so that their profits for the purposes of corporation tax are calculated in accordance with the tonnage tax regime).

Increase in capital allowances limit for ship leasing

10

Other reliefs

Extension of EIS relief and VCT relief to shares issued before 6 April 2035

11

for “2025” substitute “2035”.

Relief for payments of compensation by government etc to companies

12

(6) This Part of this Schedule provides for the following— (a) an exemption from corporation tax for relevant compensation payments, and (b) an exemption from income tax and capital gains tax for relevant onward payments. (7) (1) In this Part of this Schedule “relevant compensation payment” means a payment made to a company under— (a) the GLO Compensation Scheme, (b) the Horizon Shortfall Scheme, (c) the Suspension Remuneration Review, (d) the Post Office Process Review, or (e) such other compensation scheme of a description specified in regulations made by the Treasury. (2) The power under sub-paragraph (1)(e) to specify a description of compensation scheme is exercisable only if the scheme provides for the payment of compensation to persons by or on behalf of— (a) the government of the United Kingdom, (b) the government of a part of the United Kingdom, (c) the government of any other country or territory, (d) a local or other public authority in the United Kingdom, or (e) a local or other public authority of a territory outside the United Kingdom. (3) The power under sub-paragraph (1)(e) may be exercised so as to provide— (a) for the provisions of this Part of this Schedule to apply to all descriptions of payments made under a compensation scheme or only to such descriptions as may be specified in the regulations; (b) for all provisions of this Part of this Schedule to apply to payments made under a compensation scheme or only for such provisions to apply as are specified in the regulations. (4) The power under sub-paragraph (1)(e) must be exercised so as to provide that the reliefs conferred by this Part of this Schedule in respect of the compensation schemes mentioned in sub-paragraph (1)(a) to (d) are also conferred in a corresponding or similar way in respect of other relevant schemes. (5) The reference in sub-paragraph (4) to “relevant schemes” is a reference to any compensation schemes established for the purposes of— (a) compensating persons affected by the Horizon system, or (b) compensating persons in respect of other matters identified in High Court judgments given in proceedings relating to the Horizon system. (8) (1) For the purposes of this Part of this Schedule a payment is a “relevant onward payment” if or to the extent that— (a) the payment is made by a company to which a relevant compensation payment was made, (b) the payment is to an individual and— (i) the individual is or was a director or employee of the company, or (ii) the payment is a distribution by the company to shareholders, and (c) it is reasonable to conclude from the circumstances that the payment is made by the company to the individual for the purpose of passing on all or part of the compensation payment mentioned in paragraph (a) to the individual. (2) But where sub-paragraph (3) applies to the relevant compensation payment mentioned in sub-paragraph (1)(a), a payment to an individual is a relevant onward payment for the purposes of this Part of this Schedule only so far as it relates to such part of the relevant compensation payment as was made for the purpose of topping up the amount of compensation paid to account for sums lost to tax. (3) This sub-paragraph applies to a relevant compensation payment— (a) made (at any time) under the Horizon Shortfall Scheme; (b) made before 1 January 2024 under the Suspension Remuneration Review. (9) (1) No liability to corporation tax arises in respect of a relevant compensation payment. (2) The following are to be ignored for all other corporation tax purposes— (a) the receipt by a company of a relevant compensation payment; (b) the making by a company of a relevant onward payment. (3) This paragraph has effect— (a) in the case of relevant compensation payments falling within paragraph 7(1)(a), (b), (c) or (d), whenever the payments are received; (b) in the case of relevant compensation payments falling within paragraph 7(1)(e), where the payments are received on or after such date as is specified in the regulations concerned; (c) in the case of relevant onward payments that relate to paragraph 7(1)(a), (b), (c) or (d), whenever the payments are made; (d) in the case of relevant onward payments that relate to paragraph 7(1)(e), where the payments are made on or after such date as is specified in the regulations concerned. (4) The date specified in regulations as mentioned in sub-paragraph (3)(b) and (d) may be a date before the regulations are made. (10) (1) Paragraph 3(1) and (2) (exemption from income tax) applies to a relevant onward payment as it applies to a qualifying payment. (2) Paragraph 4(1) and (2) (exemption from capital gains tax) applies to a relevant onward payment as it applies to a qualifying payment. (3) Sub-paragraph (1) has effect— (a) in the case of relevant onward payments that relate to paragraph 7(1)(a), (b), (c) or (d), whenever the payments are received; (b) in the case of relevant onward payments that relate to paragraph 7(1)(e), where the payments are received on or after such date as is specified in the regulations concerned. (4) Sub-paragraph (2) has effect— (a) in the case of relevant onward payments that relate to paragraph 7(1)(a), (b), (c) or (d), in relation to disposals whenever made; (b) in the case of relevant onward payments that relate to paragraph 7(1)(e), in relation to disposals made on or after such date as is specified in the regulations concerned. (5) The date specified in regulations as mentioned in sub-paragraph (3)(b) and (4)(b) may be a date before the regulations are made. (11) (1) The Treasury may by regulations make provision for the purpose of providing relief from corporation tax, income tax or capital gains tax in relation to the receipt of payments made under compensation schemes that is supplementary or incidental to provision contained in this Part of this Schedule. (2) Provision under this paragraph may (among other things)— (a) make different provision for different compensation schemes; (b) make provision having retrospective effect. (12) (1) A power to make regulations under this Part of this Schedule is exercisable by statutory instrument. (2) A statutory instrument containing regulations under this Part of this Schedule is subject to annulment in pursuance of a resolution of the House of Commons. (13) (1) In this Part of this Schedule— - “GLO Compensation Scheme” means the scheme announced by His Majesty’s Government on 22 March 2022 with the objective of ensuring that persons who were party to a claim against Post Office Limited in respect of the Horizon system that was subject to a group litigation order have access to compensation for losses related to that system; - “Horizon Shortfall Scheme” means the scheme established on 1 May 2020 by Post Office Limited to compensate persons who were adversely affected by accounting shortfalls related to the Horizon system; - “the Horizon system” means previous versions of the computer system used by Post Office Limited known as Horizon (and sometimes referred to as Legacy Horizon, Horizon Online or HNG-X); - “Post Office Limited” means the private company limited by shares with the company number 02154540 whose registered office is 100 Wood Street, London EC2V 7ER; - “Post Office Process Review” means the review established by Post Office Limited to provide redress to postmasters who were financially impacted by previous processes or policies in relation to balance discrepancies unrelated to the Horizon system; - “Suspension Remuneration Review” means the review established by Post Office Limited to provide redress to postmasters contracted to deliver Post Office services through branches who were suspended before March 2019 and did not receive remuneration during their period of suspension. (2) For the purposes of this Part of this Schedule— (a) a relevant onward payment “relates” to paragraph 7(1)(a) if the related relevant compensation payment mentioned in paragraph 8(1)(c) falls within paragraph 7(1)(a) (and references to payments relating to paragraph 7(1)(b), (c), (d) or (e) are to be read accordingly); (b) references to a compensation scheme include references to any arrangements for the making of payments of compensation.

(ba) payments made under or otherwise referable to compensation schemes established in connection with certain matters relating to Post Office Limited, and

;

;

Enterprise management incentives: time limits

13

Chapter 2 — Pensions

MPs’ pension scheme etc: rectification of discrimination

14

MPs’ pension scheme etc: rectification of discrimination

15

if the rectification exercise had been retrospective.

Chapter 3 — Other income tax measures

Calculation of trade profits etc

Provision relating to the cash basis

16

Schedule 10 contains provision about the calculation of the profits of a trade, profession or vocation on the cash basis, including provision—

Other

PAYE regulations: special types of payer or payee

17

(688AB) (1) PAYE regulations may make the following provision. (2) Provision for an amount to be treated as having been recovered from the payee, and for that amount not to be recoverable from the payer (“the deemed employer”), where— (a) the deemed employer would otherwise be liable to pay an amount under PAYE regulations in consequence of being treated under section 61N(3) as having made a deemed direct payment to a worker (other than by virtue of section 61WA), and (b) an amount of income tax or corporation tax has already been paid, or assessed, in respect of income referable to that payment. (3) Provision for the amount referred to in the opening words of subsection (2)to be the best estimate which can reasonably be made by an officer of Revenue and Customs (whether generally or specifically) of the amount referred to in subsection (2)(b). (4) Provision preventing a person specified in PAYE regulations from— (a) making a claim for the repayment of, or relief in respect of, an amount referred to in subsection (2)(b), or (b) deducting, or setting off, the amount referred to in that subsection from, or against, any tax liability of the person, in a case where an estimate of that amount is treated as having been recovered from the payee as a result of provision made by virtue of this section. (5) In this section, “payee” and “payer” have the same meaning as in section 684 (see subsection (7C) of that section).

Carer’s allowance supplement: correction of statutory reference

18

Part 2 — Other taxes

Stamp duty and stamp duty reserve tax

Growth market exemption: qualifying UK multilateral trading facilities etc

19

; - “UK multilateral trading facility” has the meaning given by Article 2.1.14A of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments as it forms part of assimilated law.

(6A) For the purposes of subsection (5) a UK multilateral trading facility is “qualifying” if— (a) it is operated by an investment firm within the meaning given by article 3(1) of The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544), and (b) the investment firm has permission under Part 4A of the Financial Services and Markets Act 2000 to carry on the regulated activity (within the meaning of that Act) of operating a multilateral trading facility.

Capital-raising arrangements etc

20

Schedule 11 makes provision for and in connection with ensuring that it continues to be the case that—

Electricity generator levy

New investment exemption

21

, and (c) to the extent it is not comprised of qualifying new generating plant (see section 311A);

.

(311A) (1) Generating plant is “qualifying new generating plant” if it is new generating plant commissioned as part of a qualifying project that meets the new investment condition. (2) The new investment condition is met in relation to a qualifying project if on 21 November 2023 it was reasonable to conclude, having regard to all of the circumstances, that there is a significant likelihood of the project not proceeding. (3) The Treasury may by regulations provide for cases in which qualifying projects are to be treated as meeting the new investment condition. (4) “Qualifying project” means a project to commission— (a) new generating plant for— (i) a new generating station, or (ii) an existing generating station which (as a result of the project) is to be wholly or substantially comprised of new generating plant, or (b) new generating plant that increases the generating capacity of an existing generating station. (5) Subsection (6) applies where new generating plant that increases the generating capacity of an existing generating station replaces existing generating plant. (6) Only so much of the new generating plant as represents generating capacity in excess of the capacity of the generating plant it replaces is to be regarded as qualifying new generating plant.

qualifying new generating plant section 311A

.

Pillar Two

Ensuring consistency of Parts 3 and 4 of F(No.2)A 2023 with OECD rules etc

22

Schedule 12 makes amendments to F(No.2)A 2023 in relation to multinational top-up tax and in relation to domestic top-up tax.

Excise duty rates

Rates of tobacco products duty

23
1 Cigarettes An amount equal to the higher of— 16.5% of the retail price plus £316.70 per thousand cigarettes, or £422.80 per thousand cigarettes.
2 Cigars £395.03 per kilogram
3 Hand-rolling tobacco £412.32 per kilogram
4 Other smoking tobacco and chewing tobacco £173.68 per kilogram
5 Tobacco for heating £325.53 per kilogram

.

Rates of vehicle excise duty

24
CO2 Emissions Figure CO2 Emissions Figure Rate Rate
(1) (2) (3) (4)
Exceeding Not exceeding Reduced rate Standard Rate
g/km g/km £ £
100 110 10 20
110 120 25 35
120 130 150 160
130 140 180 190
140 150 200 210
150 165 245 255
165 175 295 305
175 185 325 335
185 200 375 385
200 225 405 415
225 255 700 710
255 — 725 735

.

(a) in column (3), in the last two rows, “405” were substituted for “700” and “725”, and (b) in column (4), in the last two rows, “415” were substituted for “710” and “735”.

CO2 Emissions Figure CO2 Emissions Figure Rate Rate
(1) (2) (3) (4)
Exceeding Not exceeding Reduced rate Standard Rate
g/km g/km £ £
0 50 0 10
50 75 20 30
75 90 125 135
90 100 165 175
100 110 185 195
110 130 210 220
130 150 260 270
150 170 670 680
170 190 1085 1095
190 225 1640 1650
225 255 2330 2340
255 — 2735 2745

.

CO2 Emissions Figure CO2 Emissions Figure Rate
(1) (2) (3)
Exceeding Not exceeding Rate
g/km g/km £
0 50 30
50 75 135
75 90 175
90 100 195
100 110 220
110 130 270
130 150 680
150 170 1095
170 190 1650
190 225 2340
225 255 2745
255 — 2745

.

Rates of air passenger duty

25

Miscellaneous VAT and excise measures

Rebate on heavy oil and certain bioblends used for heating

26

In Schedule 1A to HODA 1979 (excepted machines), in paragraph 8, in sub-paragraph (1)(e), for the words from “kerosene” to the end substitute “for fuel—

(i) heavy oil other than gas oil, or (ii) bioblend other than bioblend that is a mixture of biodiesel and gas oil.

Vehicle excise duty exemption for foreign vehicles

27

After section 5 of VERA 1994 (exempt vehicles) insert—

(5A) (1) The Secretary of State may by regulations confer an exemption from vehicle excise duty in respect of a foreign vehicle. (2) The regulations may, for or in connection with conferring the exemption, amend subordinate legislation made under this Act or the Motor Vehicles (International Circulation) Act 1952. (3) The regulations may provide that the exemption of a foreign vehicle from vehicle excise duty is— (a) subject to conditions; (b) limited to a specified period. (4) Regulations under this section may make— (a) provision which applies generally or for particular purposes; (b) retrospective provision. (5) A provision of regulations under this section that has the effect of removing the exemption of a foreign vehicle from vehicle excise duty must not be made so as to have retrospective effect. (6) In this section— - “foreign vehicle” means a vehicle that is registered under the law of any territory outside the United Kingdom; - “specified” means specified in the regulations; - “subordinate legislation” means Orders in Council, orders and regulations (including any regulations made under an Order in Council).

Interpretation of VAT and excise law

28

are to apply for the purpose of interpreting enactments relating to value added tax or any duty of excise (“VAT and excise law”).

Environmental taxes

Rates of landfill tax

29

Rate of aggregates levy

30

Rate of plastic packaging tax

31

Part 3 — Miscellaneous and final

Evasion, avoidance etc

Increase in maximum terms of imprisonment for tax offences

32
TMA 1970 Section 106A(2)(b) (fraudulent evasion of income tax)
Customs and Excise Duties (General Reliefs) Act 1979 Section 13C(4)(b) (relieved goods used, etc, in breach of condition)
CEMA 1979 Section 50(4)(b) (improper importation of goods)
CEMA 1979 Section 53(9)(b) (shipping etc dutiable or restricted goods with fraudulent intent)
CEMA 1979 Section 63(6)(b) (goods taken on board a ship etc with fraudulent intent)
CEMA 1979 Section 68(3)(b) (exportation of prohibited or restricted goods with intent to evade prohibition or restriction)
CEMA 1979 Section 68A(2)(b) (fraudulent evasion of agricultural levy)
CEMA 1979 Section 100(4)(b) (taking etc of warehoused goods with intent to defraud)
CEMA 1979 Section 136(2)(b) (claims for drawback etc with intent to defraud)
CEMA 1979 Section 159(7)(b) (removing examinable goods with intent to defraud)
CEMA 1979 Section 170(3)(b) (fraudulent evasion of duty, etc)
CEMA 1979 Section 170B(1)(b) (taking preparatory steps for evasion of excise duty)
HODA 1979 Section 10(7)(b) (contravening restrictions on use of duty-free oil)
HODA 1979 Section 13(5)(b) (contravening restrictions on use of heavy oil)
HODA 1979 Section 13AB(7)(b) (contravening restrictions on use of rebated kerosene)
HODA 1979 Section 14(8)(b) (contravening restrictions on use of light oil)
HODA 1979 Section 14D(5)(b) (contravening restrictions on use of rebated biodiesel or bioblend)
HODA 1979 Section 14F(3)(b) (contravening restrictions on use of restricted fuel) (as substituted by paragraph 9 of Schedule 11 to FA 2020)
HODA 1979 Section 20AAC(4)(d) (contravening restrictions on use of aqua methanol)
HODA 1979 Section 24A(6)(b) (contravening restrictions on use of marked oil)
BGDA 1981 Paragraph 16(1)(b) of Schedule 3 (fraudulent evasion of bingo duty)
FA 1993 Section 31(2)(b) (fraudulent evasion etc of lottery duty)
VATA 1994 Section 72(1)(b), (3)(ii) and (8)(b) (fraudulent evasion etc of VAT)
FA 1994 Section 41(2)(b) (fraudulent evasion etc of duty)
FA 1994 Paragraph 10(1)(b), (3)(b) and (5)(b) of Schedule 7 (fraudulent evasion etc of insurance premium tax)
FA 1996 Paragraph 16(1)(b), (3)(b) and (5)(b) of Schedule 5 (fraudulent evasion etc of landfill tax)
FA 1997 Paragraph 12(3)(b)(ii) of Schedule 1 (fraudulent evasion etc of gaming duty)
FA 2000 Paragraphs 92(3)(b), 93(3)(b) and 94(3)(b) of Schedule 6 (fraudulent evasion etc of climate change levy)
FA 2001 Paragraphs 1(3)(b), 2(3)(b) and 3(3)(b) of Schedule 6 (fraudulent evasion etc of aggregates levy)
FA 2003 Section 95(2)(b) (fraudulent evasion of stamp duty land tax)
FA 2012 Paragraph 37(2)(a) of Schedule 24 (fraudulent evasion of machine games duty)
FA 2014 Section 174(3)(a) (fraudulent evasion of general betting duty, pool betting duty and remote gaming duty)
FA 2017 Section 50(3)(d)(i) (fraudulent evasion of soft drinks levy)
FA 2021 Section 77(3)(d)(i) (fraudulent evasion of plastic packaging tax)
FA 2021 Section 78(3)(d)(i) (false statements in connection with plastic packaging tax)
FA 2021 Section 79(3)(d)(i) (plastic packaging tax: conduct involving evasions or false statements)

Disqualification of directors etc promoting tax avoidance schemes

33

Schedule 13 makes provision for HMRC to apply for disqualification orders under the Company Directors Disqualification Act 1986 in connection with the promotion of tax avoidance schemes.

Promoters of tax avoidance: failure to comply with stop notice etc

34

(277A) (1) A person who, without reasonable excuse, fails to comply with a duty imposed under section 236B(1) is guilty of an offence. (2) The recipient of a stop notice (“R”) is guilty of an offence if— (a) R fails, without reasonable excuse, to comply with a duty imposed under section 236B(3)(a), (4)(a) or (5)(a) to give a copy of the notice to another person (“P”), (b) P subsequently fails to comply with a duty imposed under section 236B(1) in relation to the notice, and (c) at the time of P’s failure the stop notice continues to have effect in relation to R. (3) For the purposes of this section— (a) an insufficiency of funds is not a reasonable excuse unless attributable to events outside the person's control, (b) if the person relies on any other person to do anything, that is not a reasonable excuse unless the first person took reasonable care to avoid the failure, (c) if the person had a reasonable excuse for the failure but the excuse has ceased, the person is to be treated as having continued to have the excuse if the failure is remedied without unreasonable delay after the excuse ceased, and (d) reliance on legal advice is to be taken automatically not to constitute a reasonable excuse where the person is a monitored promoter if either— (i) the advice was not based on a full and accurate description of the facts, or (ii) the conclusions in the advice that the person relied on were unreasonable. (277B) (1) If an offence under section 277A is committed by a body corporate or a partnership and— (a) is committed with the consent or connivance of a relevant person in relation to the body or partnership, or (b) is attributable to neglect on the part of such a person, the person (as well as the body or partnership) commits the offence and is liable to be proceeded against and punished accordingly. (2) A “relevant person” is— (a) in relation to a body corporate other than one whose affairs are managed by its members— (i) a director, manager, secretary or other similar officer of the body, or a person purporting to act in such a capacity, or (ii) a shadow director within the meaning of section 251 of the Companies Act 2006; (b) in relation to a limited liability partnership or other body corporate whose affairs are managed by its members— (i) a member who exercises functions of management with respect to it, or a person purporting to act in such a capacity, or (ii) in the case of a limited liability partnership, a shadow member within the meaning of regulation 2 of the Limited Liability Partnerships Regulations 2001 (S.I. 2001/1090); (c) in relation to a partnership, a partner or a person purporting to act in such a capacity.

Construction industry scheme: gross payment status

35

(b) has fraudulently made an incorrect return or has fraudulently provided incorrect information (whether as a contractor or a sub-contractor) in connection with an obligation— (i) arising under any provision of this Chapter or of regulations made under it; (ii) arising under any provision of PAYE regulations; (iii) to submit a self-assessment return; (iv) arising under any provision of the Value Added Tax Act 1994 or of regulations made under it, or

;

(v) to account for or pay VAT as required by or under the Value Added Tax Act 1994, and

;

(v) to account for or pay VAT as required by or under the Value Added Tax Act 1994, and

;

(v) to account for or pay VAT as required by or under the Value Added Tax Act 1994, and

.

Administration

Additional information to be contained in returns under TMA 1970 etc

36

(1I) Where a person is required to make and deliver a return under this section, the person may be required by an officer of His Majesty’s Revenue and Customs to include in the return any information that is specified or described in regulations made by the Commissioners (whether or not the information is relevant for the purpose mentioned in subsection (1)). (1J) The Commissioners may only specify or describe information in regulations under subsection (1I) if the Commissioners consider that the information is relevant for the purpose of the collection and management of any of the taxes listed in section 1. (1K) A person who fails to comply with a requirement imposed on them by virtue of subsection (1I) is liable to a penalty of £60. (1L) Regulations under subsection (1I) may make different provision for different purposes.

(1G) Where a person is required to make and deliver a return under this section, the person may be required by an officer of His Majesty’s Revenue and Customs to include in the return any information that is specified or described in regulations made by the Commissioners (whether or not the information is relevant for the purpose mentioned in subsection (1)). (1H) The Commissioners may only specify or describe information in regulations under subsection (1G) if the Commissioners consider that the information is relevant for the purpose of the collection and management of any of the taxes listed in section 1. (1I) A person who fails to comply with a requirement imposed on them by virtue of subsection (1G) is liable to a penalty of £60. (1J) Regulations under subsection (1G) may make different provision for different purposes.

(5F) Where a person is required to make and deliver a return under this section, the person may be required by an officer of His Majesty’s Revenue and Customs to include in the return any information that is specified or described in regulations made by the Commissioners (whether or not the information is relevant for the purpose mentioned in subsection (1)). (5G) The Commissioners may only specify or describe information in regulations under subsection (5F) if the Commissioners consider that the information is relevant for the purpose of the collection and management of any of the taxes listed in section 1. (5H) A person who fails to comply with a requirement imposed on them by virtue of subsection (5F) is liable to a penalty of £60. (5I) Regulations under subsection (5F) may make different provision for different purposes.

(707A) (1) PAYE regulations may include provision requiring an employer to provide any information that is specified or described in regulations made by the Commissioners (whether or not that information is also relevant to the assessment, charge, collection and recovery of income tax in respect of PAYE income). (2) The Commissioners for His Majesty’s Revenue and Customs may only specify or describe information in regulations under subsection (1) if the Commissioners consider that the information is relevant for the purpose of the collection and management of any of the taxes listed in section 1 of TMA 1970.

Commencement of rules imposing penalties for failure to make returns etc

37

Final

Abbreviations used in Act

38

In this Act the following abbreviations are references to the following Acts—

BGDA 1981 Betting and Gaming Duties Act 1981
CAA 2001 Capital Allowances Act 2001
CEMA 1979 Customs and Excise Management Act 1979
CTA 2009 Corporation Tax Act 2009
CTA 2010 Corporation Tax Act 2010
FA followed by a year Finance Act of that year
F(No.2)A followed by a year Finance (No.2) Act of that year
HODA 1979 Hydrocarbon Oil Duties Act 1979
ICTA Income and Corporation Taxes Act 1988
ITA 2007 Income Tax Act 2007
ITEPA 2003 Income Tax (Earnings and Pensions) Act 2003
ITTOIA 2005 Income Tax (Trading and Other Income) Act 2005
TCGA 1992 Taxation of Chargeable Gains Act 1992
TCTA 2018 Taxation (Cross-border Trade) Act 2018
TIOPA 2010 Taxation (International and Other Provisions) Act 2010
TMA 1970 Taxes Management Act 1970
TPDA 1979 Tobacco Products Duty Act 1979
VERA 1994 Vehicle Excise and Registration Act 1994

Short title

39

This Act may be cited as the Finance Act 2024.

Schedule 1

Part 1 — Main amendments of CTA 2009

1

CTA 2009 is amended as follows.

2

In Part 3, omit Chapter 6A (R&D expenditure credit).

3

In the heading of Part 13, omit “Additional relief for”.

4

(1039) (1) This Part provides relief for companies that invest in research and development. (2) Chapter 1A makes relief available in the form of a credit in respect of expenditure on research and development, which becomes payable in certain circumstances. (3) Chapter 2 makes alternative relief available, in the form of— (a) an additional deduction in calculating trading profits, and (b) a payable credit, to small or medium-sized enterprises that invest heavily in research and development and do not make associated trading profits. (4) Chapter 8 limits the reliefs provided by Chapters 1A and 2. (5) Chapter 9 contains definitions and other supplementary provision.

(1040) A company is not entitled to relief under Chapter 2 in respect of expenditure if it is entitled to, and claims, relief under Chapter 1A in respect of that expenditure.

5

After Chapter 1 of Part 13 insert—

(1042A) (1) This Chapter provides an entitlement to a credit (called an “R&D expenditure credit”) in respect of certain expenditure on research and development. (2) Section 1042B and 1042C make the basic provision setting out what the entitlement is and how it is to be realised. (3) Sections 1042D to 1042F describe the expenditure by reference to which the entitlement arises. (4) Section 1042G sets the percentage of that expenditure that is translated into the credit. (5) Sections 1042H to 1042N make provision about what happens when a company obtains the credit (in particular, about how the credit is to be accounted for and applied or paid). (6) Section 1042O makes provision about how the expenditure credit operates in the context of a basic life assurance and general annuity business carried on by an insurance company. (7) This Chapter has to be read with Chapter 8, which limits the entitlement given by this Chapter in various respects. (1042B) (1) A company is entitled to an R&D expenditure credit for an accounting period if it meets conditions A, B and C in this section. (2) Condition A is that the company carries on a trade in the period. (3) Condition B is that the company incurs expenditure that is both— (a) allowable as a deduction in calculating for corporation tax purposes the profits of the trade for the period, and (b) qualifying Chapter 1A expenditure by virtue of section 1042D, 1042E or 1042F. (4) Condition C is that the company is not an ineligible company (see section 1142). (5) The amount of the credit is the relevant percentage (see section 1042G) of the expenditure that satisfies condition B. (1042C) (1) To obtain an R&D expenditure credit the company must make a claim (see Part 9A of Schedule 18 to the FA 1998). (2) A company may not make the claim (“the RDEC claim”) after the end of the claim notification period unless— (a) the company has made an R&D claim during the period of three years ending with the last day of the claim notification period, (b) the company makes a claim notification in respect of the RDEC claim within the claim notification period, or (c) the accounting period in respect of which the RDEC claim is made falls within the same period of account as another accounting period in respect of which the company has made an R&D claim or a claim notification. (3) For the purposes of subsection (2)(a), ignore any R&D claim for an accounting period beginning before 1 April 2023 that is included in the company’s company tax return only by virtue of an amendment made on or after that date (see paragraph 83B(2) of Schedule 18 to FA 1998). (1042D) (1) Expenditure of a company is qualifying Chapter 1A expenditure if it meets each of conditions A to D in this section. (2) Condition A is that the expenditure is attributable to relevant research and development undertaken by the company itself. (3) Condition B is that the expenditure is— (a) incurred on staffing costs (see section 1123), (b) incurred on software, data licences, cloud computing services or consumable items (see section 1125), (c) qualifying expenditure on externally provided workers (see section 1127), or (d) incurred on relevant payments to the subjects of a clinical trial (see section 1140). (4) Condition C is that the research and development is not contracted out to the company (see section 1133). (5) Condition D is that the expenditure is not attributable to an exempt foreign permanent establishment (see section 1138B). (6) See sections 1124, 1126 to 1126B and 1132 for provision about when expenditure within subsection (3)(a), (b) or (c) is attributable to relevant research and development. (1042E) (1) Expenditure of a company is qualifying Chapter 1A expenditure if it meets each of conditions A to D in this section. (2) Condition A is that the expenditure is attributable to relevant research and development contracted out by the company (see section 1133). (3) Condition B is that the research and development is not also contracted out to the company (see section 1133). (4) Condition C is that the expenditure is incurred in making the qualifying element of a contractor payment (see sections 1133 to 1136). (5) Condition D is that the expenditure is not attributable to an exempt foreign permanent establishment (see section 1138B). (6) See sections 1124, 1126 to 1126B and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development. (1042F) (1) Expenditure of a company is qualifying Chapter 1A expenditure if it meets conditions A, B and C in this section. (2) Condition A is that the expenditure is attributable to relevant research and development contracted out to the company (see section 1133). (3) Condition B is that subsection (4) is satisfied by each person by whom the research and development is contracted out to the company. (4) A person satisfies this subsection if— (a) the person is an ineligible company (see section 1142), or (b) the person is not, in relation to the contracting out of the research and development by that person, acting in the course of a trade, profession or vocation within the charge to tax. (5) Condition C is that the expenditure would, but for the fact that the research and development is contracted out to the company, be qualifying Chapter 1A expenditure by virtue of section 1042D or 1042E. (1042G) (1) The relevant percentage for the purposes of section 1042B(5) is— (a) 49%, in the case of a ring fence trade within the meaning given by section 277 of CTA 2010, or (b) 20%, in any other case. (2) The Treasury may by regulations replace the percentage for the time being specified in subsection (1)(a) or (b) with a different percentage. (1042H) If a company is entitled to, and claims, an R&D expenditure credit for an accounting period, it must bring the amount of the credit into account as a receipt in calculating for corporation tax purposes the profits for the period of the trade concerned. (1042I) If a company is entitled to, and claims, an R&D expenditure credit for an accounting period, the credit is to be dealt with as follows. - Step 1The amount of the credit is to be applied in discharging any liability of the company to pay corporation tax for the accounting period. - Step 2If there is a notional tax deduction (see section 1042K), it is to be applied to any amount remaining after step 1. - Step 3If the amount remaining after step 2 exceeds the cap by reference to the company’s PAYE and NIC liabilities for the accounting period (see section 1112B), the excess is to be deducted. - Step 4Any amount remaining after step 3 is to be applied in discharging any liability of the company to pay corporation tax for any other accounting period. - Step 5If the company is a member of a group, it may surrender the whole or part of any amount remaining after step 4 to any other member of the group (as to which see section 1042N). - Step 6Any amount remaining after step 5 is to be applied in discharging any other liability of the company to pay a sum to the Commissioners for His Majesty’s Revenue and Customs—under or by virtue of an enactment, orunder an agreement made in connection with any person’s liability to make a payment to the Commissioners under or by virtue of an enactment. - Step 7Any amount remaining after step 6 is (subject to sections 1112F and 1112H) to be paid to the company by an officer of Revenue and Customs. (1042J) (1) This section applies if an amount is deducted under step 3 in section 1042I. (2) The amount is to be added to the amount of R&D expenditure credit to which the company is entitled for its next accounting period (including where that amount would otherwise be nil). (1042K) (1) This section determines the amount of the notional tax deduction for the purposes of step 2 in section 1042I. (2) The amount of the deduction is the amount (if any) by which the amount remaining after step 1 in section 1042I exceeds the amount produced by deducting the notional tax charge from the initial amount of the expenditure credit (that is, its amount before the application of that step). (3) Subsections (4) and (5) apply if the trade concerned is not a ring fence trade. (4) The notional tax charge is the amount of corporation tax that would be chargeable on the initial amount of the expenditure credit if it were an amount of profits for the accounting period on which corporation tax was chargeable at the applicable rate. (5) The applicable rate is— (a) the main rate, if the company has profits for the accounting period that— (i) are chargeable to corporation tax at the main rate, and (ii) would be so even if they did not include any amount brought into account under section 1042H; (b) in any other case, the standard small profits rate. (6) Subsections (7) and (8) apply if the trade concerned is a ring fence trade. (7) The notional tax charge is the sum of— (a) the amount of corporation tax that would be chargeable on the initial amount of the expenditure credit if it were an amount of ring fence profits for the accounting period on which corporation tax was chargeable at the applicable rate, and (b) the amount of the supplementary charge that would be chargeable on the initial amount of the expenditure credit if it were an amount of adjusted ring fence profits for the accounting period (see Chapters 6 to 9 of Part 8 of CTA 2010). (8) The applicable rate is— (a) the main ring fence profits rate, if the company has profits for the accounting period that— (i) are chargeable to corporation tax at the main ring fence profits rate, and (ii) would be so even if they did not include any amount brought into account under section 1042H; (b) in any other case, the small ring fence profits rate. (9) For the purposes of this section, the initial amount of an expenditure credit is to be treated as excluding any amount added under section 1042J. (10) In this section— - “adjusted ring fence profits” has the meaning given by section 330(2) of CTA 2010; - “main rate” means the rate referred to in section 3(1) of CTA 2010; - “main ring fence profits rate” means the rate referred to in section 279A(1) of CTA 2010; - “ring fence profits” has the meaning given by section 276 of CTA 2010; - “ring fence trade” has the meaning given by section 277 of CTA 2010; - “small ring fence profits rate” means the rate referred to in section 279A(3) of CTA 2010; - “standard small profits rate” means the rate referred to in section 18A(1) of CTA 2010. (1042L) (1) This section applies if an amount is deducted under step 2 in section 1042I. (2) If the company is a member of a group, it may, in respect of the accounting period in which the expenditure credit arises, surrender the whole or part of the deducted amount to any other member of the group (as to which see section 1042N). (3) To the extent that the deducted amount is not surrendered under subsection (2), it is to be applied in discharging any liability of the company to pay corporation tax for any subsequent accounting period. (1042M) (1) An amount within subsection (2) is to be applied as described in that subsection before any amount within subsection (3) is applied as described in that subsection. (2) An amount is within this subsection if it is to be applied under— (a) section 1042L(3), or (b) section 1042N(3) as it applies in relation to an amount surrendered under section 1042L(2), in discharging the liability of a company to pay corporation tax for an accounting period. (3) An amount is within this subsection if it is to be (or would but for subsection (1) be) applied under— (a) step 4 in section 1042I, or (b) section 1042N(3) as it applies in relation to an amount surrendered under step 5 in section 1042I, in discharging the same liability as an amount within subsection (2). (1042N) (1) Subsection (3) applies if an amount of expenditure credit is surrendered by the qualifying company to another member of its group under step 5 in section 1042I or under section 1042L(2). (2) For the purposes of that subsection— (a) the accounting period in respect of which the surrender is made is “the surrender AP”; (b) an accounting period of the other group member is an “overlapping AP” if it overlaps with the surrender AP to any extent. (3) The surrendered amount is to be dealt with as follows. - Step 1Select an overlapping AP. - Step 2Calculate the proportion of the overlapping AP that overlaps with the surrender AP, and apply that proportion to the amount of corporation tax payable by the other group member for that overlapping AP. - Step 3Calculate the proportion of the surrender AP that overlaps with the overlapping AP, and apply that proportion to the surrendered amount. - Step 4The amount given by step 3 is to be applied in discharging the liability of the other group member to pay the corporation tax mentioned in step 2, up to the amount given by that step. - Step 5Select another overlapping AP, if there is one, and repeat steps 2 to 4. - Step 6If any of the surrendered amount remains after steps 2 to 4 have been taken in relation to each overlapping AP, the remainder is to be treated for the purposes of section 1042I or (as the case may be) section 1042L(2) as if it had not been surrendered as mentioned in subsection (1). (4) A surrender to which subsection (3) applies is not to be— (a) taken into account in determining, for corporation tax purposes, the profits or losses of the qualifying company or the other group member, or (b) regarded for corporation tax purposes as the making of a distribution. (1042O) (1) This section applies if— (a) for an accounting period, an insurance company is charged to tax in respect of its basic life assurance and general annuity business in accordance with the I-E rules, and (b) the calculation of the company’s charge to tax for the period in respect of that business does not involve the calculation of any BLAGAB trade profit or loss of the company. (2) The reference in section 1042B(3)(a) to expenditure that is allowable as a deduction in calculating the profits of the trade for an accounting period is to be read as a reference to expenditure that would be so allowable if the company were to calculate its BLAGAB trade profit or loss for the period. (3) The reference in section 1042H to calculating the profits of the trade is to be read as a reference to calculating the I-E profit of the basic life assurance and general annuity business carried on by the company. (4) Any receipt to be brought into account by virtue of this section is to be treated for the purposes of section 92 of FA 2012 (certain BLAGAB trading receipts to count as deemed I-E receipts) as if it had been taken into account in calculating the company’s BLAGAB trade profit or loss for the period. (5) In this section, “BLAGAB trade profit” and “BLAGAB trade loss” have the meanings given by section 136 of FA 2012.

6

(1043) (1) This Chapter provides relief for companies that are small or medium-sized enterprises, invest heavily in research and development, and do not make associated trading profits. (2) Section 1044 provides relief in the form of an additional deduction where the investment is made in the course of a loss-making trade. (3) Section 1045 provides relief in the form of a deemed trading loss where the investment is made the course of activities that do not yet amount to the carrying on of a trade. (4) Section 1045ZA specifies the intensity of spending on research and development needed for a company to qualify for relief under section 1044 or 1045. (5) Sections 1047 and 1048 make provision about the procedure for claiming, and the effect of, relief under section 1045. (6) Section 1049 restricts consortium relief where relief under section 1044 or 1045 is claimed. (7) Sections 1051 to 1053 describe the expenditure by reference to which the entitlement to relief under section 1044 or 1045 arises. (8) Sections 1054 to 1062 provide further relief in the form of a payable credit (called an “R&D tax credit”) in respect of trading losses increased or generated by relief under section 1044 or 1045. (9) Section 1062A excludes certain insurance companies. (10) This Chapter has to be read with Chapter 8, which limits the entitlements given by this Chapter in various respects.

(2A) Condition B is that the company— (a) meets the R&D intensity condition in the period, or (b) obtained relief under this Chapter for its most recent prior accounting period of 12 months’ duration, having met the R&D intensity condition in that period.

;

(5A) Condition E is that the company makes a loss in the trade in the period. (5B) Condition F is that the company is not an ineligible company (see section 1142).

;

The deduction is, in particular, additional to any given under section 87.

;

(2A) Condition B is that the company— (a) meets the R&D intensity condition in the period, or (b) obtained relief under this Chapter for its most recent prior accounting period of 12 months’ duration, having met the R&D intensity condition in that period.

;

(4A) Condition D is that the company is not an ineligible company (see section 1142).

;

(1045ZA) (1) This section determines whether a company meets the R&D intensity condition in an accounting period for the purposes of sections 1044 and 1045. (2) If the company is not connected with another company, the company meets the condition if its relevant R&D expenditure for the period amounts to at least 30% of its total relevant expenditure for the period. (3) If the company is connected with at least one other company, the company meets the condition if the connected companies’ relevant R&D expenditure for the period amounts to at least 30% of the connected companies’ total relevant expenditure for the period. (4) In subsection (3), “the connected companies” refers to the company to which this section is being applied and each company with which it is connected; and the references to their expenditure are to the aggregate of each of their expenditures. (5) Expenditure forms part of a company’s total relevant expenditure for an accounting period if— (a) in accordance with generally accepted accounting practice, it is brought into account in calculating the profits for the period of any trade carried on by the company, (b) it is expenditure in respect of which the company is, for the period, entitled to relief under section 1045, or (c) in reliance on section 1308(2) (expenditure brought into account in determining value of intangible asset allowable as a deduction), it is brought into account in calculating the company’s profits for the period for corporation tax purposes. (6) But— (a) expenditure of a company is to be ignored for the purposes of subsection (5) if it consists of a payment, or other transfer of value, to another company with which the company is connected, and (b) where expenditure forms part of a company's total relevant expenditure by virtue of subsection (5)(c), a deduction brought into account as mentioned in subsection (5)(a) is to be ignored for the purposes of that provision to the extent that a corresponding deduction for corporation tax purposes is prevented by section 1308(5). (7) Expenditure forms part of a company’s relevant R&D expenditure for an accounting period if— (a) it forms part of the company’s total relevant expenditure for the period, or would do but for subsection (6)(a), and (b) it is expenditure in respect of which the company would, assuming that it met the R&D intensity condition, be entitled to relief under this Chapter for the period. (8) For the purposes of this section in its application to an accounting period, a company is to be treated as connected with another company if it is connected with that company on any day within the period.

(1052) (1) Expenditure of a company is qualifying Chapter 2 expenditure if it meets each of conditions A to D in this section. (2) Condition A is that the expenditure is attributable to relevant research and development undertaken by the company itself. (3) Condition B is that the expenditure is— (a) incurred on staffing costs (see section 1123), (b) incurred on software, data licences, cloud computing services or consumable items (see section 1125), (c) qualifying expenditure on externally provided workers (see section 1127), or (d) incurred on relevant payments to the subjects of a clinical trial (see section 1140). (4) Condition C is that the research and development is not contracted out to the company (see section 1133). (5) Condition D is that the expenditure is not attributable to an exempt foreign permanent establishment (see section 1138B). (6) See sections 1124, 1126 to 1126B and 1132 for provision about when expenditure within subsection (3)(a), (b) or (c) is attributable to relevant research and development. (1053) (1) Expenditure of a company is qualifying Chapter 2 expenditure if it meets each of conditions A to D in this section. (2) Condition A is that the expenditure is attributable to relevant research and development contracted out by the company (see section 1133). (3) Condition B is that the research and development is not also contracted out to the company (see section 1133). (4) Condition C is that the expenditure is incurred in making the qualifying element of a contractor payment (see sections 1133 to 1136). (5) Condition D is that the expenditure is not attributable to an exempt foreign permanent establishment (see section 1138B). (6) See sections 1124, 1126 to 1126B and 1132 for provision about when particular kinds of expenditure are attributable to relevant research and development. (1053A) (1) Expenditure of a company is qualifying Chapter 2 expenditure if it meets conditions A, B and C in this section. (2) Condition A is that the expenditure is attributable to relevant research and development contracted out to the company (see section 1133). (3) Condition B is that subsection (4) is satisfied by each person by whom the research and development is contracted out to the company. (4) A person satisfies this subsection if— (a) the person is an ineligible company (see section 1142), or (b) the person is not, in relation to the contracting out of the research and development by that person, acting in the course of a trade, profession or vocation within the charge to tax. (5) Condition C is that the expenditure would, but for the fact that the research and development is contracted out to the company, be qualifying Chapter 2 expenditure by virtue of section 1052 or 1053.

(aa) the amount of the cap by reference to the company’s PAYE and NIC liabilities for the accounting period (see section 1112B).

;

(1062A) An insurance company that carries on life assurance business in an accounting period is not to be treated for the purposes of this Chapter as a small or medium-sized enterprise in relation to that period.

7

Omit Chapter 6 of Part 13 (further provision about Chapters 2 to 5).

8

For Chapter 8 of Part 13 (cap on aid for R&D) substitute—

(1112A) (1) This Chapter limits the entitlements given by Chapters 1A and 2. (2) Sections 1112B to 1112E provide for the amount of R&D expenditure credit or R&D tax credit payable to a company to be capped by reference to certain liabilities of the company in connection with PAYE and national insurance, except in certain cases. (3) Sections 1112F and 1112G provide that payment of an R&D expenditure credit, and relief under Chapter 2, are available only to companies that are going concerns. (4) Section 1112H provides that an R&D expenditure credit or R&D tax credit does not have to be paid if a tax enquiry into the company is open or the company has outstanding PAYE or national insurance liabilities. (5) Section 1112I provides for transactions aimed at obtaining or increasing an entitlement under Chapter 1A or 2 not to succeed in doing so. (6) Section 1112J allows the Treasury to place additional limits on the amount of relief available under Chapter 2. (1112B) (1) This section determines, for the purposes of sections 1042I and 1058(1), the amount of the cap by reference to a company’s PAYE and NIC liabilities for an accounting period. But see section 1112E (which provides for there to be no cap in certain cases). (2) The amount of the cap is the sum of— (a) £20,000, and (b) the amount produced by multiplying by three (“the multiplier”) the amount of the company’s relevant PAYE and NIC liabilities for payment periods ending in the accounting period (see section 1112C). (3) If the accounting period is less than 12 months, the amount specified in subsection (2)(a) is to be proportionately reduced. (4) If the company claims relief under both Chapters 1A and 2 for the period, the amount of the cap for the purposes of section 1042I is to be reduced by the amount of any R&D tax credit obtained by the company under Chapter 2. (5) The Treasury may by regulations— (a) replace the amount for the time being specified in subsection (2)(a) with a different amount; (b) replace the multiplier for the time being specified in subsection (2)(b) with a different multiplier. (1112C) (1) This section determines the amount of a company’s relevant PAYE and NIC liabilities for a payment period for the purposes of section 1112B. (2) The amount is to be calculated as follows. - Step 1Take the total amount of the company’s PAYE and NIC liabilities for the payment period (see section 1112D). - Step 2Add any amount produced by the application of subsection (4) or (6) to the company as company A. - Step 3Deduct any amount produced by the application of subsection (4) or (6) to the company as company B. (3) An amount is produced by subsection (4) where— (a) two companies (“company A” and “company B”) are connected, (b) company A incurs expenditure in the payment period on externally provided workers (see sections 1127 and 1128), and (c) company B incurs staffing costs in the payment period in providing any of those workers for company A. (4) The amount produced is the sum of the amounts given, in relation to each worker in respect of whom subsection (3)(c) is satisfied, by— $$X×YZ$where—X is the amount of expenditure that—has been incurred on staffing costs by company B in providing the worker for company A, andforms part of the total amount of company B’s PAYE and NIC liabilities for the payment period (see section 1112D),Y is the amount of company A’s expenditure on the externally provided worker that has been taken into account in calculating the amount of company A’s qualifying expenditure for the payment period, andZ is the total amount of company A’s qualifying expenditure on the externally provided worker (see section 1127) for the payment period.$ (5) Subsection (6) produces an amount where— (a) two companies (“company A” and “company B”) are connected, (b) company A incurs qualifying contractor expenditure in the payment period, and (c) company B incurs staffing costs in the payment period in undertaking on behalf of company A any of the research and development to which that expenditure is attributable. (6) That amount is such amount of those staffing costs as forms part of the total amount of company B’s PAYE and NIC liabilities for the payment period (see section 1112D). (7) In this section as it applies for the purposes of section 1042I— - “qualifying expenditure” (except in the expression “qualifying expenditure on the externally provided worker”) means expenditure that is qualifying Chapter 1A expenditure by virtue of section 1042D, 1042E or 1042F; - “qualifying contractor expenditure” means expenditure that is qualifying Chapter 1A expenditure by virtue of—section 1042E, orsection 1042F as it applies by reference to section 1042E. (8) In this section as it applies for the purposes of section 1058(1)— - “qualifying expenditure” (except in the expression “qualifying expenditure on the externally provided worker”) means qualifying Chapter 2 expenditure (see section 1051); - “qualifying contractor expenditure” means qualifying expenditure that is qualifying Chapter 2 expenditure by virtue of—section 1053, orsection 1053A as it applies by reference to section 1053. (1112D) (1) For the purposes of section 1112C, the total amount of a company’s PAYE and NIC liabilities for a payment period is the sum of amount A and amount B. (2) Amount A is the total amount of income tax for which the company is required to account to an officer of Revenue and Customs under PAYE regulations for the period. (3) In calculating amount A, any deduction the company is authorised to make in respect of child tax credit or working tax credit is to be disregarded. (4) Amount B is the total amount of Class 1 national insurance contributions for which the company is required to account to an officer of Revenue and Customs for the accounting period. (5) In calculating amount B, any deduction the company is authorised to make in respect of any of the following is to be disregarded— (a) statutory maternity pay, (b) statutory adoption pay, (c) statutory paternity pay, (d) statutory shared parental pay, (e) statutory parental bereavement pay; (f) child tax credit, or (g) working tax credit. (6) Subsection (7) applies if— (a) in determining under section 1112C the amount of a company’s relevant PAYE and NIC liabilities for a payment period, it is necessary to determine the total amount of another company’s PAYE and NIC liabilities for that period, and (b) that period falls within, but is shorter than, a payment period of that other company. (7) The amount produced by subsection (1) in its application to that other company is to be proportionately reduced. (1112E) (1) There is no cap by reference to a company’s PAYE and NIC liabilities for an accounting period if the company meets conditions A and B. (2) A company meets condition A for an accounting period if, during the period, the company is engaged in— (a) taking, or preparing to take, steps in order that relevant intellectual property will be created by it, (b) creating relevant intellectual property, or (c) performing a significant amount of management activity in relation to relevant intellectual property it holds. (3) For the purposes of subsection (2)— (a) a company is only engaged in an activity mentioned in paragraph (a), (b) or (c) of subsection (2) if the activity is wholly or mainly undertaken by employees of the company; (b) intellectual property is “relevant” intellectual property in relation to a company if the whole or the greater part (in terms of value) of it is created by the company; (c) intellectual property is created by a company if it is created in circumstances in which the right to exploit it vests in the company (whether alone or jointly with others). (4) For the purposes of this section— - “intellectual property” means—any patent, trade mark, registered design, copyright, design right or plant breeder’s right,any rights under the law of a country or territory outside the United Kingdom which correspond or are similar to those falling within paragraph (a), orany information or technique not protected by a right within paragraph (a) or (b) but having industrial, commercial or other economic value; - “management activity”, in relation to intellectual property, means formulating plans and making decisions in relation to the development or exploitation of the intellectual property. (5) A company meets condition B for an accounting period if the amount (if any) given by subsection (6) does not exceed 15% of the company’s qualifying expenditure for the period. (6) The amount given by this subsection is the sum of the following incurred by the company in the period— (a) qualifying expenditure on externally provided workers (see section 1127), where the company, the staff provider and (if different) the staff controller (or staff controllers)— (i) are all connected, or (ii) have jointly elected (under section 1130) that section 1129 is to apply to them as if they were all connected; (b) qualifying contractor expenditure, where the company and the contractor— (i) are connected, or (ii) have jointly elected (under section 1135) that section 1134 is to apply to them as if they were connected. (7) In subsection (6)(b), “qualifying contractor expenditure” has whichever of the meanings given by 1112C(7) corresponds to the purpose for which this section is being applied. (8) The Treasury may by regulations replace the percentage for the time being specified in subsection (5) with a different percentage. (1112F) (1) Subsection (2) applies if a company makes a claim under section 1042C (claims for R&D expenditure credit) at a time when it is not a going concern. (2) No amount is to be paid to the company at step 7 in section 1042I as a result of the claim. (3) Subsection (2) ceases to apply (and the company accordingly becomes entitled to be paid) if the company becomes a going concern on or before the last day on which it would be entitled to amend the claim in accordance with paragraph 83E of Schedule 18 to FA 1998. (4) A company may not make— (a) a claim under section 1044 (R&D relief by way of additional deduction), (b) an election under section 1045 (R&D relief by way of deemed trading loss), or (c) a claim under section 1054 (R&D tax credit), at a time when it is not a going concern. (5) If a company ceases to be a going concern after making a claim under section 1054, it is treated as if it had not made the claim (and accordingly there is treated as having been no payment of R&D tax credit to carry interest under section 826 of ICTA). (6) Subsection (5) does not apply so far as the claim relates to an amount that was paid or applied before the company ceased to be a going concern. (1112G) (1) For the purposes of section 1112F, a company is a going concern if— (a) its latest published accounts were prepared on a going concern basis, and (b) nothing in those accounts indicates that they were prepared on that basis only because of an entitlement or expected entitlement to a credit or relief under this Part. (2) But a company is not a going concern if it is in administration or liquidation. (3) For the purposes of this section, a company is in administration if— (a) it is in administration under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company. (4) For the purposes of this section, a company is in liquidation if— (a) it is in liquidation within the meaning of section 247 of that Act or Article 6 of that Order, or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company. (5) If— (a) a company transfers its trade and research and development to another company that is a member of the same group, and (b) only by reason of that transfer, the company’s accounts for the period of account in which the transfer took place are not prepared on a going concern basis, the accounts are to be treated for the purposes of this section as if they were prepared on a going concern basis. (6) Section 436(2) of the Companies Act 2006 (meaning of “publication” of documents) has effect for the purposes of this section. (1112H) (1) This section applies in relation to an amount that a company would, but for this section, be entitled to be paid— (a) at step 7 in section 1042I (payment of R&D expenditure credit not applied for other purposes), or (b) under section 1054 (payment of R&D tax credit). (2) If the company’s tax return for the accounting period in question is enquired into by an officer of Revenue or Customs— (a) the amount does not have to be paid to the company, but (b) an officer of Revenue and Customs may make a payment on a provisional basis of such amount as the officer thinks fit. (3) If the company has outstanding PAYE or NIC liabilities for the accounting period in question, the amount does not have to be paid to the company. (4) For the purposes of subsection (3), a company has outstanding PAYE or NIC liabilities for an accounting period if it has not paid to an officer of Revenue and Customs any amount that it is required to pay— (a) under PAYE regulations, or (b) in respect of Class 1 national insurance contributions, for payment periods ending in the accounting period. (1112I) (1) To the extent that a transaction is attributable to arrangements entered into for a disqualifying purpose, it is to be disregarded in ascertaining a company’s entitlement to relief under this Part. (2) Arrangements are entered into for a disqualifying purpose if their main purpose, or one of their main purposes, is to enable a company to obtain relief under this Part— (a) to which it would not otherwise be entitled, or (b) of greater amount than that to which it would otherwise be entitled. (1112J) The Treasury may, by regulations, limit the availability of relief under Chapter 2 in respect of— (a) companies (or groups of companies) of a prescribed description, (b) research and development projects of a prescribed description, or (c) expenditure of a prescribed description.

9

(d) is attributable to qualifying earnings of externally provided workers.

(4) Any apportionment of expenditure of the company necessary for the purposes of this section is to be made on a just and reasonable basis.

(1132A) (1) This section determines what are “qualifying earnings” in relation to an externally provided worker for the purposes of this Part. (2) The worker’s earnings are qualifying earnings if either— (a) the staff controller, or (b) the company in relation to which the worker is an externally provided worker, is, in respect of any part of those earnings, required to account to an officer of Revenue and Customs both for income tax under PAYE regulations and for Class 1 national insurance contributions. (3) If subsection (2) does not apply, the worker’s earnings are qualifying earnings if and to the extent that they are attributable to relevant research and development that is undertaken outside the United Kingdom and to which section 1138A applies. (4) In this section, “the worker’s earnings” means the worker’s earnings under the contract mentioned in section 1128(7).

(1133) (1) This section applies for the purposes of this Part. (2) A person “contracts out” research and development if— (a) the person enters into a contract under which activities are to be undertaken for it (whether by another party to the contract or by a sub-contractor), (b) the activities undertaken in order to meet the obligations owed to the person under the contract include research and development, and (c) it is reasonable to assume, having regard to the terms of the contract and any surrounding circumstances, that the person intended or contemplated when entering into the contract that research and development of that sort would be undertaken in order to meet those obligations. (3) The research and development that is “contracted out” is the research and development referred to in subsection (2)(b), to the extent that subsection (2)(c) is satisfied in relation to it. (4) Research and development contracted out by a person is contracted out “to”— (a) the party to the contract who undertakes the obligations referred to in subsection (2)(b), and (b) any sub-contractor who undertakes contractual responsibility for the activities needed to meet those obligations. (5) References to a sub-contractor include any sub-contractor at one or more removes from the contract referred to in subsection (2). (6) A “contractor payment” is a payment made in respect of contracted out research and development to a person to whom it is contracted out. (7) A payment that relates only partly to contracted out research and development is to be apportioned on a just and reasonable basis for the purposes of subsection (6). (8) Sections 1134 to 1136 determine the “qualifying element” of a contractor payment.

(a) a company (“A”) makes a contractor payment to another person (“B”), (b) A and B are connected,

;

(e) is incurred in respect of— (i) research and development that is undertaken in the United Kingdom, or (ii) research and development that is undertaken outside the United Kingdom and to which section 1138A applies.

;

(5) In section 1123 (staffing costs) and sections 1127 to 1131 (qualifying expenditure on externally provided workers) as they apply for the purposes of subsection (3)(c), references to a company are to be read as references to B.

;

(1136) (1) This section applies to a contractor payment to which section 1134 does not apply. (2) The qualifying element of the payment is 65% of the relevant portion of the payment. (3) The relevant portion is the portion that is incurred in respect of— (a) research and development that is undertaken in the United Kingdom, or (b) research and development that is undertaken outside the United Kingdom and to which section 1138A applies. (4) An apportionment of expenditure necessary for the purposes of this section is to be made on a just and reasonable basis.

(1138A) (1) This section applies to research and development undertaken outside the United Kingdom if— (a) the research and development is undertaken in the circumstances described in subsection (2), or (b) regulations made by the Treasury provide for this section to apply. (2) The circumstances are that there are conditions necessary for the purposes of the research and development— (a) that are not present in the United Kingdom, (b) that are present in the location in which the research and development is undertaken, and (c) that it would be wholly unreasonable for the company to replicate in the United Kingdom. (3) In subsection (2) “conditions”— (a) includes— (i) geographical, environmental or social conditions; (ii) legal or regulatory requirements as a result of which the research and development may not be undertaken in the United Kingdom, but (b) does not include conditions so far as relating to— (i) the cost of the research and development; (ii) the availability of workers to carry out the research and development. (4) The Treasury may by regulations make provision specifying things that are not conditions for the purposes of subsection (2). (1138B) For the purposes of this Part in its application to an accounting period, a company’s expenditure is “attributable to an exempt foreign permanent establishment” if— (a) an election by the company under section 18A applies to the period, and (b) the expenditure is brought into account in calculating a relevant profits amount or a relevant losses amount for the purposes of that section as it applies in relation to the period.

(1140A) For the purposes of this Part, a company is in the same group as another company if those companies are in the same group for the purposes of Part 5 of CTA 2010.

(5) Two companies that are in the same group may make a joint election the effect of which is that— (a) in respect of any research and development contracted out by one of those companies to the other, the company contracting it out is to be treated for the purposes of this Part as an ineligible company, and (b) in determining whether activity is research and development for the purposes of this Part, anything done by one of those companies further to a contract with the other is to be treated as if done by the other company, in any case where that results in activity that would not otherwise be research and development being regarded as such. (6) Such an election— (a) must be made by notice in writing to an officer of Revenue and Customs, and (b) has effect until— (i) it is revoked by either company by further such notice, or (ii) the companies are no longer in the same group.

(1142C) (1) The right of a company to be paid an amount of R&D expenditure credit or R&D tax credit may not be assigned. (2) Accordingly, a purported assignment of such a right, or an agreement to assign such a right, is void. (3) References to assignment in this section are to be read in Scotland as references to assignation.

(1142D) (1) Where an amount of R&D expenditure credit or R&D tax credit is owed to a company, an officer of Revenue and Customs may not pay the amount to a person other than the company (even on the instruction or at the request of the company). (2) Subsection (1) does not apply if— (a) the company requests that payment be made to a person connected with the company, or (b) the officer is satisfied that exceptional circumstances make payment to the company impracticable or inconvenient.

(1142E) Any order or regulations under this Part may— (a) contain incidental, supplemental, consequential and transitional provision and savings; (b) make different provision for different purposes or areas.

Part 2 — Consequential amendments

FA 1998

10

FA 2007

11

In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa)(ia) (“corporation tax credit” includes R&D expenditure credit), for “Chapter 6A of Part 3” substitute “Chapter 1A of Part 13”.

CTA 2009

12

(zc) section 1142(1)(e) (companies ineligible for R&D relief),

.

  • capped R&D expenditure (in Chapter 6A of Part 3)

;

  • large company (in Chapter 6A of Part 3)

;

  • payment period (in Chapter 6A of Part 3

;

  • qualifying body (in Chapter 6A of Part 3)

;

  • qualifying body (in Part 13)

;

  • qualifying expenditure on sub-contracted R&D (in Chapter 6A of Part 3)

;

  • qualifying R&D expenditure (in Chapter 6A of Part 3)

;

  • relevant payment to the subject of a clinical trial (in Chapter 6A of Part 3)

;

  • relevant research and development (in Chapter 6A of Part 3)

;

  • research and development (in Chapter 6A of Part 3)

;

  • software, data licences, cloud computing services or consumable items (in Chapter 6A of Part 3)

;

  • staffing costs (in Chapter 6A of Part 3)

;

  • sub-contractor payment (and sub-contractor) (in Part 13)

;

  • subsidised expenditure (in Part 13)

;

  • subsidised qualifying expenditure (in Chapter 6A of Part 3)

;

contracted out (and related expressions) (in Part 13) section 1133

;

contractor payment (in Part 13) section 1133

;

group (in Part 13) section 1140A

;

ineligible company (in Part 13) section 1142

.

CTA 2010

13

(a) Chapter 1A of Part 13 (R&D expenditure credit), and (b) Chapter 2 of that Part (relief for loss-making, R&D-intensive SMEs).

;

(6) Sections 1112B to 1112E of CTA 2009 (determination of cap by reference to PAYE and NIC liabilities) apply for the purposes of subsections (2)(b), (3)(b) and (4)(b) as they apply for the purposes of section 1058(1) of CTA 2009.

TIOPA 2010

14

In the following provisions of TIOPA 2010, for “within the meaning of section 104A” substitute “under Chapter 1A of Part 13”—

FA 2013

15

In Schedule 43C to FA 2013 (penalties in connection with the general anti-abuse rule), in paragraph 11(e)(ii) (“corporation tax credit” includes R&D expenditure credit), for “Chapter 6A of Part 3” substitute “Chapter 1A of Part 13”.

Part 3 — Commencement and transitional and transitory provision

General commencement of Parts 1 and 2

16

Assignments and nominations

17

Avoidance of overlaps and gaps in entitlement during transition

18

in respect of expenditure attributable to the same research and development.

Transitional provision relating to claim notifications

19

The reference in section 1142B of CTA 2009 (as amended by paragraph 9(15)) to claims under section 1042C of that Act is to be read as including claims under section 104A of that Act before its repeal by paragraph 2.

Transitional provision relating to the R&D intensity condition

20

The references in sections 1044(2A)(b) and 1045(2A)(b) of CTA 2009 (inserted by paragraph 6(4) and (5)) to having met the R&D intensity condition in an accounting period—

Higher rate of payable credit for R&D-intensive SMEs from 1 April 2023

21

(b) it is expenditure in respect of which the company is entitled to relief under this Chapter or Chapter 6A of Part 3 for the period.

Schedule 2

Part 1 — New regime for films, television programmes and video games

1

After Part 14 of CTA 2009 insert—

(1179A) (1) This Part— (a) lays down special rules about the taxation of companies in relation to certain production activities in creative sectors, and (b) provides an entitlement to a credit in respect of expenditure on those activities. (2) In particular— (a) this Chapter makes general provision about the application of Chapters 2 and 3 and about the interpretation of this Part; (b) Chapter 2 lays down the special rules about taxation; (c) Chapter 3 provides the entitlement to credit; (d) Chapter 4 makes provision about the application of this Part to films and television programmes; (e) Chapter 5 makes provision about the application of this Part to video games. (1179AA) (1) Chapters 2 and 3 apply where there is a qualifying production and a qualifying company for that production. (2) The later Chapters supply the meanings of those terms. (3) See in particular— (a) section 1179D, in relation to films and television programmes; (b) section 1179F, in relation to video games. (4) Whether a company is the qualifying company for a qualifying production (including whether the production is a qualifying production) is to be assessed separately in relation to each accounting period of the company. (5) The assessment is to be made by reference to the state of affairs at the end of that period. (6) So far as future events are relevant to the assessment, it is to be made by reference to the reasonable expectations of the company at that time. (7) Subsections (5) and (6) are subject to any provision of this Part that provides for a production no longer to be regarded as a qualifying production in an accounting period as a result of events after the end of that period. (8) Once a qualifying company has made an election under section 1179B(1) in respect of a qualifying production, no other company can subsequently be the qualifying company for that production. (9) In this Part, “production”, except when contained in another defined term or used to refer to the act of producing something, means— (a) a film (see section 1179DA), (b) a television programme (see section 1179DD), or (c) a video game. (1179AB) (1) In this Part, “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom. (2) Any apportionment of expenditure for the purposes of this Part between expenditure that is and is not UK expenditure is to be made on a just and reasonable basis. (1179AC) (1) In this Part, “company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1)). (2) Any amendment to a company tax return that must be made by virtue of this Part, and any assessment to give effect to such a requirement, can be made despite any limitation on the time within which such an amendment or assessment can normally be made. (1179AD) For the purposes of this Part, a company is in the same group as another company if those companies are in the same group for the purposes of Part 5 of CTA 2010. (1179AE) (1) Regulations made by the Secretary of State under this Part are to be made by statutory instrument. (2) An instrument containing such regulations is subject to annulment in pursuance of a resolution of either House of Parliament. (3) A power to make regulations under this Part includes the power to make incidental, supplemental, consequential and transitional provision and savings. (1179B) (1) The qualifying company for a qualifying production may elect in its company tax return for an accounting period for the production to be taxed as a separate trade. (2) The effect of such an election is that the activities of the company in relation to the production are to be treated for corporation tax purposes as a trade separate from any other activities of the company (including activities in relation to other qualifying productions). (3) In this Part— (a) that trade is called “the separate production trade”; (b) the accounting period to which the return containing the election relates is called “the opt-in period”. (1179BA) (1) When the qualifying company is treated as beginning to carry on the separate production trade is determined by— (a) section 1179DW, in the case of a film or television programme; (b) section 1179FO, in the case of a video game. (2) If the result is that the separate production trade is treated as having been carried on in an accounting period before the opt-in period, any relevant company tax return must be amended so as to give effect to that treatment in that earlier accounting period. (3) Once a company has made an election under section 1179B(1), the activities of the company in relation to the production are to continue to be treated as a separate trade in accordance with this Chapter even if— (a) the production ceases to be a qualifying production, or (b) the company ceases to be the qualifying company for it. (4) That is the case even if the production ceases to be regarded as a qualifying production in the opt-in period as a result of events after the end of that period. (5) In the following provisions of this Chapter, “qualifying production” and “qualifying company” are accordingly capable of including productions or companies that used to be so. (1179BB) (1) The profits of the separate production trade are to be calculated in accordance with this section. (2) For the first period of account, the following are to be brought into account— (a) as a debit, the costs of the qualifying production incurred by the qualifying company to date, and (b) as a credit, the proportion of the qualifying company’s estimated total income from the qualifying production that is treated as earned at the end of that period. (3) For subsequent periods of account, the following are to be brought into account— (a) as a debit, the difference between— (i) the amount of the costs of the qualifying production incurred by the qualifying company to date, and (ii) the corresponding amount for the previous period, and (b) as a credit, the difference between— (i) the proportion of the qualifying company’s estimated total income from the qualifying production that is treated as earned at the end of that period, and (ii) the corresponding amount for the previous period. (4) The proportion of the qualifying company’s estimated total income that is treated as earned at the end of a period of account is given by— $$C / T × I$ where— C is the total of the costs of the qualifying production incurred by the qualifying company to date, T is the estimated total cost to the qualifying company of the qualifying production, and I is the qualifying company’s estimated total income from the qualifying production.$ (5) What counts as costs of, and income from, the qualifying production is determined by— (a) section 1179DX, in the case of a film or television programme; (b) section 1179FP, in the case of a video game. (See also section 1179CB.) (6) But nothing in this Part, except section 1179BE, allows an amount to count as costs of the qualifying production if it would not generally be allowed as a deduction in calculating the profits of a trade for corporation tax purposes. (7) Estimates for the purposes of this section must be made— (a) as at the balance sheet date for each period of account, and (b) on a just and reasonable basis taking into consideration all relevant circumstances. (8) Subsection (9) applies if a period of account of the separate production trade does not coincide with an accounting period of the qualifying company. (9) The expenditure and receipts brought into account for the period under this section, and the resulting profit or loss, are to be apportioned to accounting periods of the company for the purposes of this Part by reference to the number of days in the periods concerned. (1179BC) (1) For the purposes of section 1179BB, costs are incurred when they are represented in the state of completion of the work in progress. (2) Accordingly— (a) payments in advance for work to be done are to be ignored until the work has been carried out, and (b) deferred payments are to be recognised to the extent that the work is represented in the state of completion. (3) But an amount that has not been paid is not an incurred cost until there is an unconditional obligation to pay it. (4) If an obligation is linked to income being earned from the qualifying production, no amount is to be brought into account in respect of the costs of the obligation unless an appropriate amount of income is or has been brought into account. (1179BD) (1) This section applies if, before the qualifying company began to carry on the separate production trade, it incurred expenditure on the development of the qualifying production. (2) The expenditure may be treated as expenditure of the separate production trade incurred immediately after the company began to carry on the trade. (3) If expenditure so treated has previously been taken into account for other tax purposes, any relevant company tax return must be amended accordingly. (1179BE) (1) This section applies for corporation tax purposes in relation to the separate production trade. (2) Expenditure that— (a) counts as costs of the qualifying production, and (b) would (apart from this subsection) be regarded as of a capital nature by reason only of being incurred on the creation of an asset in the form of the qualifying production, is to be treated as expenditure of a revenue nature. (As to other capital expenditure, see section 53 and section 1179BB(6).) (3) Receipts that— (a) count as income from the qualifying production, and (b) would (apart from this subsection) be regarded as of a capital nature, are to be treated as receipts of a revenue nature. (1179BF) (1) This section applies if a company makes a loss in the separate production trade in a pre-completion period (see sections 1179DY and 1179FQ). (2) The loss is not available for loss relief, except as provided in subsections (3) and (5). (3) The loss is not prevented from being carried forward under section 45B of CTA 2010 to be deducted from profits of the separate production trade in a subsequent period. (4) If the loss is so carried forward and deducted, the deduction is to be ignored for the purposes of section 269ZB of CTA 2010. (5) To the extent that the loss could be carried forward under section 45B of CTA 2010 to the completion period or a subsequent accounting period, it may instead be treated for the purposes of section 37 and Part 5 of CTA 2010 as a loss made in that period. (6) Subsection (5) does not apply to the extent that the loss is carried forward by virtue of section 1179BG. (7) In this section, “loss relief” includes any means by which a loss might be used to reduce the amount in respect of which the company, or any other person, is chargeable to tax. (1179BG) (1) This section applies if— (a) a company (“the principal company”) ceases to carry on the separate production trade in respect of a production, (b) the principal company could, but for the cessation of that trade, carry an amount (“the terminal loss”) forward under section 45A or 45B of CTA 2010 to an accounting period after that in which the cessation occurs, (c) when the trade ceases, either the principal company or another company in the same group carries on another separate production trade under this Chapter (“the other trade”), and (d) the ceased trade and the other trade both relate to productions that are or were qualifying productions by virtue of the same Chapter of this Part. (2) If the other trade is carried on by the principal company, the company may, by making a claim, treat the terminal loss (or part of it) as a loss made in the other trade that is carried forward under section 45B of CTA 2010. (3) If the other trade is carried on by another company— (a) the principal company may surrender the terminal loss (or part of it) to the other company, and (b) the other company may, by making a claim, elect for the surrendered amount to be treated as a loss made in the other trade that is carried forward under section 45B of CTA 2010. (4) The carrying forward of a loss by virtue of subsection (2) or (3) is to the first accounting period beginning after the cessation of the ceased trade. (5) If— (a) the other trade is no longer carried on that accounting period, (b) the company carrying on the other trade is not entitled to an expenditure credit under Chapter 3 for that accounting period in respect of the other trade, or (c) in a case within subsection (3), the other company does not make the election in relation to that accounting period, the claim under subsection (2) or the surrender under subsection (3) is to be treated as not having been made. (6) The Treasury may, in relation to surrenders or elections under subsection (3), make provision by regulations corresponding, subject to such adaptations or modifications as appear to them to be appropriate, to that made by Part 8 of Schedule 18 to the FA 1998. (7) A deduction made under section 45B of CTA 2010 by virtue of this section is to be ignored for the purposes of section 269ZB of CTA 2010. (8) The principal company is not entitled to relief under section 45F of CTA 2010 in respect of an amount surrendered under subsection (3). (1179C) (1) The qualifying company for a qualifying production is entitled to an expenditure credit for— (a) the opt-in period, and (b) (subject to subsection (2)) any subsequent accounting period in which it continues to carry on the separate production trade. (2) If in any of those subsequent periods the production is no longer a qualifying production, or the company is no longer the qualifying company for it, the company is not entitled to an expenditure credit for the period. (3) But that does not affect the entitlement of the company for any subsequent period in which the production is once again a qualifying production or the company is once again the qualifying company for it. (4) If a production ceases to be regarded as a qualifying production in an accounting period as a result of events after the end of that period— (a) the qualifying company is no longer entitled to an expenditure credit for that period, and (b) any company tax return drawn up in reliance on such an entitlement must be amended so as to remove anything derived from that entitlement. (5) An expenditure credit to which a company is entitled may be claimed by the company in accordance with Part 9D of Schedule 18 to FA 1998. (1179CA) (1) The amount of the expenditure credit to which a qualifying company is entitled for an accounting period is determined as follows. - Step 1 Ascertain the total of the company’s relevant global expenditure (see subsection (2)) for all accounting periods up to and including the present one. - Step 2 Deduct from that total any expenditure that is not UK expenditure (see section 1179AB). - Step 3 If the amount remaining after step 2 exceeds 80% of the total ascertained at step 1, deduct the amount of the excess. The remaining amount is the company’s “qualifying expenditure to date”. - Step 4 Deduct from the company’s qualifying expenditure to date the amount (if any) that was the company’s qualifying expenditure to date in the accounting period for which it was last entitled to, and claimed, an expenditure credit in respect of the qualifying production. The remaining amount is the company’s “qualifying expenditure for the period”. - Step 5 The amount of the credit to which the company is entitled is the relevant percentage of the company’s qualifying expenditure for the period. The relevant percentage is determined by— section 1179DV, in the case of a film or television programme; section 1179FN, in the case of a video game. (2) Expenditure is “relevant global expenditure” for an accounting period if— (a) it is brought into account under section 1179BB in calculating the profits of the separate production trade for that period, and (b) it counts as relevant production expenditure in relation to the qualifying production under— (i) section 1179DR, in the case of a film or television programme; (ii) section 1179FJ, in the case of a video game. (1179CB) (1) An expenditure credit under this Chapter is not to be treated as income for the purposes of section 1179BB. (2) But if a company is entitled to, and claims, an expenditure credit under this Chapter for an accounting period, the profits of the separate production trade for that period must (having first been calculated in accordance with section 1179BB) be adjusted by bringing the amount of the expenditure credit into account as a credit. (1179CC) If a company is entitled to, and claims, an expenditure credit under this Chapter for an accounting period, the credit is to be dealt with as follows. - Step 1 The amount of the credit is to be applied in discharging any liability of the company to pay corporation tax for the accounting period. - Step 2 Any amount remaining after step 1 is to be reduced, if necessary, to the amount given by— $A - B$ where— A is the initial amount of the credit (before step 1), and B is the amount of corporation tax that would be chargeable on that amount if it were an amount of profits for the accounting period on which corporation tax was chargeable at the main rate. For provision about the treatment of an amount deducted under this step, see section 1179CD. - Step 3 The amount remaining after step 2 is to be applied in discharging any liability of the company to pay corporation tax for any other accounting period. - Step 4 If the company is a member of a group, it may surrender the whole or part of any amount remaining after step 3 to any other member of the group (as to which see section 1179CE). - Step 5 Any amount remaining after step 4 is to be applied in discharging any other liability of the company to pay a sum to the Commissioners for His Majesty’s Revenue and Customs— under or by virtue of an enactment, or under an agreement made in connection with any person’s liability to make a payment to the Commissioners under or by virtue of an enactment. - Step 6 Any amount remaining after step 5 is (subject to sections 1179CG and 1179CH) to be paid to the company by an officer of Revenue and Customs. (1179CD) (1) This section applies if an amount is deducted under step 2 in section 1179CC from the amount of the qualifying company’s expenditure credit. (2) If the qualifying company is a member of a group, it may, in respect of the accounting period for which the expenditure credit arises, surrender the whole or part of the deducted amount to any other member of the group (as to which see section 1179CE). (3) To the extent that the deducted amount is not surrendered under subsection (2), it is to be carried forward to the next accounting period of the qualifying company, and subsections (4) and (5) apply. (4) The carried-forward amount is to be applied in discharging any liability of the qualifying company to pay corporation tax for the accounting period. (5) If— (a) any of the carried-forward amount remains after the application of subsection (4), and (b) the qualifying company is a member of a group, the qualifying company may, in respect of the accounting period, surrender the whole or part of the remaining amount to any other member of the group (as to which see section 1179CE). (6) If any of the carried-forward amount remains after the application of subsections (4) and (5), it is to be carried forward to the next accounting period of the qualifying company, and those subsections apply again in relation to that accounting period. (1179CE) (1) Subsection (3) applies if an amount of expenditure credit is surrendered by the qualifying company to another member of its group under step 4 in section 1179CC or under section 1179CD(2) or (5). (2) For the purposes of that subsection— (a) the accounting period in respect of which the surrender is made is “the surrender AP”; (b) an accounting period of the other group member is an “overlapping AP” if it overlaps to any extent with the surrender AP. (3) The surrendered amount is to be dealt with as follows. - Step 1 Select an overlapping AP. - Step 2 Calculate the proportion of the overlapping AP that overlaps with the surrender AP, and apply that proportion to the amount of corporation tax payable by the other group member for that overlapping AP. - Step 3 Calculate the proportion of the surrender AP that overlaps with the overlapping AP, and apply that proportion to the surrendered amount. - Step 4 The amount given by step 3 is to be applied in discharging the liability of the other group member to pay the corporation tax mentioned in step 2, up to the amount given by that step. - Step 5 Select another overlapping AP, if there is one, and repeat steps 2 to 4. - Step 6 If any of the surrendered amount remains after steps 2 to 4 have been taken in relation to each overlapping AP, the remainder is to be treated for the purposes of section 1179CC or (as the case may be) section 1179CD as if it had not been surrendered as mentioned in subsection (1). (4) A surrender to which subsection (3) applies is not to be— (a) taken into account in determining, for corporation tax purposes, the profits of the qualifying company or the other group member, or (b) regarded for corporation tax purposes as the making of a distribution. (1179CF) (1) An amount within subsection (2) is to be applied as described in that subsection before any amount within subsection (3) is applied as described in that subsection. (2) An amount is within this subsection if it is to be applied under— (a) section 1179CD(4), or (b) section 1179CE(3) as it applies in relation to an amount surrendered under section 1179CD(2) or (5), in discharging the liability of a company to pay corporation tax for an accounting period. (3) An amount is within this subsection if it is to be (or would but for subsection (1) be) applied under— (a) section 1179CC, or (b) section 1179CE(3) as it applies in relation to an amount surrendered under section 1179CC, in discharging the same liability as an amount within subsection (2). (1179CG) (1) No amount may be paid to a company at step 6 of section 1179CC if, when the company claims the expenditure credit from which the amount is derived, the company is in administration or liquidation. (2) For the purposes of this section, a company is in administration if— (a) it is in administration under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company. (3) For the purposes of this section, a company is in liquidation if— (a) it is in liquidation within the meaning of section 247 of that Act or Article 6 of that Order, or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company. (1179CH) (1) Subsection (2) applies if— (a) a company would (but for that subsection) be entitled to be paid an amount at step 6 of section 1179CC, and (b) the company’s tax return for the accounting period in question is enquired into by an officer of Revenue and Customs. (2) The amount does not have to be paid to the company; but an officer of Revenue and Customs may make a payment on a provisional basis of such amount as the officer thinks fit. (3) Subsection (4) applies if— (a) a company would (but for that subsection) be entitled to be paid an amount at step 6 of section 1179CC, and (b) the company has not paid to an officer of Revenue and Customs any amount that it is required to pay— (i) under PAYE regulations, (ii) under section 966 of ITA 2007 (visiting performers), or (iii) in respect of Class 1 national insurance contributions, for payment periods ending in the accounting period in question. (4) The amount does not have to be paid to the company; but an officer of Revenue and Customs may make a payment of such amount as the officer thinks fit. (5) For the purposes of subsection (3), a “payment period” is— (a) in relation to PAYE regulations or Class 1 national insurance contributions, a period— (i) which ends on the fifth day of a month, and (ii) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs; (b) in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act. (1179CI) (1) Subsections (2) and (3) apply if, at any time, a company is party to disqualifying arrangements in relation to anything that is, was or becomes a qualifying production (“the production”). (2) The company is not entitled to an expenditure credit under this Chapter in respect of the production for any accounting period. (3) Any relevant company tax return must be amended accordingly. (4) Subsection (5) applies if a transaction— (a) is attributable to arrangements (other than disqualifying arrangements) entered into otherwise than for genuine commercial reasons, and (b) would result in a company obtaining a relevant advantage. (5) The relevant advantage is to be counteracted by the making of just and reasonable adjustments to any amounts relevant to the calculation of the company’s entitlement to an expenditure credit under this Chapter. (6) Those adjustments may be made (for example) by way of amendment, assessment, or modification of an assessment. (7) For the purposes of this section, arrangements are disqualifying arrangements if their main purpose, or one of their main purposes, is to enable the company to obtain a relevant advantage. (8) But such arrangements are not disqualifying arrangements if the obtaining of that advantage as a result of the arrangements could reasonably be regarded as consistent with— (a) the principles (whether expressed or implied) on which the provisions of this Part are based, and (b) the policy objectives of those provisions. (9) For the purposes of this section, a company would obtain a relevant advantage if it would become entitled to an expenditure credit under this Chapter— (a) to which it would not otherwise be entitled, or (b) of a greater amount than that to which it would otherwise be entitled. (10) In this section, “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable. (1179D) (1) For the purposes of this Part— (a) a qualifying film (see section 1179DB) or qualifying television programme (see section 1179DE) is a qualifying production, and (b) the production company for a qualifying film or a qualifying television programme (see section 1179DP) is the qualifying company for that film or programme. (2) The following provisions of this Chapter apply for the purposes of this Part in relation to films and television programmes. (3) Expenditure credit under Chapter 3 is called “audiovisual expenditure credit” when the entitlement to it arises in respect of a film or television programme. (1179DA) (1) “Film” includes any record, however made, of a sequence of visual images that is capable of being used as a means of showing that sequence as a moving picture. (2) Each part of a series of films is treated as a separate film, unless— (a) the films form a series with not more than 26 parts, (b) the combined playing time is not more than 26 hours, and (c) the series constitutes a self-contained work or is a series of documentaries with a common theme, in which case the films are treated as a single film. (3) References to a film include the film soundtrack. (1179DB) A film is a qualifying film if it meets— (a) the theatrical release condition (see section 1179DC), (b) the British certification condition (see section 1179DJ), and (c) the UK expenditure condition (see section 1179DO). (1179DC) (1) A film meets the theatrical release condition if— (a) the film is intended for exhibition to the paying public at the commercial cinema, and (b) a significant proportion of the earnings from the film is intended to be obtained by such exhibition. (2) If the film does not meet that condition in an accounting period after the opt-in period, it cannot meet it in any subsequent accounting period (subject to section 1179E). (1179DD) (1) “Television programme” means any programme (with or without sounds) which— (a) is produced to be seen on television or on the internet, and (b) consists of moving or still images or of legible text or of a combination of those things. (2) Two or more television programmes that are commissioned together under the same agreement are to be treated as a single television programme. (1179DE) A television programme is a qualifying television programme if— (a) it is of an eligible category (see section 1179DF), (b) it is not an excluded programme (see section 1179DG), (c) it meets the broadcast condition (see section 1179DH), (d) in the case of a programme that is not an animation or a children’s programme, it meets the slot length and hourly cost conditions (see section 1179DI), (e) it meets the British certification condition (see section 1179DJ), and (f) it meets the UK expenditure condition (see section 1179DO). (1179DF) (1) The eligible categories of television programme are— (a) dramas, (b) documentaries, (c) animations, and (d) children’s programmes. (2) A television programme is a drama if— (a) it consists wholly or mainly of a depiction of events, (b) the events are depicted wholly or mainly by one or more persons performing, and (c) the whole or a major proportion of what is done by the person or persons performing, whether by way of speech, acting, singing or dancing, involves the playing of a role. (Accordingly, “drama” may include a comedy.) (3) A television programme is a documentary if— (a) it depicts real events, places or circumstances, (b) it is not a drama, and (c) it is primarily intended to record or inform. (4) A programme is a children’s programme if, when production activities begin, it is reasonable to expect that the persons who will make up the programme’s primary audience will be under the age of 15. (5) See section 1179EA(3) for the meaning of “animation”. (1179DG) (1) A television programme is an excluded programme if— (a) it is an advertisement or other promotional programme, (b) it is a news or current affairs programme or discussion programme, (c) it is a quiz show, game show, panel show, variety show, chat show or similar entertainment, (d) it consists of or includes a competition or contest, or the results of a competition or contest, (e) it is a broadcast of a live event or of a theatrical or artistic performance given otherwise than for the purpose of being filmed, or (f) it is produced for training purposes. (2) But a children’s programme is not an excluded programme by virtue of being a quiz show or game show, or falling within subsection (1)(d), if the prize total does not exceed £1,000. (3) For that purpose the “prize total” for a programme is the total of— (a) the amount of each relevant prize that is a money prize, and (b) the amount spent on each other relevant prize by, or on behalf of, its provider; and here “relevant prize” means a prize offered in connection with participation in a quiz, game, competition or contest in, or promoted by, the programme. (4) The Treasury may by regulations amend subsection (2) for the purpose of increasing the amount of the money limit for the time being specified in that subsection. (1179DH) (1) A television programme meets the broadcast condition if— (a) it is intended for broadcast to the general public, and (b) it is not a film that meets the theatrical release condition (see section 1179DC). (2) If the television programme does not meet that condition in an accounting period after the opt-in period, it cannot meet it in any subsequent accounting period (subject to section 1179E). (1179DI) (1) A television programme that consists of distinct episodes meets the slot length condition if the slot length of each episode is greater than 20 minutes. (2) A television programme that does not consist of distinct episodes meets the slot length condition if the slot length of the programme is greater than 20 minutes. (3) A television programme meets the hourly cost condition if the average core expenditure per hour of slot length in relation to the programme is at least £1 million. (4) In this section, “slot length” means the period of time which the episode or (as the case may be) programme is commissioned to fill. (1179DJ) (1) In this section, references to a certificate are to be read— (a) in relation to a film, as references to a certificate under Schedule 1 to the Films Act 1985, and (b) in relation to a television programme, as references to a certificate under section 1179DM. (2) A film or television programme meets the British certification condition in a pre-completion period (see section 1179DY) if— (a) an interim certificate has effect in relation to it at the end of that period, and (b) the production company’s company tax return for that period is accompanied by the certificate. (3) A film or television programme meets the British certification condition in the completion period (see section 1179DY) and any subsequent accounting period if— (a) at the end of the completion period, either— (i) a final certificate has effect in relation to the film or programme, or (ii) the production company has abandoned production activities in relation to the film or programme and an interim certificate has effect in relation to it, and (b) the production company’s company tax return for that period is accompanied by the certificate. (4) Subsections (2) and (3) are subject to subsections (5) and (6). (5) If a film or television programme does not meet the British certification condition in the completion period, it is no longer to be regarded as having met the condition (nor, therefore, as being a qualifying film or qualifying television programme) in any pre-completion period. (6) If, after the end of an accounting period, a certificate ceases to have effect in respect of that period, the film or programme in question is no longer to be regarded as having met the British certification condition (nor, therefore, as being a qualifying film or qualifying television programme) in that period in reliance on that certificate. (7) Subsection (6) does not apply where an interim certificate ceases to have effect on being superseded by a final certificate. (8) For the purposes of subsection (6), a certificate that ceases to have effect so ceases in respect of all accounting periods, except to the extent that a direction under paragraph 3 of Schedule 1 to the Films Act 1985 or section 1179DM provides otherwise. (1179DK) (1) The Secretary of State, with the approval of the Treasury, may by regulations specify conditions which must be met by a television programme before it may be certified as a British programme. (2) Such regulations may— (a) specify different conditions in relation to different descriptions of programme; (b) provide that certain descriptions of programme may not be certified as a British programme; (c) enable the Secretary of State to direct that any provision made by virtue of paragraph (b) does not apply to a programme that meets certain conditions. (1179DL) (1) The production company for a television programme may apply to the Secretary of State for a certificate under section 1179DM in relation to the programme. (2) An application may be for an interim certificate or a final certificate. (3) An interim certificate is a certificate that— (a) is granted before the programme is completed (see section 1179EB), and (b) states that the programme, if completed in accordance with the proposals set out in the application, will be a British programme. (4) A final certificate is a certificate that— (a) is granted after the programme is completed, and (b) states that the programme is a British programme. (5) The Secretary of State may require an applicant to provide documents or information to assist the Secretary of State in determining the application. (6) The Secretary of State may require information provided for the purposes of an application to be accompanied by a statutory declaration, made by the person providing it, as to the truth of the information. (7) The Secretary of State may by regulations make provision supplementing this section, including— (a) provision about the form of applications, (b) provision about the particulars and evidence necessary for satisfying the Secretary of State that a programme meets any conditions that apply by virtue of section 1179DK, and (c) provision that any statutory declaration which is required by subsection (6) to be made by any person may be made on the person’s behalf by such person as is specified in the regulations. (1179DM) (1) If— (a) an application is made in accordance with section 1179DL, and (b) the Secretary of State is satisfied that the television programme concerned meets any conditions that apply by virtue of section 1179DK, the Secretary of State must certify the programme accordingly. (2) An interim certificate— (a) may be given subject to conditions, and (unless the Secretary of State directs otherwise) is of no effect if the conditions are not met, and (b) may be expressed to expire after a specified period, and (unless the Secretary of State directs otherwise) ceases to have effect at the end of that period. (3) If it appears to the Secretary of State that a film or television programme certified under this section ought not to have been certified, the Secretary of State may revoke the certificate. (4) Unless the Secretary of State directs otherwise, a certificate that is revoked is treated as never having had effect. (1179DN) (1) Section 18(1) of the Commissioners for Revenue and Customs Act 2005 (restriction on disclosure by Revenue and Customs officials) does not prevent disclosure to the Secretary of State for the purposes of the Secretary of State’s functions under— (a) Schedule 1 to the Films Act 1985, or (b) sections 1179DK to 1179DM. (2) Information disclosed to the Secretary of State for those purposes may be disclosed by the Secretary of State to the British Film Institute. (3) The Treasury may by regulations amend subsection (2)— (a) so as to substitute for the person or body specified in that subsection a different person or body, or (b) in consequence of a change in the name of the person or body so specified. (4) A person to whom information is disclosed under subsection (1) or (2) may not otherwise disclose it except— (a) for the purposes of the Secretary of State’s functions under the provisions referred to in subsection (1), (b) if the disclosure is authorised by an enactment, (c) in pursuance of an order of a court, (d) for the purposes of a criminal investigation or legal proceedings (whether criminal or civil) connected with the operation of this Part or Schedule 1 to the Films Act 1985, (e) with the consent of the Commissioners for His Majesty’s Revenue and Customs, or (f) with the consent of each person to whom the information relates. (5) Section 19 of the Commissioners for Revenue and Customs Act 2005 (offence of unlawful disclosure of revenue and customs information) applies in relation to a contravention of subsection (4) as it applies in relation to a contravention of the provisions referred to in subsection (1) of that section. (1179DO) (1) A film or television programme meets the UK expenditure condition in a pre-completion period (see section 1179DY) if— (a) the production company’s company tax return for the period states— (i) the total amount of core expenditure that is expected to be incurred in relation to the film or programme, and (ii) the amount of that expenditure that is expected to be UK expenditure, and (b) the second of those amounts is at least 10% of the first. (2) A film or television programme meets the UK expenditure condition in the completion period (see section 1179DY) and any subsequent accounting period if— (a) the production company’s company tax return for the completion period states— (i) the total amount of core expenditure that has been incurred in relation to the film or programme, and (ii) the amount of that expenditure that is UK expenditure, and (b) the second of those amounts is at least 10% of the first. (3) Subsection (1) is subject to subsections (4) and (5). (4) If a film or television programme does not meet the UK expenditure condition in a pre-completion period, it is no longer to be regarded as having done so (nor, therefore, as being a qualifying film or qualifying television programme) in any previous accounting period by virtue of subsection (1) as it applies to that previous period. (5) If a film or television programme does not meet the UK expenditure condition in the completion period, it is no longer to be regarded as having done so (nor, therefore, as being a qualifying film or qualifying television programme) in any pre-completion period. (6) References in this section to core expenditure are to core expenditure incurred— (a) in the case of a film or programme other than a qualifying co-production, by the production company, or (b) in the case of a qualifying co-production, by the co-producers. (7) The Treasury may by regulations amend the percentage specified in subsection (1) or (2). (1179DP) (1) A company is the production company for a film or television programme that is not a qualifying co-production if— (a) it is responsible for— (i) pre-production, principal photography and post-production of the film or programme, and (ii) delivery of the film or programme in completed form, (b) it is actively engaged in production planning and decision-making during pre-production, principal photography and post-production, (c) it directly negotiates, contracts and pays for rights, goods and services in relation to the film or programme, and (d) it is more directly engaged in the matters described in paragraphs (a) to (c), taken as a whole, than any other company that satisfies those paragraphs. (2) A company is the production company for a film or television programme that is a qualifying co-production if— (a) the company is a co-producer of the co-production, (b) the company makes an effective creative, technical and artistic contribution to the film or programme, and (c) its creative, technical, and artistic contribution is greater than that of any other company that— (i) is also a co-producer of the co-production, and (ii) is chargeable to corporation tax on income it receives from the film or programme (or would be if it received any). (3) Activities carried on in partnership are to be ignored in determining whether a company is the production company for a film or television programme. (1179DQ) (1) A film is a “qualifying co-production” if it falls to be treated as a national film in the United Kingdom under an international agreement. (2) A television programme is a “qualifying co-production” if it is eligible to be certified under section 1179DM under an international agreement. (3) A company is a “co-producer” of a qualifying co-production if it is regarded as such under the international agreement by virtue of which the film or television programme in question is a qualifying co-production. (4) In this section, “international agreement” means an agreement between His Majesty’s Government in the United Kingdom and any other government, international organisation or authority. (1179DR) Expenditure incurred by the production company for a film or television programme counts as “relevant production expenditure” for the purposes of section 1179CA(2) if— (a) it is core expenditure in relation to that film or television programme (see section 1179DS), and (b) it is not excluded expenditure (see sections 1179DT and 1179DU). (1179DS) Expenditure is “core expenditure” in relation to a film or television programme if it is expenditure on the pre-production, principal photography or post-production of the film or programme. (1179DT) Expenditure is excluded expenditure to the extent that the production company would, in respect of the expenditure, be able to claim— (a) an R&D expenditure credit under Chapter 6A of Part 3, or (b) relief under Part 13 (relief for expenditure on research and development). (1179DU) (1) Expenditure is excluded expenditure to the extent that it represents connected party profit, unless subsection (3) applies. (2) For the purposes of subsection (1), expenditure represents connected party profit— (a) if it is a payment to a person (“C”) in exchange for something supplied by that person, (b) if the production company is connected with C, and (c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying that thing. (3) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length. (4) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded). (5) Subsections (6) and (7) apply if— (a) the supply by C to the production company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and (b) either— (i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or (ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable). (6) The reference to C in subsection (2)(c) is to be read as a reference to the supplier in the first transaction in the sequence. (7) The reference to the transaction in subsection (3) is to be read as including each transaction in the sequence. (8) In this section, “payment” includes any transfer of value. (1179DV) (1) This section determines the relevant percentage for the purposes of step 5 in section 1179CA(1). (2) In the case of— (a) a qualifying film that is not an animation, or (b) a qualifying television programme that is not an animation or a children’s programme, the relevant percentage is 34%. (3) In the case of— (a) a qualifying film that is an animation, or (b) a qualifying television programme that is an animation or a children’s programme, the relevant percentage is, subject to the following subsections, 39%. (4) Subsection (5) applies if, for any accounting period, the production company is entitled to, and claims, an audiovisual expenditure credit on the basis that the film or programme falls within subsection (2). (5) In relation to any subsequent accounting period, the relevant percentage is 34%. (6) The Treasury may by regulations replace the percentage for the time being specified in subsection (2), (3) or (5) with a different percentage. (1179DW) For the purposes of section 1179B, the production company for a film or television programme is treated as beginning the separate production trade in respect of the film or programme— (a) when pre-production of the film or programme begins, (b) if earlier, when any income from the film or programme is received by the company. (1179DX) (1) This section applies for the purposes of section 1179BB as that section applies in relation to a film or television programme. (2) Expenditure counts towards the costs of the film or programme if it is expenditure on— (a) production activities in connection with the film or programme, or (b) activities with a view to exploiting the film or programme. (3) But an amount that has not been paid within the period of 4 months beginning with the first day after the final day of a period of account is not to count towards the costs incurred in that period. (4) Receipts count towards the income from the film or programme if they are receipts in connection with the making or exploitation of the film or programme, including— (a) receipts from the sale of the film or programme or rights in it, (b) royalties or other payments for use of the film or programme, or aspects of it (for example, characters or music), (c) payments for rights to produce games or other merchandise, and (d) receipts by way of a profit share agreement. (1179DY) (1) A reference to an accounting period, in relation to a film or television programme, is a reference to an accounting period of the production company for the film or programme. (2) A reference to the “completion period”, in relation to a film or television programme, is a reference to the accounting period in which— (a) the film or programme is completed (see section 1179EB), or (b) the production company abandons production activities in relation to the film or programme. (3) The production company for a film or television programme must, in its company tax return for the completion period, state whichever of those has occurred. (4) A reference to a “pre-completion period”, in relation to a film or television programme, is a reference to any accounting period before the completion period in relation to that film or programme. (5) In this section, “production company” includes a company that is no longer the production company for the film or television programme but is still carrying on the separate production trade in relation to it. (1179DZ) (1) Subsection (2) applies if, for an accounting period, a production company is entitled to, and claims, an audiovisual expenditure credit— (a) in respect of a film on the basis that it is an animation, or (b) in respect of a television programme on the basis that it is an animation or a children’s programme. (2) The production company may not, for any subsequent accounting period, claim an audiovisual expenditure credit in respect of the film or programme on the basis that it is— (a) a qualifying film other than an animation, or (b) a qualifying television programme other than an animation or a children’s programme. (3) Subsection (2) ceases to apply if the company amends its company tax return for the accounting period referred to in subsection (1) to withdraw the claim for expenditure credit for that period. (4) An amendment may be made for that purpose despite any limitation on the time within which the return could normally be amended. (1179E) (1) The same production may be a qualifying film in one accounting period and a qualifying television programme in a subsequent accounting period, or vice versa. (2) Such a change does not interrupt the application of this Part in relation to the film or programme. (3) Section 1179DC(2) does not apply to a failure to meet the theatrical release condition in an accounting period if, in that period, the film was a qualifying television programme. (4) Section 1179DH(2) does not apply to a failure to meet the broadcast condition in an accounting period if, in that period, the television programme was a qualifying film. (5) A certificate under Schedule 1 to the Films Act 1985 has effect for the purposes of this Part as it may apply to the certified film as a television programme. (6) A certificate under section 1179DM has effect for the purposes of this Part as it may apply to the certified television programme as a film. (1179EA) (1) “Production activities”, in relation to a film or television programme, means the activities involved in development, pre-production, principal photography and post-production of the film or programme. (2) “Principal photography”, in relation to a film or television programme, includes the generation of images by a computer for inclusion in the film or programme. (3) A film or television programme is an “animation” if (and only if)— (a) the imagery of the completed film or programme includes animation, and (b) the core expenditure on the completed animation constitutes at least 51% of the total core expenditure on the completed film or programme. (1179EB) (1) A film is “completed” when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and distributed for presentation to the general public. (2) A television programme is “completed” when it is first in a form in which it can reasonably be regarded as ready for broadcast to the general public. (1179F) (1) For the purposes of this Part— (a) a qualifying video game (see section 1179FA) is a qualifying production, and (b) the development company for a qualifying video game (see section 1179FI) is the qualifying company for that video game. (2) The following provisions of this Chapter apply for the purposes of this Part in relation to video games. (3) Expenditure credit under Chapter 3 is called “video game expenditure credit” when the entitlement to it arises in respect of a video game. (1179FA) (1) A video game is a qualifying video game if— (a) it is not an excluded game (see subsection (2)), (b) it meets the intended supply condition (see section 1179FB), (c) it meets the British certification condition (see section 1179FC), and (d) it meets the UK expenditure condition (see section 1179FH). (2) A video game is an excluded game if it is produced for— (a) advertising or promotional purposes, or (b) the purposes of gambling, within the meaning of the Gambling Act 2005. (1179FB) (1) A video game meets the intended supply condition if it is intended for supply to the general public. (2) If the video game does not meet that condition in an accounting period after the opt-in period, it cannot meet it in any subsequent accounting period. (1179FC) (1) In this section, references to a certificate are to a certificate under section 1179FF. (2) A video game meets the British certification condition in a pre-completion period (see section 1179FQ) if— (a) an interim certificate has effect in relation to it at the end of that period, and (b) the development company’s company tax return for that period is accompanied by the certificate. (3) A video game meets the British certification condition in the completion period (see section 1179FQ) and any subsequent accounting period if— (a) at the end of the completion period, either— (i) a final certificate has effect in relation to the video game, or (ii) the development company has abandoned development activities in relation to the video game and an interim certificate has effect in relation to it, and (b) the development company’s company tax return for that period is accompanied by the certificate. (4) Subsections (2) and (3) are subject to subsections (5) and (6). (5) If a video game does not meet the British certification condition in the completion period, it is no longer to be regarded as having done so (nor, therefore, as being a qualifying video game) in any pre-completion period. (6) If, after the end of an accounting period, a certificate ceases to have effect in respect of that period, the video game in question is no longer to be regarded as having met the British certification condition (nor, therefore, as being a qualifying video game) in that period in reliance on that certificate. (7) Subsection (6) does not apply where an interim certificate ceases to have effect on being superseded by a final certificate. (8) For the purposes of subsection (6), a certificate that ceases to have effect so ceases in respect of all accounting periods, except to the extent that a direction under section 1179FF provides otherwise. (1179FD) (1) The Secretary of State, with the approval of the Treasury, may by regulations specify conditions which must be met by a video game before it may be certified as a British video game. (2) Such regulations may— (a) specify different conditions in relation to different descriptions of video game; (b) provide that certain descriptions of video game may not be certified as a British video game; (c) enable the Secretary of State to direct that any provision made by virtue of paragraph (b) does not apply to a video game that meets certain conditions. (1179FE) (1) The development company for a video game may apply to the Secretary of State for a certificate under section 1179FF in relation to the programme. (2) An application may be for an interim certificate or a final certificate. (3) An interim certificate is a certificate that— (a) is granted before the video game is completed (see section 1179FS), and (b) states that the video game, if completed in accordance with the proposals set out in the application, will be a British video game. (4) A final certificate is a certificate that— (a) is granted after the video game is completed, and (b) states that the video game is a British video game. (5) The Secretary of State may require an applicant to provide documents or information to assist the Secretary of State in determining the application. (6) The Secretary of State may require information provided for the purposes of an application to be accompanied by a statutory declaration, made by the person providing it, as to the truth of the information. (7) The Secretary of State may by regulations make provision supplementing this section, including— (a) provision about the form of applications, (b) provision about the particulars and evidence necessary for satisfying the Secretary of State that a video game meets any conditions that apply by virtue of section 1179FD, and (c) provision that any statutory declaration which is required by subsection (6) to be made by any person may be made on the person’s behalf by such person as is specified in the regulations. (1179FF) (1) If— (a) an application is made in accordance with section 1179FE, and (b) the Secretary of State is satisfied that the video game concerned meets any conditions that apply by virtue of section 1179FD, the Secretary of State must certify the video game accordingly. (2) An interim certificate— (a) may be given subject to conditions, and (unless the Secretary of State directs otherwise) is of no effect if the conditions are not met, and (b) may be expressed to expire after a specified period, and (unless the Secretary of State directs otherwise) ceases to have effect at the end of that period. (3) If it appears to the Secretary of State that a video game certified under this section ought not to have been certified, the Secretary of State may revoke the certificate. (4) Unless the Secretary of State directs otherwise, a certificate that is revoked is treated as never having had effect. (1179FG) Section 1179DN (disapplication of section 18, and application of section 19, of the Commissioners for Revenue and Customs Act 2005) has effect in relation to the Secretary of State’s functions under sections 1179FD to 1179FF as it has effect in relation to the Secretary of State’s functions under sections 1179DK to 1179DM. (1179FH) (1) A video game meets the UK expenditure condition in a pre-completion period (see section 1179FQ) if— (a) the development company’s company tax return for the period states— (i) the total amount of core expenditure that is expected to be incurred in relation to the video game, and (ii) the amount of that expenditure that is expected to be UK expenditure, and (b) the second of those amounts is at least 10% of the first. (2) A video game meets the UK expenditure condition in the completion period (see section 1179FQ) and any subsequent accounting period if— (a) the development company’s company tax return for the completion period states— (i) the total amount of core expenditure that has been incurred in relation to the video game, and (ii) the amount of that expenditure that is UK expenditure, and (b) the second of those amounts is at least 10% of the first. (3) Subsection (1) is subject to subsections (4) and (5). (4) If a video game does not meet the UK expenditure condition in a pre-completion period, it is no longer to be regarded as having done so (nor, therefore, as being a qualifying video game) in any previous accounting period by virtue of subsection (1) as it applies to that previous period. (5) If a video game does not meet the UK expenditure condition in the completion period, it is no longer to be regarded as having done so (nor, therefore, as being a qualifying video game) in any pre-completion period. (6) References in this section to core expenditure are to core expenditure incurred by the development company. (7) The Treasury may by regulations amend the percentage specified in subsection (1) or (2). (1179FI) (1) A company is the development company for a video game if— (a) it is responsible for designing, producing and testing the video game, (b) it is actively engaged in planning and decision-making during the design, production and testing of the video game, (c) it directly negotiates, contracts and pays for rights, goods and services in relation to the video game, and (d) it is more directly engaged in the matters described in paragraphs (a) to (c), taken as a whole, than any other company that satisfies those paragraphs. (2) Activities carried on in partnership are to be ignored in determining whether a company is the development company for a video game. (1179FJ) Expenditure incurred by the development company for a video game counts as “relevant production expenditure” for the purposes of section 1179CA(2) if— (a) it is core expenditure in relation to that video game (see section 1179FK), and (b) it is not excluded expenditure (see sections 1179FL and 1179FM). (1179FK) (1) Expenditure is “core expenditure” in relation to a video game if it is expenditure on designing, producing or testing the video game. (2) But core expenditure does not include expenditure on— (a) designing the initial concept for a video game, or (b) debugging, or carrying out maintenance in connection with, a completed video game. (1179FL) Expenditure is excluded expenditure to the extent that the development company would, in respect of the expenditure, be able to claim— (a) an R&D expenditure credit under Chapter 6A of Part 3, or (b) relief under Part 13 (relief in respect of expenditure on research and development). (1179FM) (1) Expenditure is excluded expenditure to the extent that it represents connected party profit, unless subsection (3) applies. (2) For the purposes of subsection (1), expenditure represents connected party profit— (a) if it is a payment to a person (“C”) in exchange for something supplied by that person, (b) if the development company is connected with C, and (c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying that thing. (3) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length. (4) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded). (5) Subsections (6) and (7) apply if— (a) the supply by C to the development company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and (b) either— (i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or (ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable). (6) The reference to C in subsection (2)(c) is to be read as a reference to the supplier in the first transaction in the sequence. (7) The reference to the transaction in subsection (3) is to be read as including each transaction in the sequence. (8) In this section, “payment” includes any transfer of value. (1179FN) (1) In relation to a qualifying video game, the relevant percentage for the purposes of step 5 in section 1179CA(1) is 34%. (2) The Treasury may by regulations replace the percentage for the time being specified in subsection (1) with a different percentage. (1179FO) For the purposes of section 1179B, the development company for a video game is treated as beginning the separate production trade in respect of the video game— (a) when the design of the video game begins, (b) if earlier, when any income from the video game is received by the company. (1179FP) (1) This section applies for the purposes of section 1179BB as that section applies in relation to a video game. (2) Expenditure counts towards the costs of the video game if it is expenditure on— (a) development activities in connection with the video game, or (b) activities with a view to exploiting the video game. (3) But an amount that has not been paid within the period of 4 months beginning with the first day after the final day of a period of account is not to count towards the costs incurred in that period. (4) Receipts count towards the income from the video game if they are receipts in connection with the production or exploitation of the video game, including— (a) receipts from the sale of the video game or rights in it, (b) royalties or other payments for use of the video game, or aspects of it (for example, characters or music), (c) payments for rights to produce games or other merchandise, and (d) receipts by way of a profit share agreement. (1179FQ) (1) A reference to an accounting period, in relation to a video game, is a reference to an accounting period of the development company for the video game. (2) A reference to the “completion period”, in relation to a video game, is a reference to the accounting period in which— (a) the video game is completed (see section 1179FS), or (b) the development company abandons development activities in relation to the video game. (3) The development company for a video game must, in its company tax return for the completion period, state whichever of those has occurred. (4) A reference to a “pre-completion period”, in relation to a video game, is a reference to any accounting period before the completion period in relation to that video game. (5) In this section, “development company” includes a company that is no longer the development company for the video game but is still carrying on the separate production trade in relation to it. (1179FR) “Development activities”, in relation to a video game, means the activities involved in designing, producing and testing the video game. (1179FS) A video game is “completed” when it is first in a form in which it can reasonably be regarded as ready for copies of it to be made and made available to the general public.

Part 2 — Amendments consequential on Part 1

Films Act 1985

2
  • “film production company”, in relation to a film, means a company that is the production company for the film for the purposes of Part 14A of the Corporation Tax Act 2009 (see section 1179DP of that Act) or the film production company in relation to the film for the purposes of Part 15 of that Act (see section 1182 of that Act).

FA 1998

3

(4A) An election under section 1179B of the Corporation Tax Act 2009 (opting into Part 14A of that Act) can only be made by being included in a company tax return.

(za) audiovisual expenditure credit or video game expenditure credit,

.

FA 2007

4

In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa) (meaning of “corporation tax credit”), before paragraph (iv) insert—

(iiia) an audiovisual expenditure credit or video game expenditure credit under Chapter 3 of Part 14A of CTA 2009 (expenditure credit in respect of films, television programmes and video games),

.

CTA 2009

5

(807A) This Part does not apply to an intangible fixed asset held by a company treated as carrying on a separate trade under any of Parts 14A to 15E (production of films, television programmes, video games, theatrical productions, orchestral concerts and museum and gallery exhibitions), so far as the asset represents expenditure of that separate trade.

(A1) For provision prohibiting audiovisual expenditure credit or video game expenditure credit being given where relief is available under this Part, see sections 1179DT and 1179FL.

accounting period (in Part 14A) sections 1179DY(1) (in relation to films and television programmes) and 1179FQ(1) (in relation to video games)

;

animation (in Part 14A) section 1179EA(3)

;

audiovisual expenditure credit section 1179D(3)

;

company tax return (in Part 14A) section 1179AC

;

completed (in Part 14A) sections 1179EB (in relation to films and television programmes) and 1179FS (in relation to video games)

;

completion period (in Part 14A) sections 1179DY(2) (in relation to films and television programmes) and 1179FQ(2) (in relation to video games)

;

co-producer (of a qualifying co-production) (in Part 14A) section 1179DQ

;

core expenditure sections 1179DS (in relation to films and television programmes) and 1179FK (in relation to video games)

;

development activities section 1179FR

;

development company (in Part 14A) section 1179FI

;

film (in Part 14A) section 1179DA

;

group (in Part 14A) section 1179AD

;

opt-in period (in Part 14A) section 1179B(3)

;

pre-completion period (in Part 14A) sections 1179DY(4) (in relation to films and television programmes) and 1179FQ(4) (in relation to video games)

;

principal photography (in Part 14A) section 1179EA(2)

;

production (in Part 14A) section 1179AA(9)

;

production activities (in Part 14A) section 1179EA(1)

;

production company (in Part 14A) section 1179DP

;

qualifying company (in Part 14A) sections 1179D(1) (in relation to films and television programmes) and 1179F(1) (in relation to video games); and see also section 1179BA(5)

;

qualifying co-production (in Part 14A) section 1179DQ

;

qualifying film (in Part 14A) section 1179DB

;

qualifying production (in Part 14A) sections 1179D(1) (in relation to films and television programmes) and 1179F(1) (in relation to video games); and see also section 1179BA(5)

;

qualifying television programme (in Part 14A) section 1179DE

;

qualifying video game (in Part 14A) section 1179FA

;

the separate production trade (in Part 14A) section 1179B(3)

;

television programme (in Part 14A) section 1179DD

;

UK expenditure (in Part 14A) section 1179AB

;

video game expenditure credit section 1179F(3)

.

CTA 2010

6

(da) subsection (7A) (expenditure on the production of films, television programmes and video games),

;

(7A) Head 4A is the amount of any expenditure in respect of which the company is entitled to an audiovisual expenditure credit or video game expenditure credit under Part 14A of CTA 2009.

;

(aa) the amount of any audiovisual expenditure credit or video game expenditure credit under Part 14A of CTA 2009 brought into account in calculating the profits of the trade for the accounting period,

.

(357QE) (1) This Chapter makes provision about the interaction between this Part and Part 14A of CTA 2009 (films, television programmes and video games). (2) This Chapter applies if— (a) a company is a Northern Ireland company in an accounting period, (b) the company is treated under Part 14A of CTA 2009 as carrying on a separate trade in that period (see 1179B of that Act), and (c) that trade is a qualifying trade. (3) References in this Chapter to “the Northern Ireland company”, “the accounting period” and “the separate trade” are to be read accordingly. (357QF) (1) Subsection (2) applies if, under section 1179CB of CTA 2009 (expenditure credit under Part 14A of CTA 2009 to be taxable receipt), the Northern Ireland company brings an amount of audiovisual expenditure credit or video game expenditure credit into account in calculating the profits of the separate trade for the accounting period. (2) The amount is to form part of the mainstream profits or mainstream losses of the trade for that period. (357QG) (1) If the accounting period is a pre-completion period within the meaning of section 1179BF of CTA 2009 (carrying forward of production losses in separate trade), that section applies in relation to the separate trade and that accounting period subject to the following provisions. (2) In subsection (1) of that section, the reference to a loss is to be read as a reference to— (a) any Northern Ireland losses, or (b) any mainstream losses; and the rest of that section is to be read accordingly. (3) Subsection (4) applies if the Northern Ireland company has in the accounting period— (a) both Northern Ireland losses of the separate trade and mainstream profits of that trade, or (b) both mainstream losses of the separate trade and Northern Ireland profits of that trade. (4) The company may, despite section 1179BF(2) of CTA 2009, claim under section 37 (relief for trade losses against total profits) for— (a) relief for those Northern Ireland losses against those mainstream profits, or (b) relief for those mainstream losses against those Northern Ireland profits. (357QH) (1) Subsection (2) applies if— (a) the Northern Ireland company ceases to carry on the separate trade in the accounting period, (b) as a result, section 1179BG of CTA 2009 (transfer of terminal loss in separate production trade to other production or group company) applies, and (c) the amount in respect of which it applies (see subsection (1)(b) of that section) represents a Northern Ireland loss. (2) The references to a loss in subsections (2) and (3)(b) of that section are to be read as references to a Northern Ireland loss.

Part 3 — Repeal of existing regimes for films, television programmes and video games

7

In CTA 2009, omit Parts 15 to 15B.

Part 4 — Amendments consequential on Part 3

Films Act 1985

8

ICTA

9

FA 1998

10

FA 2007

11

In Schedule 24 to FA 2007 (penalties for errors), in paragraph 28(fa) (meaning of “corporation tax credit”), omit paragraphs (iv) to (ivb).

CTA 2009

12
  • company tax return (in Part 15)

;

  • company tax return (in Part 15A)

;

  • company tax return (in Part 15B)

;

  • the completion period (in Chapter 5 of Part 15)

;

  • the completion period (in Chapter 5 of Part 15A)

;

  • the completion period (in Chapter 5 of Part 15B)

;

  • co-producer (in Part 15)

;

  • co-producer (in Part 15A)

;

  • core expenditure (in Part 15)

;

  • core expenditure (in Part 15A)

;

  • core expenditure (in Part 15B)

;

  • costs of the film (in Chapter 2 of Part 15)

;

  • costs of the relevant programme (in Chapter 2 of Part 15A)

;

  • costs of the video game (in Chapter 2 of Part 15B)

;

  • European expenditure (in Part 15B)

;

  • film (in Part 15)

;

  • film-making activities (in Part 15)

;

  • film production company (in Part 15)

;

  • film tax relief (in Part 15)

;

  • final certificate (in Chapter 5 of Part 15)

;

  • final certificate (in Chapter 5 of Part 15A)

;

  • final certificate (in Chapter 5 of Part 15B)

;

  • income from the film (in Chapter 2 of Part 15)

;

  • income from the relevant programme (in Chapter 2 of Part 15A)

;

  • income from the video game (in Chapter 2 of Part 15B)

;

  • interim accounting period (in Chapter 5 of Part 15)

;

  • interim accounting period (in Chapter 5 of Part 15A)

;

  • interim accounting period (in Chapter 5 of Part 15B)

;

  • principal photography (in Part 15)

;

  • principal photography (in Part 15A)

;

  • production expenditure (in Part 15)

;

  • production expenditure (in Part 15A)

;

  • qualifying co-production (in Part 15)

;

  • qualifying co-production (in Part 15A)

;

  • qualifying expenditure (in Chapter 3 of Part 15)

;

  • qualifying expenditure (in Chapter 3 of Part 15A)

;

  • qualifying expenditure (in Chapter 3 of Part 15B)

;

  • relevant programme (in Part 15A)

;

  • the separate film trade (in Chapters 2, 3 and 5 of Part 15)

;

  • the separate programme trade (in Chapters 2, 3 and 5 of Part 15A)

;

  • the separate video game trade (in Chapters 2, 3 and 5 of Part 15B)

;

  • special film relief (in Chapter 5 of Part 15)

;

  • special television relief (in Chapter 5 of Part 15A)

;

  • special video games relief (in Chapter 5 of Part 15B)

;

  • television production activities (in Part 15A)

;

  • television production company (in Part 15A)

;

  • television programme (in Part 15A)

;

  • television tax relief (in Part 15A)

;

  • UK expenditure (in Part 15)

;

  • UK expenditure (in Part 15A)

;

  • video game (in Part 15B)

;

  • video games development activities (in Part 15B)

;

  • video games development company (in Part 15B)

;

  • video games tax relief (in Part 15B)

.

FA 2009

13

In paragraph 2 of Schedule 54A to FA 2009 (amounts of overpaid repayment interest recoverable as late payment interest), omit paragraphs (e) to (g).

CTA 2010

14
  • qualifying expenditure

;

  • the separate programme trade

;

  • the separate video game trade

;

  • television production company

;

  • theatrical production

;

  • video games development company

.

FA 2016

15

In Schedule 24 to FA 2016 (tax advantages constituting the grant of state aid), in Part 1, in the table headed “Creative tax reliefs”, omit the entries for film tax relief, television tax reliefs and video games tax relief.

Part 5 — Commencement and transitional provision

General commencement

16

Closure of existing regimes to new productions

17

A company is not to be treated as carrying on a separate trade under Part 15, 15A or 15B of CTA 2009 if the trade would be treated under that Part as beginning on or after 1 April 2025.

Opting into new regime during transitional period

18

Productions not moving into new regime

19

Continuity between regimes: taxation as separate trade

20

Continuity between regimes: calculation of expenditure credit

21

Continuity between regimes: British certification

22
Existing provision in Part 15A or 15B of CTA 2009 New provision in Part 14A of CTA 2009
Section 1216CB(2) Section 1179DK(1)
Section 1216CC(7) Section 1179DL(7)
Section 1217CB(2) Section 1179FD(1)
Section 1217CC(7) Section 1179FE(7)

Continuity between regimes: UK expenditure (films and television programmes)

23

The repeal of Parts 15 and 15A of CTA 2009 does not affect the requirement in section 1214(3) or 1216EB(3) of that Act, so far as it relates to entitlements in accounting periods beginning before 1 April 2027 (even if the “completion period” begins on or after that date).

Transition of video games from European expenditure condition to UK expenditure condition

24

Transfer of terminal losses between productions in existing and new regimes

25

Schedule 3

Part 1 — Amendments of Part 15C of CTA 2009

Introduction

1

Part 15C of CTA 2009 (theatrical productions) is amended as follows.

Meaning of “theatrical production”

2

(a) the primary focus of the play, opera, musical or dramatic piece is the depiction of a story, or a number of related or unrelated stories, through the playing of roles by performers (whether actors, singers, dancers or others),

;

(bb) it is reasonable to expect that the main purpose of the audience members will be to observe the performance (rather than, for example, to undertake tasks facilitated or accompanied by the performance),

.

Meaning of “core expenditure”

3

Provision to emphasise that capital expenditure does not generally qualify for relief

4

In section 1217IC (costs of theatrical production), in subsection (3), at the end insert—

(As to other capital expenditure, see section 53 and subsection (2).)

UK expenditure threshold to replace EEA expenditure threshold

5

(2) In this Part “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom.

;

  • “UK expenditure” has the meaning given by section 1217GB;
  • “UK expenditure condition” has the meaning given by section 1217GB.
UK expenditure (in Part 15C) section 1217GB(2)

;

UK expenditure condition (in Part 15C) section 1217GB(1)

.

EEA expenditure not to qualify for relief

6

Profit element of non-arm's-length payments to connected parties not to qualify for relief

7

(3) Expenditure is excluded to the extent that it represents connected party profit, unless subsection (5) applies. (4) For the purposes of subsection (3), expenditure represents connected party profit— (a) if it is a payment to a person (“C”) in exchange for something supplied by that person, (b) if the company is connected with C, and (c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying that thing. (5) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length. (6) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded). (7) Subsections (8) and (9) apply if— (a) the supply by C to the production company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and (b) either— (i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or (ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable). (8) The reference to C in subsection (4)(c) is to be read as a reference to the supplier in the first transaction in the sequence. (9) The reference to the transaction in subsection (5) is to be read as including each transaction in the sequence. (10) In this section, “payment” includes any transfer of value.

Amendment of R&D exclusion

8

Restriction where tax liabilities outstanding: meaning of “payment period”

9

In section 1217KB (payment in respect of theatre tax credit), after subsection (4) insert—

(4A) For the purposes of subsection (4), a “payment period” is— (a) in relation to PAYE regulations or Class 1 national insurance contributions, a period— (i) which ends on the fifth day of a month, and (ii) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs; (b) in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act.

Relief not to be available for companies in insolvency

10

(1217KD) (1) A company may not make a claim under section 1217H or section 1217K at a time when it is in administration or liquidation. (2) For the purposes of this section, a company is in administration if— (a) it is in administration under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company. (3) For the purposes of this section, a company is in liquidation if— (a) it is in liquidation within the meaning of section 247 of that Act or Article 6 of that Order, or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company.

Part 2 — Changes from European to UK expenditure: transitional provision

Transitional provision in relation to paragraph 5

11

is unaffected by a failure to meet the UK expenditure condition so far as the entitlement derives from expenditure incurred before 1 April 2025.

Transitional provision in relation to paragraph 6

12

Schedule 4

Part 1 — Amendments of Part 15D of CTA 2009

Introduction

1

Part 15D of CTA 2009 (orchestra tax relief) is amended as follows.

Time of election for orchestral concerts to be treated as a series

2

— (a) before the date on which the company first delivers a company tax return for a period in relation to which a concert in the series falls to be treated in accordance with section 1217Q, or (b) if later,

.

Meaning of “core expenditure”

3

Provision to emphasise that capital expenditure does not generally qualify for relief

4

In section 1217QD (costs of orchestral concert), in subsection (3), at the end insert—

(As to other capital expenditure, see section 53 and subsection (2).)

UK expenditure threshold to replace EEA expenditure threshold

5

(2) In this Part “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom.

;

  • “UK expenditure” has the meaning given by section 1217RB(2);
  • “UK expenditure condition” has the meaning given by section 1217RB(1).
UK expenditure (in Part 15D) section 1217RB(2)

;

UK expenditure condition (in Part 15D) section 1217RB(1)

.

EEA expenditure not to qualify for relief

6

Profit element of non-arm's-length payments to connected parties not to qualify for relief

7

, and (c) is not excluded by subsection (3).

(3) Expenditure is excluded to the extent that it represents connected party profit, unless subsection (5) applies. (4) For the purposes of subsection (3), expenditure represents connected party profit— (a) if it is a payment to a person (“C”) in exchange for something supplied, transferred or done by that person, (b) if the company is connected with C, and (c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying, transferring or doing that thing. (5) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length. (6) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded). (7) Subsections (8) and (9) apply if— (a) the supply by C to the company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and (b) either— (i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or (ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable). (8) The reference to C in subsection (4)(c) is to be read as a reference to the supplier in the first transaction in the sequence. (9) The reference to the transaction in subsection (5) is to be read as including each transaction in the sequence. (10) In this section, “payment” includes any transfer of value.

Amendment of exclusion for other reliefs

8

(za) an R&D expenditure credit under Chapter 6A of Part 3, (zb) relief under Part 13 (relief for expenditure on research and development),

.

Restriction where tax liabilities outstanding: meaning of “payment period”

9

In section 1217RI (payment in respect of orchestra tax credit), after subsection (4) insert—

(4A) For the purposes of subsection (4), a “payment period” is— (a) in relation to PAYE regulations or Class 1 national insurance contributions, a period— (i) which ends on the fifth day of a month, and (ii) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs; (b) in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act.

Relief not to be available for companies in insolvency

10

(1217RKA) (1) A company may not make a claim under section 1217RD or section 1217RG at a time when it is in administration or liquidation. (2) For the purposes of this section, a company is in administration if— (a) it is in administration under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company. (3) For the purposes of this section, a company is in liquidation if— (a) it is in liquidation within the meaning of section 247 of that Act or Article 6 of that Order, or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company.

Part 2 — Changes from European to UK expenditure: transitional provision

Transitional provision in relation to paragraph 5

11

is unaffected by a failure to meet the UK expenditure condition so far as the entitlement derives from expenditure incurred before 1 April 2025.

Transitional provision in relation to paragraph 6

12

Schedule 5

Part 1 — Amendments of Part 15E of CTA 2009

Introduction

1

Part 15E of CTA 2009 (museum and gallery exhibition tax relief) is amended as follows.

Museum and gallery exhibitions not to be wholly remote

2

(4A) “Admitted” means admitted in person to the venue where the objects or works are displayed.

Meaning of “core expenditure”

3

UK expenditure threshold to replace European expenditure threshold

4

(2) In this Part “UK expenditure” means expenditure on goods or services that are used or consumed in the United Kingdom.

;

  • “UK expenditure” has the meaning given by section 1218ZCC(2);
  • “UK expenditure condition” has the meaning given by section 1218ZCC(1).
UK expenditure (in Part 15E) section 1218ZCC(2)

;

UK expenditure condition (in Part 15E) section 1218ZCC(1)

.

EEA expenditure not to qualify for relief

5

Profit element of non-arm's-length payments to connected parties not to qualify for relief

6

(ba) is not excluded by subsection (2A),

.

(2A) Expenditure is excluded to the extent that it represents connected party profit, unless subsection (2C) applies. (2B) For the purposes of subsection (2A), expenditure represents connected party profit— (a) if it is a payment to a person (“C”) in exchange for something supplied, transferred or done by that person, (b) if the company is connected with C, and (c) if, and to the extent that, the amount of the payment exceeds the expenditure incurred by C in supplying, transferring or doing that thing. (2C) This subsection applies if the amount of the payment is no more than would have been the case had the transaction been entered into at arm’s length. (2D) A transaction would have been entered into “at arm’s length” if it made “the arm’s length provision” within the meaning of Part 4 of TIOPA 2010 (and for this purpose any limitation on the application of that Part is to be disregarded). (2E) Subsections (2F) and (2G) apply if— (a) the supply by C to the company is one of a sequence of transactions in which the thing supplied has been supplied by one person to another, and (b) either— (i) each transacting party in the sequence is connected to at least one other transacting party in the sequence, or (ii) each transaction in the sequence is entered into in furtherance of a single scheme or arrangement (of whatever kind, and whether or not legally enforceable). (2F) The reference to C in subsection (2B)(c) is to be read as a reference to the supplier in the first transaction in the sequence. (2G) The reference to the transaction in subsection (2C) is to be read as including each transaction in the sequence. (2H) In this section, “payment” includes any transfer of value.

Amendment of exclusion for R&D relief and other creative sector reliefs

7

Restriction where tax liabilities outstanding: meaning of “payment period”

8

In section 1218ZCJ (payment in respect of museums and galleries exhibition tax credit), after subsection (4) insert—

(4A) For the purposes of subsection (4), a “payment period” is— (a) in relation to PAYE regulations or Class 1 national insurance contributions, a period— (i) which ends on the fifth day of a month, and (ii) for which the company is liable to account for income tax and national insurance contributions to an officer of Revenue and Customs; (b) in relation to section 966 of ITA 2007, a period for which the company is required to make a return as described in section 969(1)(b) of that Act.

Relief not to be available for companies in insolvency

9

(1218ZCLA) (1) A company may not make a claim under section 1218ZCE or section 1218ZCH at a time when it is in administration or liquidation. (2) For the purposes of this section, a company is in administration if— (a) it is in administration under Part 2 of the Insolvency Act 1986 or Part 3 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company. (3) For the purposes of this section, a company is in liquidation if— (a) it is in liquidation within the meaning of section 247 of that Act or Article 6 of that Order, or (b) a corresponding situation under the law of a country or territory outside the United Kingdom exists in relation to the company.

Part 2 — Changes from European to UK expenditure: transitional provision

Transitional provision in relation to paragraph 4

10

is unaffected by a failure to meet the UK expenditure condition so far as the entitlement derives from expenditure incurred before 1 April 2025.

Transitional provision in relation to paragraph 5

11

Schedule 6

Power to recover overpayments

1

, or (d) creative sector credit,

.

(2B) In this paragraph, “creative sector credit” means— (a) audiovisual expenditure credit or video game expenditure credit under Chapter 3 of Part 14A of the Corporation Tax Act 2009, (b) film tax credit under Part 15 of that Act, (c) television tax credit under Part 15A of that Act, (d) video game credit under Part 15B of that Act, (e) theatre tax credit under Part 15C of that Act, (f) orchestra tax credit under Part 15D of that Act, or (g) museums and galleries exhibition credit under Part 15E of that Act.

(al) an amount of creative sector credit paid to a company for an accounting period, or

;

Time limit for claims

2

end of the period of— (a) two years beginning with the last day of the period of account to which the claim relates, in a case where that period is not longer than 18 months, or (b) 42 months beginning with the first day of the period of account to which the claim relates, in any other case.

Supporting information

3

(83WA) The Commissioners for His Majesty’s Revenue and Customs may by regulations specify, in relation to a claim to which this Part of this Schedule applies— (a) information to be provided by the claimant company; (b) the form and manner in which, and the time by which, the information is to be provided; (c) the consequences of failing to provide the information as required (which may include the total or partial invalidity of the claim or a reduction of the claimed relief).

Schedule 7

Amendment of CTA 2010

1

CTA 2010 is amended in accordance with paragraphs 2 to 10.

CoACS to be institutional investors

2

In Section 528 (conditions for company), in subsection (4A), after paragraph (b) insert—

(ba) a person acting on behalf of an authorised contractual scheme (within the meaning given by section 237(3) of FISMA 2000) which is a co-ownership scheme (within the meaning given by section 235A of that Act) that meets the genuine diversity of ownership condition or the non-close condition;

.

Non-close condition

3

(4C) The non-close condition is met— (a) in relation to a company, if— (i) it is not a close company, or (ii) it is a close company but only because it has an institutional investor as a direct or indirect participator, and (b) in relation to a person or scheme other than a company, if it would fall within paragraph (a)(i) or (ii) if— (i) the person’s business or the scheme were a company, and (ii) the interests of persons in the business or scheme were shares in the company.

(5B) For the purposes of subsection (4C)(a)(ii)— (a) a person is a “direct participator” if the person is a participator for the purposes of Part 10 of CTA 2010 (see section 454), and (b) a person is an “indirect” participator in a company if the person has a share or interest in the capital or income of the company through another body corporate or other bodies corporate. (5C) In determining whether a person is an indirect participator— (a) reference to having a share or interest in the capital or income of a company through a body corporate is to be read in accordance with sub-paragraphs (9) and (10) of paragraph 46 of Schedule 5AAA to TCGA 1992 (meaning of direct or indirect participator), and (b) a person is regarded for the purposes of those sub-paragraphs, and for the purposes of subsection (5B)(b) of this section, as having a share or interest in the capital or income of a company if the person would be a participator in the company as a result of section 454(2) of CTA 2010.

Certain institutional investors required to meet GDO or non-close condition

4

(4D) But for the purposes of applying the non-close condition for the purpose of any of paragraphs (a) to (c) of subsection (4A), subsection (4C) has effect as if— (a) paragraph (a)(ii) were omitted, and (b) in paragraph (b), in the words before sub-paragraph (i), “or (ii)” were omitted.

, and (b) ignore paragraph (a) of section 442 (non-UK resident companies deemed not to be close).

(5A) But subsection (5)(a) does not apply for the purpose of determining whether a person acting in the course of a long term insurance business meets the non-close condition.

(5D) In determining whether a company is a close company for the purposes of the non-close condition— (a) the rights and powers of a person (“A”) are not to be attributed to another person (“P”) merely because A is a partner of P for the purposes of any attribution under section 451(4) (rights of a person's associates to be attributed to the person etc in determining “control”), and (b) a company (“C”) is not to be regarded as a close company only because a person possesses or is entitled to acquire 50% or more of the voting power in C as a result of being— (i) a manager of a collective investment vehicle (within the meaning of Schedule 5AAA to TCGA 1992), or (ii) a general partner in a limited partnership which is a collective investment scheme.

— - “collective investment scheme” has the meaning it has in section 235 of FISMA 2000;

.

Paragraph 4: transitional provision

5

Insurance companies may be included in group UK REIT

6

Property financing costs

7

(3A) The reference in subsection (3)(a) to the group's property rental business in the United Kingdom is a reference to— (a) property rental business of UK members of the group, and (b) UK property rental business of other members.

(4A) But property financing costs do not (for the purposes of section 543) include any expense for which a deduction would not be allowed in calculating profits in accordance with section 599, other than an expense which is disallowed only as a result of the application of Part 10 of TIOPA 2010 (corporate interest restriction).

Single property rule

8

In section 529 (conditions as to property rental business)—

(a) entry, and (b) when the property was acquired.

Disposal of rights or interests in UK property rich funds

9

(7A) Any such reference also includes the disposal of a right or interest in a fund (a “relevant fund”) that— (a) is an authorised contractual scheme (within the meaning given by section 237(3) of FISMA 2000) which is a co-ownership scheme (within the meaning given by section 235A of that Act), and (b) is UK property rich as determined in accordance with paragraph 3 of Schedule 5AAA to TCGA (UK property rich collective investment vehicles etc).

Holders of excessive rights

10

(4A) For the purposes of section 551, a holder of excessive rights is an “excluded holder” if— (a) in accordance with double taxation arrangements (within the meaning of section 2(4) of TIOPA 2010), the holder is taxed at a particular rate, or not taxed at all, on distributions from a UK REIT, unless the sole reason for that treatment is the size of the holder’s interest in the UK REIT, or (b) the holder is a person to whom a payment of a distribution must be made without deduction of income tax in accordance with regulation 7 of the Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006 (S.I. 2006/2867) (gross payment of distributions).

Corporate interest restriction and disposal of interests in UK property rich companies

11

Schedule 8

Introduction

1

Schedule 22 to FA 2000 (tonnage tax) is amended as follows.

Qualifying companies to include companies managing qualifying ships

2

(18A) A company is regarded for the purposes of this Schedule as managing a qualifying ship if— (a) the ship is a qualifying ship operated by a tonnage tax company (“the operator”), (b) the company carries on activities in relation to the ship that would be tonnage tax activities of the operator if the operator carried them on, and (c) those activities as carried on by the company represent a significant contribution to the operation of the ship.

Daily profits of managed ships

3
  • Step One Determine the daily profit for each qualifying ship operated by the company and each qualifying ship managed by the company by reference to the following table and the net tonnage of the ship— Net tonnageDaily ProfitOperated shipManaged ship For each 100 tons up to 1,000 tons£0.60£0.12For each 100 tons between 1,000 and 10,000 tons£0.45£0.09For each 100 tons between 10,000 and 25,000 tons£0.30£0.06For each 100 tons above 25,000 tons£0.15£0.03

.

Tonnage tax activities include activities in managing ships

4

In paragraph 46 (core qualifying activities)—

(3) A company’s activities in managing qualifying ships means its participation in the activities mentioned in that paragraph by virtue of which the ship is a qualifying ship.

Effect of temporarily ceasing to manage or operate qualifying ships

5

In paragraph 17 (effect of temporarily ceasing to operate qualifying ships)—

Training requirement

6

In paragraph 23 (the training requirement), after sub-paragraph (2) insert—

(3) The condition mentioned in sub-paragraph (1) does not apply to— (a) a company that does not operate any qualifying ships, or (b) a group that does not have any members that operate one or more qualifying ships.

Disapplication of 75% limit for ship managers

7

(6) For the purposes of sub-paragraph (1)— (a) a company is “relevant” if it operates one or more qualifying ships, and (b) a group is “relevant” if it has one or more members that operate one or more qualifying ships.

Commencement

8

The amendments made by this Schedule have effect in relation to tonnage tax elections made on or after 1 April 2024.

Schedule 9

Part 1 — Abolition of lifetime allowance charge

1

Part 4 of FA 2004 (pension schemes etc) is amended as follows.

2

In section 204 (tax charges: authorised pensions and lump sums), after subsection (2) insert—

(3) For further provision, in addition to that contained in this Chapter, about the taxation of pensions and lump sums which are authorised to be paid by this Part, see— (a) Chapter 5A of Part 9 of ITEPA 2003 (pensions under registered pension schemes); (b) Chapter 15A of that Part of that Act (lump sums under registered pension schemes).

3

Omit sections 214 to 226 (lifetime allowance charge) and the italic heading before those sections.

4

(8E) Schedule 32 contains provision about the meaning of references in this section to benefit crystallisation events.

5

(8E) Schedule 32 contains provision about the meaning of references in this section to benefit crystallisation events.

6

In section 237B (annual allowance: liability of scheme administrator), in subsection (6) omit the words from “or benefit crystallisation event 5” to the end.

7

In section 255 (assessments under Part 4 of FA 2004), in subsection (1) omit paragraph (c).

8

Omit section 267 (discharge of liability of scheme administrator to lifetime allowance charge).

9
10

In section 272A (liabilities of independent trustee), in subsection (7) omit paragraph (b).

11

In section 280 (abbreviations and general index), in the table in subsection (2) omit the entries for the following—

12

In Schedule 28 (pension rules and pension death benefit rules), in Part 2 (pension death benefit rules), in paragraph 16AA omit sub-paragraph (a).

13

(A1) (1) This Schedule applies for the purposes of sections 232 and 236. (2) In this Schedule— (a) paragraph A2 sets out the events that are benefit crystallisation events in relation to an individual; (b) subsequent paragraphs give the meaning of expressions used in paragraph A2. (A2) (1) Benefit crystallisation event 1 occurs in relation to an individual if sums or assets held for the purposes of a money purchase arrangement under any of the relevant pension schemes are designated as available for the payment of drawdown pension to the individual. (2) Benefit crystallisation event 2 occurs in relation to an individual if the individual becomes entitled to a scheme pension under any of the relevant pension schemes. (3) Benefit crystallisation event 3 occurs in relation to an individual if the individual, having become so entitled, becomes entitled to payment of the scheme pension, otherwise than in excepted circumstances, at an increased annual rate which— (a) exceeds the threshold annual rate, and (b) exceeds by more than the permitted margin the rate at which it was payable on the day on which the individual became entitled to it. (4) Benefit crystallisation event 4 occurs in relation to an individual if the individual becomes entitled to a lifetime annuity purchased under a money purchase arrangement under any of the relevant pension schemes. (5) Benefit crystallisation event 6 occurs in relation to an individual if the individual becomes entitled to a relevant lump sum under any of the relevant pension schemes.

14

In Schedule 34 (non-UK schemes: application of certain charges) omit paragraphs 13 to 19 (lifetime allowance charge) and the italic heading before those paragraphs.

Part 2 — Taxation of lump sums

Amendments of Part 4 of FA 2004 (pension schemes etc)

15

Part 4 of FA 2004 (pension schemes etc) is amended as follows.

16

In section 164 (authorised member payments), in subsection (2)(c), for the words from “for the purposes of” to the end substitute “as a relevant benefit crystallisation event for the purposes of section 637Q or 637S of ITEPA 2003 (availability of individual’s lump sum allowance and lump sum and death benefit allowance).”

17

(aa) a pension commencement excess lump sum,

;

18

In section 168 (lump sum death benefit rule), in subsection (1), in the lump sum death benefit rule—

19

In section 227G (when pension rights are first flexibly accessed) omit subsection (11).

20

(e) the amount of any lump sum death benefit which is subject to the charge to tax on pension income under Part 9 of ITEPA 2003 (pension income) in the tax year.

(d) the amount of any lump sum death benefit which is subject to the charge to tax on pension income under Part 9 of ITEPA 2003 (pension income) in the tax year.

21

In section 264 (false statements etc), in subsection (1)(a), for “under this Part, or” substitute “under this Part or under Part 9 of ITEPA 2003 (pension income) on pension income to which—

(i) any provision of Chapter 15A of that Part of that Act (lump sums under registered pension schemes) applies, or (ii) section 579A of that Act (pension income under registered pension schemes) applies by virtue of any provision of that Chapter, or

22
23

After section 278 (market value) insert—

(278A) (1) For the purposes of this Part, a pension credit is “disqualifying” if, when the member becomes entitled to it, the person subject to the corresponding pension debit has an actual (rather than a prospective) right to payment of a pension under the relevant arrangement. (2) The “relevant arrangement” is the arrangement to which the pension sharing order, or provision by virtue of which the member becomes entitled to the pension credit, relates. (278B) (1) For the purposes of this Part, a dependants' annuity is “related to” a lifetime annuity payable to a member of a registered pension scheme if— (a) 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 dependants’ annuity will be payable to a dependant of the member. (2) For the purposes of this Part, a nominees’ annuity is “related to” a lifetime annuity payable to a member of a registered pension scheme if— (a) 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. (3) For the purposes of this Part, a dependants’ scheme pension is “related to” a scheme pension payable to a member of a registered pension scheme if— (a) the day on which one is purchased or sums or assets are applied for its provision is no earlier than seven days before, and no later than seven days after, the day on which the other is purchased or sums or assets are applied for its provision, and (b) the dependants’ scheme pension will be payable to a dependant of the member.

24

In section 280 (abbreviations and general index), in the table in subsection (2)—

pension commencement excess lump sum paragraph 3C of Schedule 29

;

25

Schedule 29 (authorised lump sums - supplementary) is amended in accordance with paragraphs 26 to 37.

26

(2) In paragraph 1 “the permitted maximum”, in relation to a lump sum, means the lowest of the following amounts— (a) the applicable amount in relation to the relevant pension (see paragraphs 2A to 2D); (b) so much of the member’s lump sum allowance as is available on the individual becoming entitled to the lump sum (see paragraph 12A); (c) so much of the member’s lump sum and death benefit allowance as is available on the individual becoming entitled to the lump sum (see paragraph 12A).

(2A) (1) This paragraph defines “the applicable amount” in relation to a relevant pension in a case in which the relevant pension is income withdrawal. (2) The applicable amount is one third of the scheme pension capital value. (3) The scheme pension capital value is (subject to sub-paragraph (4)) the aggregate of— (a) the sums designated as available for the payment of drawdown pension on that occasion, and (b) the market value of the assets so designated. (4) There is to be deducted from the amount determined under sub-paragraph (3) so much (if any) of the sums and assets designated as mentioned in sub-paragraph (3)(a) or (b) as represent rights attributable to a disqualifying pension credit. (2B) (1) This paragraph defines “the applicable amount” in relation to a relevant pension in a case in which the relevant pension is a lifetime annuity. (2) The applicable amount is one third of the annuity purchase price. (3) The annuity purchase price is (subject to sub-paragraph (4)) the aggregate of— (a) such of the sums held for the purposes of the pension scheme, and (b) the market value of such of the assets held for the purposes of the pension scheme, as are applied in (or in connection with) the purchase of the lifetime annuity and any related dependants’ annuity and any related nominees’ annuity. (4) There is to be deducted from the amount determined under sub-paragraph (3)— (a) if the sums or assets applied in (or in connection with) the purchase of the annuity or any related dependants’ annuity or any related nominees’ annuity consist of, or include, sums or assets representing the whole or part of the member’s drawdown pension fund or of the member's flexi-access drawdown fund, the aggregate of those sums and the market value of those assets, and (b) in any case, so much (if any) of the sums or assets applied in (or in connection with) the purchase of the annuity or any related dependants’ annuity or any related nominees’ annuity as represents rights which are attributable to a disqualifying pension credit. (2C) (1) This paragraph defines “the applicable amount” in relation to a relevant pension in a case in which the relevant pension is— (a) a scheme pension under a defined benefits arrangement, or (b) a collective money purchase arrangement. (2) The applicable amount is (subject to sub-paragraph (3))— $$A + ( B × C ) - D 4$ where— A is the amount of the lump sum; B is the relevant revaluation factor (see section 276); C is the amount of the pension which will be payable to the member in the period of 12 months beginning with the day on which the member becomes entitled to the pension (assuming that it remains payable throughout that period at the rate at which it is payable on that day); D is so much (if any) of A or C as represents rights which are attributable to a disqualifying pension credit.$ (3) In determining C for the purposes of subsection (2) in a case in which the pension is under a public service pension scheme, any abatement of the pension is to be left out of account. (2D) (1) This paragraph defines “the applicable amount” in relation to a relevant pension in a case in which the relevant pension is a scheme pension under a money purchase arrangement that is not a collective money purchase arrangement. (2) The applicable amount is one third of the scheme pension purchase price. (3) The scheme pension purchase price is (subject to sub-paragraph (4)) the aggregate of— (a) such of the sums held for the purposes of the pension scheme, and (b) the market value of such of the assets held for the purposes of the pension scheme, as are applied in (or in connection with) the purchase or provision of the scheme pension and any related dependants’ scheme pension. (4) There is to be deducted from the amount determined under sub-paragraph (3)— (a) if the scheme pension is funded (in whole or in part) by the application of sums or assets representing the whole or part of the member’s drawdown pension fund or of the member’s flexi-access drawdown fund, the aggregate of those sums and the market value of those assets, and (b) in any case, so much (if any) of the sums and assets referred to in sub-paragraph (3)(a) and (b) as represent rights which are attributable to a disqualifying pension credit.

.

(3B) (1) Sub-paragraph (2) applies if— (a) sums or assets held for the purposes of, or representing accrued rights under, a money purchase arrangement relating to the member under a registered pension scheme (“member money purchase funds”) are subject to a relevant surrender or a relevant transfer, (b) the sole or main purpose of the relevant surrender or relevant transfer is to increase the applicable amount for the purposes of paragraph 2 on the member becoming entitled to a scheme pension, and (c) the member becomes entitled to a scheme pension under a relevant defined benefits arrangement. (2) The pension scheme under which the relevant defined benefits arrangement is an arrangement is to be treated as making an unauthorised payment to the member of the amount by which— (a) the applicable amount in relation to the relevant defined benefits arrangement (as determined under paragraph 2C), exceeds (b) what would be the applicable amount (as determined under paragraph 2D) if the arrangement were a money purchase arrangement. (3) For the purposes of sub-paragraph (1)— (a) member money purchase funds are subject to a “relevant surrender” if they are surrendered and, in consequence of the surrender, there is a corresponding increase in the sums or assets held for the purposes of, or representing rights under, a defined benefits arrangement relating to the member under the pension scheme (or such an arrangement is established), and (b) member money purchase funds are subject to a “relevant transfer” if they are transferred so as to become held for the purposes of, or to represent rights under, a defined benefits arrangement relating to the member under any other registered pension scheme. (4) In this paragraph “relevant defined benefits arrangement” means— (a) the defined benefits arrangement mentioned in paragraph (a) or (b) of sub-paragraph (3), or (b) any other defined benefits arrangement relating to the member (under the pension scheme or any other registered pension scheme) in the case of which any of the sums or assets held for the purposes of, or representing accrued rights under, the arrangement directly or indirectly represent sums or assets previously held for the purposes of, or representing accrued rights under, the defined benefits arrangement so mentioned.

(3C) (1) For the purposes of this Part a lump sum is a pension commencement excess lump sum if— (a) the member becomes entitled to it in connection with becoming entitled to a relevant pension (or dies after becoming entitled to it but before becoming entitled to the relevant pension in connection with which it was anticipated that the member would become entitled to it); (b) it is paid when none of the member’s lump sum allowance is available (see paragraph 12A); (c) it is paid within the period beginning six months before, and ending one year after, the day on which the member becomes entitled to it; (d) it does not reduce the rate of payment of any pension to which the member has become (actually) entitled, or extinguish the member’s entitlement to payment of any such pension; (e) it is paid when the member has reached normal minimum pension age (or the ill-health condition is met); and (f) it is not an excluded lump sum (see sub-paragraph (4)). (2) But if a lump sum falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not a pension commencement excess lump sum. (3) In this paragraph “the permitted maximum”, in relation to a lump sum, means— $$( A × 4 ) - B$ where— “A” is the applicable amount in relation to the relevant pension (see paragraphs 2A to 2D); “B” is the amount of the member’s lump sum and death benefit allowance that is available on the payment of the lump sum (see paragraph 12A).$ (4) A lump sum is an “excluded lump sum” if— (a) it would, apart from this paragraph, be permitted to be paid under the lump sum rule in section 166, or (b) the pension in connection with which the member becomes entitled to it is a CMP-derived drawdown pension. (5) In determining for the purposes of this paragraph— (a) whether any of a member’s lump sum allowance is available on the payment of a lump sum, or (b) the amount of a member’s lump sum and death benefit allowance that is available on the payment of a lump sum, the member is treated as having already become entitled to any pension commencement lump sum that is paid to the member in connection with becoming entitled to the relevant pension.

27
28
29

(c) the member has not previously become entitled to any pension or lump sum under the pension scheme,

.

30

(b) the amount given by the formula— $$( ( A - B ) × 4 ) + C$ where— “A” is the member’s lump sum allowance; “B” is the amount of the member’s lump sum allowance that is available (see paragraph 12A) on the payment of the lump sum in question; “C” is the amount of any serious ill health lump sum already paid to the member so far as it was not chargeable to income tax.$

31

In paragraph 10 (winding-up lump sum), in sub-paragraph (1)(d), for “lifetime allowance is available” substitute “lump sum allowance is available (see paragraph 12A)”.

32

Omit paragraph 11 (lifetime allowance excess lump sum) and the italic heading before it.

33

Omit paragraph 11A (transitional 2013/14 lump sum) and the italic heading before it.

34

In the italic heading before paragraph 12 omit “of Part 1”.

35
36

After paragraph 12 insert—

(12A) (1) In this Part of this Schedule, a reference to the amount of an individual’s lump sum allowance that is available on the individual becoming entitled to a lump sum, or being paid a lump sum, is to the amount of that allowance that would be so available on the following assumption. (2) The assumption is that the individual becoming entitled to or (as the case may be) being paid the lump sum was a relevant benefit crystallisation event within the meaning of section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance). (3) In this Part of this Schedule, a reference to the amount of an individual’s lump sum and death benefit allowance that is available on the individual becoming entitled to a lump sum, or being paid a lump sum, is to the amount of that allowance that would be so available on the following assumption. (4) The assumption is that the individual becoming entitled to or (as the case may be) being paid the lump sum was a relevant benefit crystallisation event within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

37

Amendments of Part 9 of ITEPA 2003

38

Part 9 of ITEPA 2003 (pension income) is amended as follows.

39

In section 565 (structure of Part 9), for the paragraph relating to Chapter 15A substitute—

Chapter 15A— (a) provides for certain amounts paid under registered pension schemes in the form of lump sums to be subject to the charge to tax on pension income, and (b) deals with exemptions from the charge to tax (whether under this Part or any other provision) in relation to certain other amounts paid under registered pension schemes in the form of lump sums.

40
Section 637B Pensions treated as arising from payment of pension commencement excess lump sums under registered pension schemes Chapter 15A
41

For Chapter 15A substitute—

(637) (1) This Chapter makes provision about the income tax treatment of authorised lump sums and authorised lump sum death benefits. (2) In this Chapter— (a) “authorised lump sum” means a lump sum permitted by the lump sum rule in section 166 of FA 2004 to be paid by a registered pension scheme to a member of the scheme; (b) “authorised lump sum death benefit” means a lump sum death benefit permitted by the lump sum death benefit rule in section 168 of that Act to be paid by a registered pension scheme in respect of a member of the scheme. (3) Expressions used in this Chapter and Part 4 of FA 2004 (pensions etc) have the same meaning in this Chapter as in that Part. (637A) No liability to income tax arises on a pension commencement lump sum paid under a registered pension scheme. (637B) A person to whom a pension commencement excess lump sum is paid under a registered pension scheme is treated as having taxable pension income for the tax year in which the payment is made equal to the amount of the lump sum. (637C) (1) Subject to subsections (2) and (4), no liability to income tax arises on a serious ill-health lump sum paid under a registered pension scheme. (2) If— (a) a serious ill-health lump sum is paid under a registered pension scheme to a member who (at the time of the payment) is under 75, and (b) the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) In subsection (2) “the permitted maximum”, in relation to a serious ill-health lump sum paid to a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the member becomes entitled to the lump sum (see section 637S). (4) If a serious ill-health lump sum is paid under a registered pension scheme to a member who (at the time of the payment) is 75 or over, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (637D) (1) Subject to subsection (2), where an uncrystallised funds pension lump sum is paid under a registered pension scheme— (a) no liability to income tax arises on 25% of the lump sum, and (b) section 579A (pensions) applies in relation to the remainder of the lump sum as it applies to any pension under a registered pension scheme. (2) If— (a) an uncrystallised funds pension lump sum is paid under a registered pension scheme, and (b) 25% of the lump sum is an amount that exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) In subsection (2) “the permitted maximum”, in relation to an uncrystallised funds pension lump sum paid to a member, means the lower of the following amounts— (a) so much of the member’s lump sum allowance as is available immediately before the member becomes entitled to the lump sum (see section 637Q); (b) so much of the member’s lump sum and death benefit allowance as is available immediately before the member becomes entitled to the lump sum (see section 637S). (637E) A short service refund lump paid under a registered pension scheme is subject to income tax in accordance with section 205 of FA 2004 (charge to tax on scheme administrator in respect of such a lump sum) but not otherwise. (637F) No liability to income tax arises on a refund of excess contributions lump sum paid under a registered pension scheme. (637G) (1) Subject to subsection (2), a member of a registered pension scheme to whom— (a) a trivial commutation lump sum, or (b) a winding-up lump sum, is paid under the scheme is treated as having taxable pension income for the tax year in which the payment is made equal to the amount of the lump sum. (2) If, immediately before the lump sum is paid, the member has uncrystallised rights under any one or more arrangements under the pension scheme, the amount of the taxable pension income is reduced by the tax-free element (if any). (3) In subsection (2) “the tax-free element” means 25% of the value of any uncrystallised rights extinguished by the lump sum. (4) In this section “uncrystallised rights” has the same meaning as in section 212 of FA 2004; and the value for the purposes of this section of any uncrystallised rights is to be calculated in accordance with that section. (637H) (1) Subject to subsections (2) to (6), no liability to income tax arises on a defined benefits lump sum death benefit paid under a registered pension scheme. (2) If— (a) a defined benefits lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is paid before the end of the relevant two year period, and (c) the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) If— (a) a defined benefits lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (4) If— (a) a defined benefits lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (5) If a defined benefits lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (6) If a defined benefits lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (7) In this section— - “non-qualifying person” has the same meaning as in section 206 of FA 2004; - “the permitted maximum”, in relation to a defined benefits lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S); - “qualifying person” means a person who is not a non-qualifying person; - “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it. (637I) (1) Subject to subsections (2), (3) and (4) no liability to income tax arises on a pension protection lump sum death benefit paid under a registered pension scheme. (2) If— (a) a pension protection lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, and (b) the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) If a pension protection lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (4) If a pension protection lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (5) In this section— - “non-qualifying person” has the same meaning as in section 206 of FA 2004; - “the permitted maximum”, in relation to a pension protection lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S); - “qualifying person” means a person who is not a non-qualifying person. (637J) (1) Subject to subsections (2) to (6), no liability to income tax arises on an uncrystallised funds lump sum death benefit paid under a registered pension scheme. (2) If— (a) an uncrystallised funds lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is paid before the end of the relevant two year period, and (c) the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) If— (a) an uncrystallised funds lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (4) If— (a) an uncrystallised funds lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (5) If an uncrystallised funds lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (6) If an uncrystallised funds lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (7) In this section— - “non-qualifying person” has the same meaning as in section 206 of FA 2004; - “the permitted maximum”, in relation to an uncrystallised funds lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S); - “qualifying person” means a person who is not a non-qualifying person; - “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it. (637K) (1) Subject to subsections (2), (3) and (4), no liability to income tax arises on an annuity protection lump sum death benefit paid under a registered pension scheme. (2) If— (a) an annuity protection lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, and (b) the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) If an annuity protection lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (4) If an annuity protection lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (5) In this section— - “non-qualifying person” has the same meaning as in section 206 of FA 2004; - “the permitted maximum”, in relation to an annuity protection lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S); - “qualifying person” means a person who is not a non-qualifying person. (637L) (1) Subject to subsections (2) to (6), no liability to income tax arises on a drawdown pension lump sum death benefit paid under a registered pension scheme. (2) If— (a) a drawdown pension lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is paid before the end of the relevant two year period, and (c) the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) If— (a) a drawdown pension lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (4) If— (a) a drawdown pension lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (5) If a drawdown pension lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (6) If a drawdown pension lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (7) A reference in this section to a “member”, in relation to a drawdown pension lump sum death benefit under paragraph 17(2) of Schedule 29 to FA 2004 (lump sum payable on death of dependant of deceased member), is a reference to the dependant on whose death the lump sum is payable. (8) In this section— - “non-qualifying person” has the same meaning as in section 206 of FA 2004; - “the permitted maximum”, in relation to a drawdown pension lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S); - “qualifying person” means a person who is not a non-qualifying person; - “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it. (637M) (1) Subject to subsections (2) to (6), no liability to income tax arises on a flexi-access drawdown lump sum death benefit paid under a registered pension scheme. (2) If— (a) a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is paid before the end of the relevant two year period, and (c) the lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) If— (a) a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (4) If— (a) a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid in respect of a member who, on death, is under 75, (b) the lump sum is not paid before the end of the relevant two year period, and (c) the lump sum is paid to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (5) If a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a qualifying person, section 579A (pensions) applies to the lump sum as it applies to any pension under a registered pension scheme. (6) If a flexi-access drawdown lump sum death benefit under a registered pension scheme is paid— (a) in respect of a member who, on death, is 75 or over, and (b) to a non-qualifying person, the lump sum is subject to income tax under section 206 of FA 2004 (special lump sum death benefits charge on scheme administrator) but not otherwise. (7) A reference in this section to a “member”— (a) in relation to a flexi-access drawdown lump sum death benefit under paragraph 17A(2) of Schedule 29 to FA 2004 (lump sum payable on death of dependant of deceased member), is a reference to the dependant on whose death the lump sum is payable; (b) in relation to a flexi-access drawdown lump sum death benefit under paragraph 17A(3) or (4) of Schedule 29 to FA 2004 (lump sum payable on death of nominee or successor of deceased member), is a reference to the nominee or successor on whose death the lump sum is payable. (8) In this section— - “non-qualifying person” has the same meaning as in section 206 of FA 2004; - “the permitted maximum”, in relation to a flexi-access drawdown lump sum death benefit paid in respect of a member, means so much of the member’s lump sum and death benefit allowance as is available immediately before the lump sum is paid (see section 637S); - “qualifying person” means a person who is not a non-qualifying person; - “the relevant two year period” means the period of two years beginning with the day on which the scheme administrator of the scheme first knew of the member’s death or (if earlier) the day on which the scheme administrator could first reasonably have been expected to have known of it. (637N) A person to whom a trivial commutation lump sum death benefit is paid under a registered pension scheme is treated as having taxable pension income for the tax year in which the payment is made equal to the amount of the lump sum. (637P) An individual’s “lump sum allowance” is £268,275. (637Q) (1) This section is about the availability of an individual’s lump sum allowance on the occurrence of a relevant benefit crystallisation event (“the current event”). (2) In this section— (a) “relevant benefit crystallisation event”, in relation to an individual, means the individual becoming entitled to a relevant lump sum; (b) “relevant lump sum” means— (i) a pension commencement lump sum, or (ii) an uncrystallised funds pension lump sum. (3) If no relevant benefit crystallisation event has occurred in relation to the individual before the current event, the whole of the individual’s lump sum allowance is available. (4) Otherwise, the amount of the individual’s lump sum allowance that is available is— (a) so much of that allowance as is left after deducting the previously-used amount, or (b) if none is left after deducting that amount, nil. (5) For this purpose “the previously-used amount” is the aggregate of the non-taxable amounts in relation to each relevant benefit crystallisation event that has occurred in relation to the individual before the current event. (6) In subsection (5) “non-taxable amount”, in relation to a relevant benefit crystallisation event, means so much (if any) of the relevant lump sum to which the event relates as is exempt from the charge to income tax by virtue of any provision of this Chapter. (7) A reference in this section to a relevant benefit crystallisation event is to a relevant benefit crystallisation event occurring on or after 6 April 2024. (8) For transitional provision under which the amount of an individual’s lump sum allowance available on the occurrence of a relevant benefit crystallisation event may be reduced as a result of events occurring before 6 April 2024, see paragraph 125 of Schedule 9 to FA 2024. (637R) An individual’s “lump sum and death benefit allowance” is £1,073,100. (637S) (1) This section is about the availability of an individual’s lump sum and death benefit allowance on the occurrence of a relevant benefit crystallisation event (“the current event”). (2) In this section— (a) “relevant benefit crystallisation event”, in relation to an individual, means— (i) the individual becoming entitled to a relevant lump sum, or (ii) a person being paid a relevant lump sum death benefit in respect of the individual; (b) “relevant lump sum” means— (i) a pension commencement lump sum, (ii) a serious ill-health lump sum, or (iii) an uncrystallised funds pension lump sum; (c) “relevant lump sum death benefit” means any authorised lump sum death benefit other than— (i) a charity lump sum death benefit, or (ii) a trivial commutation lump sum death benefit. (3) If no relevant benefit crystallisation event has occurred in relation to the individual before the current event, the whole of the individual’s lump sum and death benefit allowance is available. (4) Otherwise, the amount of the individual’s lump sum and death benefit allowance that is available is— (a) so much of that allowance as is left after deducting the previously-used amount, or (b) if none is left after deducting that amount, nil. (5) For this purpose “the previously-used amount” is the aggregate of the non-taxable amounts in relation to each relevant benefit crystallisation event that has occurred in relation to the individual before the current event. (6) In subsection (5) “non-taxable amount”, in relation to a relevant benefit crystallisation event, means so much (if any) of the relevant lump sum, or relevant lump sum death benefit, to which the event relates as is exempt from the charge to income tax by virtue of any provision of this Chapter. (7) Where more than one relevant benefit crystallisation event within subsection (2)(a)(i) occurs in relation to an individual on the same day, it is for the individual to decide the order in which they are to be treated as occurring for the purposes of this section. (8) Where more than one relevant benefit crystallisation event within subsection (2)(a)(ii) occurs in relation to an individual, they are to be treated for the purposes of this section as occurring— (a) immediately before the individual’s death, (b) immediately after any pension commencement lump sum to which the individual becomes entitled immediately before death by virtue of section 166(2) of FA 2004 (lump sum rule), and (c) in such order as may be decided by the individual’s personal representatives. (9) A reference in this section to a relevant benefit crystallisation event is to a relevant benefit crystallisation event occurring on or after 6 April 2024. (10) For transitional provision under which the amount of an individual’s lump sum and death benefit allowance available on the occurrence of a relevant benefit crystallisation event may be reduced as a result of events occurring before 6 April 2024, see paragraph 126 of Schedule 9 to FA 2024. (11) For further transitional provision that may affect the operation of this section, see paragraph 20 of Schedule 36 to FA 2004 (pensions in payment before commencement of Part 4 of FA 2004).

Amendments of the Registered Pension Schemes (Authorised Payments) Regulations 2009

42

(b) the member has not previously become entitled to any pension or lump sum under the pension scheme;

.

Part 3 — Non-UK schemes

Amendments of Part 4 of FA 2004

43

Part 4 of FA 2004 (pension schemes etc) is amended as follows.

44

In section 244 (non-UK schemes: application of certain charges), after “under this Part” insert “, and under Part 9 of ITEPA 2003 (pension income),”.

45

For section 244A (overseas transfer charge) substitute—

(244AA) A charge to income tax, to be known as the overseas transfer charge, arises under the following sections— (a) section 244AC (overseas transfer charge: transfers where no exclusion applies); (b) section 244IA (overseas transfer charge: transfers exceeding available allowance). (244AB) (1) In this section and in sections 244AC to 244N— - “former QROPS” means a scheme that has at any time been a QROPS; - “onward transfer” means (subject to subsection (3)) a transfer of sums or assets held for the purposes of, or representing accrued rights under, an arrangement under a QROPS or a former QROPS in relation to a member so as to become held for the purposes of, or to represent rights under, an arrangement under another QROPS in relation to that person as a member of that other QROPS; - “original transfer”, in relation to an onward transfer, means (subject to subsection (3))— the recognised transfer or relieved relevant non-UK scheme transfer in respect of which the following conditions are met— it is from a registered pension scheme or a relieved relevant non-UK scheme to a QROPS, the sums and assets transferred by the onward transfer directly or indirectly derive from those transferred by it, and it is more recent than any other recognised transfer or relieved relevant non-UK scheme transfer in respect of which the conditions in sub-paragraphs (i) and (ii) are met, or where there is no such recognised transfer or relieved relevant non-UK scheme transfer, the relevant transfer (see paragraph 1(6) of Schedule 34) in respect of which the following conditions are met— it is from a relevant non-UK scheme (see paragraph 1(5) of Schedule 34), it is a transfer of the whole or part of the UK tax-relieved fund (see paragraph 3 of Schedule 34) of a member of the scheme, it is to a QROPS, and the sums and assets transferred by the onward transfer directly or indirectly derive from those transferred by it; - “QROPS” means a qualifying recognised overseas pension scheme; - “recognised transfer” has the meaning given by section 169; - “the relevant period” means— in the case of a recognised transfer or a relieved relevant non-UK scheme transfer made on 6 April in any year, the five years beginning with the date of that transfer, in the case of any other recognised transfer or relieved relevant non-UK scheme transfer, the period consisting of the combination of— the period beginning with the date of the transfer and ending immediately before the next 6 April, and the five years beginning at the end of that initial period, in the case of an onward transfer, the period— beginning with the date of the transfer, and ending at the end of the relevant period for the original transfer (see paragraphs (a) and (b) or, as the case may be, paragraphs (d) and (e)), in the case of a relevant transfer that— is made on 6 April in any year, and is the original transfer for an onward transfer, the five years beginning with the date of the relevant transfer, and in the case of a relevant transfer that— is made otherwise than on 6 April in any year, and is the original transfer for an onward transfer, the period consisting of the combination of: the period beginning with the date of the relevant transfer and ending immediately before the next 6 April; and the five years beginning at the end of that initial period; - “relieved relevant non-UK scheme” means a pension scheme that is a relevant non-UK scheme within the meaning of sub-paragraph (5) of paragraph 1 of Schedule 34 in respect of which at least one of paragraphs (a) to (c) of that sub-paragraph applies; - “relieved relevant non-UK scheme transfer” means a transfer, other than a block transfer, of sums or assets held for the purposes of, or representing accrued rights under, an arrangement under a relieved relevant non-UK scheme in relation to a relieved member of the scheme so as to become held for the purposes of, or to represent rights under, an arrangement under a QROPS in relation to that person as a member of that QROPS; - “ring-fenced transfer fund”, in relation to a QROPS or former QROPS, has the meaning given by paragraph 1 of Schedule 34. (2) For the purposes of the definition of “relieved relevant non-UK scheme transfer”— (a) a transfer is “a block transfer” in relation to a member of a pension scheme if it involves the transfer, in a single transaction, of all the sums and assets held for the purposes of, or representing accrued rights under, the arrangements under the scheme which relate to the member and at least one other member of the scheme; (b) an individual is “a relieved member” of a relieved relevant non-UK scheme if— (i) any of the contributions in respect of which relief has been given as mentioned in paragraph (a) or (b) of the definition of “relevant non-UK scheme” in paragraph 1(5) of Schedule 34 were contributions paid by or on behalf of, or in respect of, the individual, or (ii) the individual is the member, or one of the members, who has been exempt from liability to tax as mentioned in paragraph (c) of that definition. (3) Where, apart from this subsection, there would be different original transfers for different parts of an onward transfer, each such part of the onward transfer is to be treated as a separate onward transfer for the purposes of this section and sections 244AC to 244N. (244AC) (1) The overseas transfer charge arises where— (a) a transfer within subsection (2) is made to a QROPS, and (b) the transfer is not excluded from the charge by or under any of sections 244B to 244H. (2) A transfer to a QROPS is within this subsection if it is— (a) a recognised transfer, (b) a relieved relevant non-UK scheme transfer, or (c) an onward transfer that is made during the relevant period for the original transfer. (3) Sections 244B to 244H are subject to section 244I (circumstances in which exclusions do not apply).

46
47
48

In section 244D (exclusion: receiving scheme is an occupational pension scheme), in the words before paragraph (a), after “overseas transfer charge” insert “under section 244AC”.

49

In section 244E (exclusion: receiving scheme set up by international organisation), in subsection (1), in the words before paragraph (a), after “overseas transfer charge” insert “under section 244AC”.

50

In section 244F (exclusion: receiving scheme is an overseas public service scheme), in subsection (1), in the words before paragraph (a), after “overseas transfer charge” insert “under section 244AC”.

51

(5) An onward transfer is excluded from the overseas transfer charge under section 244AC where— (a) the overseas transfer charge under section 244IA(1) arose in relation to the original transfer, and (b) none of the member’s overseas transfer allowance was available on the making of the original transfer.

52

In section 244H (power to provide for further exclusions)—

53

In section 244I (circumstances in which exclusions do not apply), in subsection (1)—

54

After section 244I insert—

(244IA) (1) The overseas transfer charge arises where— (a) a transfer to a QROPS is made that is— (i) within section 244AC(2)(a) or (b), or (ii) an onward transfer within section 244AC(2)(c) in relation to which the original transfer is a transfer within paragraph (b) of the definition of “original transfer” (see section 244AB(1)), (b) the transfer is excluded from the charge under section 244AC by or under any of sections 244B to 244H, and (c) the transferred value (determined in accordance with section 244K) exceeds the amount of the member’s overseas transfer allowance that is available on the making of the transfer. (2) The overseas transfer charge also arises where— (a) a transfer of the kind mentioned in subsection (1)(a) is made to a QROPS, (b) a charge under section 244AC (“the original charge”) arises in relation to the transfer, (c) a person liable to the original charge becomes entitled under section 244M to a repayment in respect of the original charge, and (d) the transferred value (determined in accordance with section 244K) exceeds the amount of the member’s overseas transfer allowance that is available on the making of the transfer. (244IB) A member’s “overseas transfer allowance” is an amount equal to the member’s lump sum and death benefit allowance. (244IC) (1) This section is about the availability of a member’s overseas transfer allowance on the making of a transfer of the kind mentioned in section 244IA(1)(a) (“the current overseas transfer”). (2) If no transfer of the kind mentioned in section 244IA(1)(a) has been made in relation to the member before the current overseas transfer, the whole of the member’s overseas transfer allowance is available. (3) Otherwise, the amount of the member’s overseas transfer allowance that is available is— (a) so much of that allowance as is left after deducting the previously-used amount, or (b) if none is left after deducting that amount, nil. (4) For this purpose “the previously-used amount” is the aggregate of the transferred value (determined in accordance with section 244K) of each transfer (if any) of the kind mentioned in section 244IA(1)(a) that has been made in relation to the member before the current overseas transfer. (5) A reference in this section to a transfer of the kind mentioned in section 244IA(1)(a) is to a transfer made on or after 6 April 2024.

55

(1A) In the case of a relieved relevant non-UK scheme transfer, the member is liable to the overseas transfer charge.

56

After section 244J insert—

(244JA) (1) Where the overseas transfer charge arises under section 244AC in relation to a transfer, the charge is— (a) in a case where the transfer is an onward transfer and the overseas transfer charge under section 244IA(1) arose in relation to the original transfer, 25% of so much of the transferred value of the original transfer as did not exceed the amount of the member’s overseas transfer allowance that was available on the making of the original transfer; (b) in any other case, 25% of the transferred value. (2) Where the overseas transfer charge arises under section 244IA in relation to a transfer, the charge is 25% of so much of the transferred value as exceeds the amount of the member’s overseas transfer allowance that is available on the making of the transfer.

57

(1A) The transferred value, in relation to a transfer within section 244AC(2), is to be determined in accordance with this section.

(3A) If the transfer is a transfer from a relieved relevant non-UK scheme, the transferred value is the total of— (a) the amount of any sums transferred that are attributable to the member’s UK tax-relieved fund (see paragraph 3 of Schedule 34), and (b) the value of any assets transferred that are attributable to that fund, but this is subject to subsections (6) to (9).

58

In section 244M (repayments of charge on subsequent excluding events), in subsection (1), in paragraph (a), for “overseas transfer charge” substitute “the overseas transfer charge under section 244AC”.

59

(4) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

(2A) In sub-paragraph (2) “relevant events” means— (a) relevant benefit crystallisation events, or (b) occasions that are, or could (depending on their timing) be, occasions on which an individual first flexibly accesses pension rights for the purposes of sections 227B to 227F.

;

(6) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

60

(e) the charge to tax under Part 9 of ITEPA 2003 (pension income) on pension income to which— (i) any provision of Chapter 15A of that Part of that Act (lump sums under registered pension schemes) applies, or (ii) section 579A of that Act (pension income under registered pension schemes) applies by virtue of any provision of that Chapter.

;

(b) Chapter 15A of Part 9 of ITEPA 2003 (lump sums under registered pension schemes).

(5ZA) (1) The provisions of Chapter 15A of Part 9 of ITEPA 2003 (lump sums under registered pension schemes) do not apply in relation to— (a) a serious ill-health lump sum paid to a transfer member of a relevant non-UK scheme, or (b) an authorised lump sum death benefit paid in respect of a transfer member of a relevant non-UK scheme who (at the time of the payment) is under 75. (2) In this paragraph “authorised lump sum death benefit” means a lump sum death benefit permitted by the lump sum death benefit rule in section 168 of this Act to be paid in respect of a member of a registered pension scheme.

Amendments of Chapter 4 of Part 9 of ITEPA 2003

61

(2A) A lump sum is not “a relevant lump sum” by virtue of subsection (2) if it is within paragraph 5ZA(1)(a) or (b) of Schedule 34 to FA 2004 (which specify certain lump sums paid to or in respect of transfer members of relevant non-UK schemes).

Amendments of the Pension Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006

62

(2) For the purposes of this regulation, the “amount crystallised” on a transfer from a UK registered scheme to a relevant non-UK scheme is the aggregate of the amount of any sums transferred and the market value of any assets transferred.

(3) For the purposes of this regulation, the “amount crystallised” on a transfer from a UK registered pension scheme to a relevant non-UK scheme is the aggregate of the amount of any sums transferred and the market value of any assets transferred.

(1A) In paragraph 3C (pension commencement excess lump sum)— (a) in sub-paragraph (1), after paragraph (c) insert— (ca) it is not paid from the relevant transfer fund of a qualifying recognised overseas pension scheme; (cb) it is not paid from the UK tax-relieved fund of a relevant non-UK scheme. (b) after sub-paragraph (4) insert— (5) Expressions used in sub-paragraph (1)(ca) and (cb) have the same meaning as in Schedule 34 (non-UK schemes: application of certain charges). (1B) In paragraph 4 (serious ill-health lump sum)— (a) in sub-paragraph (1)(a)— (i) for “scheme administrator” substitute “scheme manager”; (ii) after “registered medical practitioner” insert “or a recognised medical practitioner”; (b) at the end insert— (4) In sub-paragraph (1) “recognised medical practitioner” means a medical practitioner practising outside the United Kingdom who is authorised, licensed or registered to practise medicine in the country or territory, outside the United Kingdom, in which either the scheme or the member is resident. (1C) In paragraph 12A (references to availability of allowances) after sub-paragraph (4) insert— (5) Sub-paragraph (6) applies in any case in which it is necessary to determine, for the purposes of— (a) paragraph 1 (pension commencement lump sum), (b) paragraph 7 (trivial commutation lump sum), or (c) paragraph 10 (winding-up lump sum), whether all or part of a transfer member’s lump sum allowance or lump sum and death benefit allowance is available when a lump sum is paid by a recognised overseas pension scheme. (6) Sections 637Q and 637S of ITEPA 2003 (availability of allowances) have effect as if references in those sections to relevant benefit crystallisation events were only to relevant benefit crystallisation events— (a) occurring in relation to the recognised overseas pension scheme, and (b) in respect of lump sums referable to the member’s relevant transfer fund (within the meaning given by paragraph 4 of Schedule 34 to FA 2004). (7) In sub-paragraph (5) “transfer member” has the meaning given by paragraph 1(8) of Schedule 34 (non-UK schemes).

;

(18) (1) Paragraph (2) applies where an uncrystallised funds pension lump sum is paid to a transfer member of a recognised overseas pension scheme. (2) In determining the amount of “the permitted maximum” for the purposes of section 637D of ITEPA 2003 (income tax treatment of uncrystallised funds pension lump sums), sections 637Q and 637S of that Act (availability of allowances) have effect as if references to relevant benefit crystallisation events were only to relevant benefit crystallisation events— (a) occurring in relation to the recognised overseas pension scheme, and (b) in respect of lump sums referable to the member’s relevant transfer fund (within the meaning given by paragraph 4 of Schedule 34 to FA 2004). (3) In sub-paragraph (1) “transfer member” has the meaning given by paragraph 1(8) of Schedule 34 to FA 2004 (non-UK schemes).

Part 4 — Transitional protections

Amendments of Schedule 29 to FA 2004

63

(8) For further provision about circumstances in which a lump sum is not an uncrystallised funds pension lump sum, see the following provisions of Part 2 of Schedule 36 (transitional provision and saving: pre-commencement rights: enhancement of allowances)— (a) paragraph 7(8) (enhancement of allowances: primary protection); (b) paragraph 12(3H) (enhancement of allowances: enhanced protection); (c) paragraph 18(7) (enhancement of allowances: pre-commencement pension credits); (d) paragraph 20A(8) (pension credits from previously crystallised rights); (e) paragraph 20B(8) (individuals who are not always relevant UK individuals); (f) paragraph 20E(9) (transfers from recognised overseas pension schemes).

Amendments of Schedule 34 to FA 2004

64

(12A) (1) The provisions of Schedule 36 relating to the enhancement of an individual’s lump sum allowance and lump sum and death benefit allowance (“the enhancement of allowances provisions”) apply in relation to an individual who is a relieved member of a relieved non-UK pension scheme as if the relieved non-UK pension scheme were a registered pension scheme. (2) A pension scheme is a relieved non-UK pension scheme if— (a) relief from tax has been given in respect of contributions paid under the pension scheme by virtue of Schedule 33 (overseas pension schemes: migrant member relief), (b) relief from tax has been so given at any time after 5th April 2006 under double tax arrangements, or (c) a member of the pension scheme has been, or members of the pension scheme have been, exempt from liability to tax by virtue of section 307 of ITEPA 2003 (exemption for provision made by employer for retirement or death benefit) in respect of provision made under the pension scheme at any time after 5th April 2006 when the pension scheme was an overseas pension scheme. (3) An individual is a relieved member of a relieved non-UK pension scheme if— (a) any of the contributions in respect of which relief has been given as mentioned in sub-paragraph (2)(a) or (b) were contributions paid by or on behalf of, or in respect of, the individual, or (b) the individual is the member, or one of the members, who has been exempt from liability to tax as mentioned in sub-paragraph (2)(c).

Amendments of Part 2 of Schedule 36 to FA 2004

65

Part 2 of Schedule 36 to FA 2004 (transitional provision and saving: pre-commencement rights: lifetime allowance charge) is amended as follows.

66

In the heading, for “lifetime allowance charge” substitute “enhancement of allowances etc”.

67

Before paragraph 7 and the italic heading before it insert—

(6A) (1) Sub-paragraph (2) applies, in relation to a relevant benefit crystallisation event occurring in relation to an individual, other than the individual becoming entitled to a pension commencement lump sum or an uncrystallised funds pension lump sum, where one or more lump sum and death benefit allowance enhancement factors operate in relation to the relevant benefit crystallisation event. (2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were an amount equal to— $$A + A × B$ where— A is— in the case of an individual in relation to whom a relevant protection provision applies (see sub-paragraph (3)), the individual’s protected lump sum and death benefit allowance (see sub-paragraph (4)); in any other case, £1,073,100; B is the aggregate of the lump sum and death benefit allowance enhancement factors that operate in relation to the relevant benefit crystallisation event.$ (3) The following provisions are “relevant protection provisions”— (a) paragraph 7 of this Schedule (primary protection); (b) paragraph 14 of Schedule 18 to FA 2011 (fixed protection); (c) paragraph 1 of Schedule 22 to FA 2013 (“fixed protection 2014”); (d) paragraph 1 of Schedule 6 to FA 2014 (“individual protection 2014”); (e) paragraph 1 of Schedule 4 to FA 2016 (“fixed protection 2016”); (f) paragraph 9 of that Schedule (“individual protection 2016”). (4) In the case of an individual in relation to whom a relevant protection provision applies, the individual’s “protected lump sum and death benefit allowance” is the amount treated as specified in section 637R of ITEPA 2003 in relation to the individual by virtue of the relevant protection provision. (5) The following paragraphs make provision for the operation of lump sum and death benefit enhancement factors— - paragraphs 7 to 11A (primary protection); - paragraph 18 (pre-commencement pension credits); - paragraph 20A (pension credits from previously crystallised rights); - paragraphs 20B to 20D (individuals who are not always relevant UK individuals); - paragraphs 20E to 20G (transfers from recognised overseas pension schemes). (6) Paragraphs 7 and 18 also make provision enhancing the amount of an individual’s lump sum allowance. (7) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

68

For paragraph 7 (primary protection) substitute—

(7) (1) This paragraph applies in the case of an individual where— (a) the amount of the relevant pre-commencement pension rights of the individual exceeds £1,500,000, and (b) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs. (2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect— (a) in relation to a relevant benefit crystallisation event within the meaning of section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) occurring in relation to the individual, as if the amount specified in section 637P of ITEPA 2003 (individual’s lump sum allowance) were £375,000; (b) in relation to a relevant benefit crystallisation event within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) occurring in relation to the individual, as if the amount specified in section 637R of ITEPA 2003 (individual’s lump sum and death benefit allowance) were £1,800,000. (3) A lump sum and death benefit allowance enhancement factor operates in relation to the relevant benefit crystallisation event mentioned in paragraph 6A(1). (4) The lump sum and death benefit allowance enhancement factor is the primary protection factor. (5) The primary protection factor is— $$R R - £ 1 , 500 , 000 £ 1 , 500 , 000$ where RR is the amount of the relevant pre-commencement pension rights of the individual (see sub-paragraph (6)).$ (6) The amount of the relevant pre-commencement rights of the individual is the aggregate of— (a) the value of the individual’s relevant uncrystallised pension rights on 5th April 2006 (calculated in accordance with paragraphs 8 and 9), and (b) the value of the individual’s relevant crystallised pension rights on that date (calculated in accordance with paragraph 10). (7) Sub-paragraph (5) is subject to paragraph 11 (pension debit on or after 6th April 2006) and paragraph 11A (pension debit on or after 6th April 2006: lump sum death benefits). (8) Where this paragraph applies in the case of an individual, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if— (a) the lump sum condition (see paragraphs 24(2) and (3), 25 and 26 of this Schedule) is met in relation to the individual, or (b) immediately before the lump sum is paid, the amount given by the formula in sub-paragraph (9) is less than 25% of the lump sum. (9) The formula is— $$£ 1 , 800 , 000 - A 4$ where A is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.$

69

(5) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

70

(5) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

71

(3A) Where this paragraph applies in the case of an individual, Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) and Part 4 of FA 2004 (pensions etc) have effect in relation to the individual with the modifications in sub-paragraphs (3B) to (3F). (3B) For the purposes of determining the income tax treatment of a lump sum or a lump sum death benefit— (a) section 637C of that Act (serious ill-health lump sums) has effect as if, in subsection (3) of that section (which defines the permitted maximum), for the words from “so much of” to the end there were substituted “the maximum amount of a serious ill-health lump sum that could have been paid to the individual on 5 April 2024 under the arrangement pursuant to which the individual becomes entitled to the serious ill-health lump sum”; (b) section 637D of that Act (uncrystallised funds pension lump sums) has effect as if— (i) in subsection (3) of that section (which defines the permitted maximum), for paragraph (b) there were substituted— (b) the maximum amount of an uncrystallised funds pension lump sum that could have been paid to the individual with no liability to income tax on 5 April 2024 under the arrangement pursuant to which the entitlement to the uncrystallised funds pension lump sum arises in respect of the individual. (ii) after that subsection there were inserted— (4) But in a case where the individual has previously become entitled to a serious ill-health lump sum— (a) subsection (3) does not apply, and (b) in subsection (2) “the permitted maximum”, in relation to an uncrystallised funds pension lump sum paid to the member, is nil. (c) section 637H of that Act (defined benefits lump sum death benefits) has effect as if, in subsection (7) of that section, in the definition of “the permitted maximum”, for the words from “so much of” to the end there were substituted — (a) the maximum amount of a defined benefits lump sum death benefit that could have been paid in respect of the individual on 5 April 2024 under the arrangement pursuant to which the entitlement to the defined benefits lump sum death benefit arises in respect of the individual, less (b) the aggregate of the non-taxable amounts within the meaning given by section 637S(6) of each authorised lump sum death benefit (if any) previously paid in respect of the individual under that arrangement after that date; or, if that produces a negative result, nil. (d) section 637I of that Act (pension protection lump sum death benefits) has effect as if, in subsection (5) of that section, in the definition of “the permitted maximum”, for the words from “so much of” to the end there were substituted — (a) the maximum amount of a pension protection lump sum death benefit that could have been paid in respect of the individual on 5 April 2024 under the arrangement pursuant to which the entitlement to the pension protection lump sum death benefit arises in respect of the individual, less (b) the aggregate of the non-taxable amounts within the meaning given by section 637S(6) of each authorised lump sum death benefit (if any) previously paid in respect of the individual under that arrangement after that date; or, if that produces a negative result, nil. (e) section 637J of that Act (uncrystallised funds lump sum death benefits) has effect as if, in subsection (7), in the definition of “the permitted maximum”, for the words from “so much of” to the end there were substituted — (a) the maximum amount of an uncrystallised funds lump sum death benefit that could have been paid in respect of the individual on 5 April 2024 under the arrangement pursuant to which the entitlement to the uncrystallised funds lump sum death benefit arises in respect of the individual, less (b) the aggregate of the non-taxable amounts within the meaning given by section 637S(6) of each authorised lump sum death benefit (if any) previously paid in respect of the individual under that arrangement after that date; or, if that produces a negative result, nil. (f) section 637K of that Act (annuity protection lump sum death benefits) has effect as if, in subsection (5), in the definition of “the permitted maximum”, for the words from “so much of” to the end there were substituted — (a) the maximum amount of an annuity protection lump sum death benefit that could have been paid in respect of the individual on 5 April 2024 under the arrangement pursuant to which the entitlement to the annuity protection lump sum death benefit arises in respect of the individual, less (b) the aggregate of the non-taxable amounts within the meaning given by section 637S(6) of each authorised lump sum death benefit (if any) previously paid in respect of the individual under that arrangement after that date; or, if that produces a negative result, nil. (g) section 637L of that Act (drawdown pension fund lump sum death benefits) has effect as if, in subsection (8), in the definition of “the permitted maximum”, for the words from “so much of” to the end there were substituted — (a) the maximum amount of a drawdown pension fund lump sum death benefit that could have been paid in respect of the individual on 5 April 2024 under the arrangement pursuant to which the entitlement to the drawdown pension fund lump sum death benefit arises in respect of the individual, less (b) the aggregate of the non-taxable amounts within the meaning given by section 637S(6) of each authorised lump sum death benefit (if any) previously paid in respect of the individual under that arrangement after that date; or, if that produces a negative result, nil. (h) section 637M of that Act (flexi-access drawdown lump sum death benefits) has effect as if, in subsection (8), in the definition of “the permitted maximum”, for the words from “so much of” to the end there were substituted — (a) the maximum amount of a flexi-access drawdown lump sum death benefit that could have been paid in respect of the individual on 5 April 2024 under the arrangement pursuant to which the entitlement to the flexi-access drawdown lump sum death benefit arises in respect of the individual, less (b) the aggregate of the non-taxable amounts within the meaning given by section 637S(6) of each authorised lump sum death benefit (if any) previously paid in respect of the individual under that arrangement after that date; or, if that produces a negative result, nil. (i) Schedule 29 to FA 2004 (pension commencement lump sum: definition of “permitted maximum”) has effect as if— (i) in paragraph 2, sub-paragraph (c) were omitted; (ii) after paragraph 2 there were inserted— (2ZA) In the case of an individual who has previously become entitled to a serious ill-health lump sum— (a) paragraph 2 does not apply, and (b) in paragraph 1 “the permitted maximum”, in relation to a lump sum, is nil. (3C) For the purposes of the modifications made by sub-paragraph (3B), the maximum amount of a serious ill-health lump sum or a lump sum death benefit that could have been paid in respect of an individual on 5 April 2024 under an arrangement that is a defined benefits arrangement is an amount equal to the appropriate limit, determined under paragraph 15(4), in relation to payment of the serious ill-health lump sum or the lump sum death benefit. (3D) For the purposes of the modifications made by sub-paragraph (3B) “authorised lump sum death benefit” means a lump sum death benefit authorised to be paid by the lump sum death benefit rule. (3E) Section 637P of ITEPA 2003 (individual’s lump sum allowance) applies as if the amount specified in that section were £375,000. (3F) Section 637R of ITEPA 2003 (individual’s lump sum and death benefit allowance) applies as if the amount specified in that section were an amount equal to the value of the individual’s uncrystallised pension rights on 5 April 2024. (3G) The Commissioners for His Majesty’s Revenue and Customs may by regulations make provision about how the value of the individual’s uncrystallised pension rights on 5 April 2024 is to be determined for the purposes of sub-paragraph (3F). (3H) Where this paragraph applies in the case of an individual, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if the lump sum condition (see paragraphs 24(2) and (3), 25 and 26 of this Schedule) is met in relation to the individual.

72

In paragraph 13 (enhanced protection: relevant benefit accrual), in sub-paragraph (b), for “a benefit crystallisation event or” substitute “the individual becomes entitled to any pension or lump sum or a”.

73

(2A) In sub-paragraph (2) “relevant permitted transfer” means a permitted transfer that is not a transfer of sums or assets held for the purposes of, or representing accrued rights under, any of the relevant pension schemes so as to become held for the purposes of, or to represent rights under, a qualifying recognised overseas pension scheme in connection with the individual’s membership of that pension scheme.

74

In paragraph 16 (post-commencement earnings limit), in subsection (3), for the words from “7.5%” to the end substitute “£135,000.”

75

For paragraph 18 (pre-commencement pension credits) substitute—

(18) (1) This paragraph applies in the case of an individual where— (a) before 6th April 2006, the individual has acquired rights under a pension scheme within paragraph 1(1) by virtue of having become entitled to a pension credit, (b) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs, and (c) paragraph 7 (primary protection) does not apply in relation to the individual. (2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect, in relation to a relevant benefit crystallisation event within the meaning of section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) occurring in relation to the individual, as if the amount specified in section 637P of ITEPA 2003 (individual’s lump sum allowance) were the lower of— (a) an amount equal to £268,275 increased by the pre-commencement pension credit factor calculated under sub-paragraph (5), and (b) £375,000. (3) A lump sum and death benefit allowance enhancement factor operates in relation to the relevant benefit crystallisation event mentioned in paragraph 6A(1). (4) The lump sum and death benefit allowance enhancement factor is the pre-commencement pension credit factor calculated under sub-paragraph (5). (5) The pre-commencement pension credit factor is— $$A £ 1 , 500 , 000$ where A is the amount which is the appropriate amount for the purposes of section 29(1) of WRPA 1999 or Article 26(1) of WRP(NI)O 1999 in relation to the pension credit, as increased by the percentage specified in sub-paragraph (6).$ (6) The percentage is the percentage by which the retail prices index for April 2006 is greater than that for the month in which the rights were acquired. (7) Where this paragraph applies in the case of an individual, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if, immediately before the lump sum is paid, the amount given by the formula in sub-paragraph (8) is less than 25% of the lump sum. (8) The formula is— $$A - B 4$ where— A is— in the case of an individual in relation to whom a relevant protection provision applies, the individual’s protected lump sum and death benefit allowance (see paragraph 6A(4)); in any other case, £1,073,100; B is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.$

76

(1A) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual with the modifications in sub-paragraphs (1B) and (2). (1B) Where the relevant benefit crystallisation event is the individual becoming entitled to a pension commencement lump sum, section 637P of ITEPA 2003 (individual’s lump sum allowance) applies as if the amount specified in that section were £268,275 reduced by the relevant percentage (see sub-paragraph (4).

(2) Where the event is a relevant benefit crystallisation event, section 637R of ITEPA 2003 (individual’s lump sum and death benefit allowance) applies as if the amount specified in that section were the amount determined under sub-paragraph (2A) reduced by the relevant percentage (see sub-paragraph (4). (2A) That amount is— (a) £1,073,100, or (b) in a case where, disregarding sub-paragraph (2), section 637R of ITEPA 2003 (individual’s lump sum and death benefit allowance) would apply in relation to the individual as if it specified any other amount, that amount.

(7) In this paragraph “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance).

77

, and (b) during the period beginning on 5th April 2006 and ending on 5th April 2024, no benefit crystallisation event within the meaning of section 216 as that provision had effect at the end of that period has occurred in relation to the individual.

(1A) Section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) applies as if, immediately before the first relevant benefit crystallisation event occurring in relation to the individual on or after 6th April 2024— (a) a relevant benefit crystallisation event within the meaning of that section had occurred in relation to the individual, and (b) the amount of the lump sum to which the relevant benefit crystallisation event relates was an amount equal to 25% of the value of the individual’s pre-commencement pension rights immediately before the relevant benefit crystallisation event.

78

After paragraph 20 insert—

(20A) (1) This paragraph applies in relation to a relevant benefit crystallisation event occurring in relation to an individual where— (a) the individual has (at any time after 5th April 2006 but before 6th April 2024) acquired rights under a registered pension scheme by reason of having become entitled to a pension credit, (b) the pension credit derived from the same or another registered pension scheme, (c) the rights under the registered pension scheme which became subject to the corresponding pension debit consisted of, or included, rights to a post-commencement pension in payment, and (d) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs. (2) “Post-commencement pension in payment” means a pension to which a person became entitled on or after 6th April 2006. (3) A lump sum and death benefit allowance enhancement factor operates in relation to the relevant benefit crystallisation event mentioned in paragraph 6A(1). (4) The lump sum and death benefit allowance enhancement factor is the pension credit factor. (5) The pension credit factor is— $$A £ 1 , 000 , 000$ where A is the post-commencement pension in payment portion of the amount which is the appropriate amount for the purposes of section 29(1) of WRPA 1999 or Article 26(1) of WRP(NI)O 1999 in relation to the pension credit.$ (6) The post-commencement pension in payment portion of the appropriate amount referred to in the definition of A— (a) in a case where the appropriate amount is arrived at under section 29(2) or (3)(b) of WRPA 1999 or Article 26(2) or (3)(b) of WRP(NI)O 1999, is so much of that amount as is attributable to rights to a post-commencement pension in payment; (b) in a case where the appropriate amount is arrived at under section 29(3)(a) of WRPA 1999 or Article 26(3)(a) of WRP(NI)O 1999, is so much of that amount as is just and reasonable. (7) In this paragraph and in paragraphs 20B to 20G, “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance). (8) Where this paragraph applies, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if, immediately before the lump sum is paid, the amount given by the formula in sub-paragraph (9) is less than 25% of the lump sum. (9) The formula is— $$A - B 4$ where— A is— in the case of an individual in relation to whom a relevant protection provision applies, the individual’s protected lump sum and death benefit allowance (see paragraph 6A(4)); in any other case, £1,073,100; B is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.$ (20B) (1) This paragraph applies in relation to a relevant benefit crystallisation event occurring in relation to an individual where— (a) during any part of the period that is the active membership period in relation to an arrangement relating to the individual under a registered pension scheme, the individual is a relevant overseas individual, and (b) notice of intention to rely on this paragraph is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs. (2) A lump sum and death benefit allowance enhancement factor operates in relation to the relevant benefit crystallisation event mentioned in paragraph 6A(1). (3) Paragraph 20C provides the lump sum and death benefit allowance enhancement factor in the case of an arrangement that is a money purchase arrangement. (4) Paragraph 20D provides the lump sum and death benefit allowance enhancement factor in the case of any other arrangement. (5) For the purposes of this Part an individual is a relevant overseas individual at any time if, at that time, the individual either is not a relevant UK individual or— (a) is a relevant UK individual by virtue only of paragraph (c) of section 189(1) (individuals resident in UK at some time in previous five tax years), and (b) is not employed by a person resident in the United Kingdom. (6) In this paragraph and in paragraphs 20C and 20D “the active membership period”, in relation to an arrangement relating to the individual, is the period— (a) beginning with the date on which the benefits first began to accrue to or in respect of the individual under the arrangement or, if later, 6th April 2006, and (b) ending on 5th April 2024. (7) But if benefits ceased to accrue to or in respect of the individual under the arrangement at a time before 5th April 2024, the active membership period is to be treated as having ended at that time. (8) Where this paragraph applies, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if, immediately before the lump sum is paid, the amount given by the formula in sub-paragraph (9) is less than 25% of the lump sum. (9) The formula is— $$A - B 4$ where— A is— in the case of an individual in relation to whom a relevant protection provision applies, the individual’s protected lump sum and death benefit allowance (see paragraph 6A(4)); in any other case, £1,073,100; B is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.$ (20C) (1) This paragraph applies in the case of an arrangement that is a money purchase arrangement. (2) The lump sum and death benefit allowance enhancement factor is— (a) if the arrangement is a cash balance arrangement, the cash balance arrangement non-residence factor (see sub-paragraphs (3) to (5)), and (b) in any other case, the other money purchase arrangement non-residence factor (see sub-paragraphs (6) and (7)). (3) The cash balance arrangement non-residence factor is— (a) the factor arrived at by the application of sub-paragraph (4) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or (b) if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of sub-paragraph (4) in relation to each of those parts of that period. (4) The factor arrived at by the application of this subsection in relation to any part of the active membership period is— $$A - B £ 1 , 000 , 000$ where— A is the closing value of the individual’s rights under the arrangement; B is the opening value of the individual’s rights under the arrangement.$ (5) For the purposes of sub-paragraph (4)— (a) the closing value of the individual's rights under the arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the end of that part of that period, and (b) the opening value of the individual's rights under the arrangement is the amount which would, on the valuation assumptions, be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the beginning of that part of that period. (6) The other money purchase arrangement non-residence factor is— (a) the factor arrived at by the application of sub-paragraph (7) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or (b) if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of sub-paragraph (7) in relation to each of those parts of that period. (7) The factor arrived at by the application of this sub-paragraph in relation to any part of the active membership period is— $$C £ 1 , 000 , 000$ where C is the amount of the contributions made under the arrangement by or in respect of the individual in any part of the active membership period during which the individual is a relevant overseas individual.$ (20D) (1) This paragraph applies in the case of an arrangement that is not a money purchase arrangement. (2) The lump sum and death benefit allowance enhancement factor is— (a) if the arrangement is a defined benefits arrangement, the defined benefits arrangement non-residence factor (see sub-paragraphs (3) and (4)), and (b) if the arrangement is a hybrid arrangement, the hybrid arrangement non-residence factor (see sub-paragraphs (5) to (7)). (3) The defined benefits arrangement non-residence factor is— (a) the factor arrived at by the application of sub-paragraph (4) in relation to the part of the active membership period during which the individual was a relevant overseas individual, or (b) if there have been two or more parts of that period during which the individual was a relevant overseas individual, the aggregate of the factors arrived at by the application of sub-paragraph (4) in relation to each of those parts of that period. (4) The factor arrived at by the application of this sub-paragraph in relation to any part of the active membership period is— $$A × B + C - A × D + E £ 1 , 000 , 000$ where— A is the relevant valuation factor (see section 276); B is the amount of the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the arrangement if the individual became entitled to payment of it at the end of that part of that period; C is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement t (otherwise than by commutation of pension) if the individual became entitled to payment of it at the end of that part of that period; D is the amount of the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of that part of that period; E is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the beginning of that part of that period.$ (5) The hybrid arrangement non-residence factor is the greater or greatest of such of— (a) what would be the cash balance arrangement non-residence factor (under section 222) if the arrangement were a cash balance arrangement, (b) what would be the other money purchase arrangement non-residence factor (under that section) if the arrangement were a collective money purchase arrangement, (c) what would be the other money purchase arrangement non-residence factor (under that section) if the arrangement were a money purchase arrangement other than a cash balance arrangement or a collective money purchase arrangement, and (d) what would be the defined benefits arrangement non-residence factor (undersub-paragraphs (3) and (4)) if the arrangement were a defined benefits arrangement, as are relevant factors in relation to the arrangement. (6) A factor is a relevant factor in relation to a hybrid arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under the arrangement may be benefits linked to that factor. (7) For the purposes of sub-paragraph (6)— (a) cash balance benefits are linked to the cash balance arrangement non-residence factor; (b) other money purchase benefits are linked to the other money purchase arrangement non-residence factor; (c) defined benefits are linked to the defined benefits arrangement non-residence factor. (20E) (1) This paragraph applies in relation to a relevant benefit crystallisation event occurring in relation to an individual where— (a) at any time after 5th April 2006 but before 6th April 2024, there has been a recognised overseas scheme transfer, and (b) notice of intention to rely on it is given to His Majesty’s Revenue and Customs in accordance with regulations made by the Commissioners for His Majesty’s Revenue and Customs. (2) There is a “recognised overseas scheme transfer” if any sums or assets— (a) held for the purposes of an arrangement under a recognised overseas pension scheme, or (b) representing accrued rights under such an arrangement, are transferred so as to become held for the purposes of, or to represent rights under, an arrangement under a registered pension scheme relating to the individual. (3) The arrangement specified in sub-paragraph (2)(a) or (b) is referred to in this paragraph and in paragraphs 20F and 20G as the “recognised overseas scheme arrangement”. (4) A lump sum and death benefit allowance enhancement factor operates in relation to the relevant benefit crystallisation event mentioned in paragraph 6A(1). (5) The lump sum and death benefit allowance enhancement factor is the recognised overseas scheme transfer factor. (6) The recognised overseas scheme transfer factor is— $$A - B £ 1 , 000 , 000$ where— A is the aggregate of the amount of any sums transferred, and the market value of any assets transferred, on the recognised overseas scheme transfer; B is the relevant relievable amount (see paragraphs 20F and 20G).$ (7) In this paragraph and in paragraphs 20F and 20G “the overseas arrangement active membership period” is the period— (a) beginning with the date on which the benefits first began to accrue to or in respect of the individual under the recognised overseas scheme arrangement or, if later, 6th April 2006, and (b) ending on 5th April 2024. (8) But if benefits ceased to accrue to or in respect of the individual under the recognised overseas scheme arrangement at a time before 5th April 2024, the overseas arrangement active membership period is to be treated as having ended at that time. (9) Where this paragraph applies, for the purposes of this Part a lump sum is not an uncrystallised funds pension lump sum (see paragraph 4A of Schedule 29) if, immediately before the lump sum is paid, the amount given by the formula in sub-paragraph (10) is less than 25% of the lump sum. (10) The formula is— $$A - B 4$ where— A is— in the case of an individual in relation to whom a relevant protection provision applies, the individual’s protected lump sum and death benefit allowance (see paragraph 6A(4)); in any other case, £1,073,100; B is the amount that would be the previously-used amount within the meaning of section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) if a relevant benefit crystallisation event within the meaning of that section had occurred immediately before the lump sum is paid.$ (20F) (1) This paragraph applies in the case of a recognised overseas scheme arrangement that was a money purchase arrangement. (2) The relevant relievable amount is— (a) if the recognised overseas scheme arrangement was a cash balance arrangement, the cash balance relevant relievable amount (see sub-paragraphs (3) to (5)), and (b) if the recognised overseas scheme arrangement was any other sort of money purchase arrangement, the other money purchase relevant relievable amount (see sub-paragraphs (6) and (7)). (3) The cash balance relevant relievable amount is— (a) the amount arrived at by the application of sub-paragraph (4) in relation to the part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual, or (b) if there have been two or more parts of that period during which the individual was not a relevant overseas individual, the aggregate of the amounts arrived at by the application of sub-paragraph (4) in relation to each of those parts of that period. (4) The amount arrived at by the application of this subsection in relation to any part of the overseas arrangement active membership period is— $$A - B$ where— A is the closing value of the individual’s rights under the arrangement, and B is the opening value of the individual’s rights under the arrangement.$ (5) For the purposes of sub-paragraph (4)— (a) the closing value of the individual's rights under the recognised overseas scheme arrangement is the amount which would, on the valuation assumptions (see section 277), be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the end of that part of that period, and (b) the opening value of the individual's rights under the arrangement is the amount which would, on the valuation assumptions, be available for the provision of benefits to or in respect of the individual under the arrangement if the individual became entitled to the benefits at the beginning of that part of that period. (6) The other money purchase relevant relievable amount is— (a) the amount arrived at by the application of sub-paragraph (7) in relation to the part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual, or (b) if there have been two or more parts of that period during which the individual was not a relevant overseas individual, the aggregate of the amounts arrived at by the application of sub-paragraph (7) in relation to each of those parts of that period. (7) The amount arrived at by the application of this sub-paragraph in relation to any part of the overseas arrangement active membership period is the amount of the contributions made under the arrangement by or in respect of the individual in any part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual. (20G) (1) This section applies in the case of a recognised overseas scheme arrangement that was not a money purchase arrangement. (2) The relevant relievable amount is— (a) if the recognised overseas scheme arrangement was a defined benefits arrangement, the defined benefits relevant relievable amount (see sub-paragraphs (3) and (4)), and (b) if the recognised overseas scheme arrangement was a hybrid arrangement, the hybrid relevant relievable amount (see sub-paragraph (5) to (7)). (3) The defined benefits relevant relievable amount is— (a) the amount arrived at by the application of sub-paragraph (4) in relation to the part of the overseas arrangement active membership period during which the individual was not a relevant overseas individual, or (b) if there have been two or more parts of that period during which the individual was not a relevant overseas individual, the aggregate of the amounts arrived at by the application of sub-paragraph (4) in relation to each of those parts of that period. (4) The amount arrived at by the application of this subsection in relation to any part of the overseas arrangement active membership period is— $$A × B + C - A × D + E$ where— A is the relevant valuation factor (see section 276); B is the annual rate of the pension which would, on the valuation assumptions (see section 277), be payable to the individual under the recognised overseas scheme arrangement if the individual became entitled to payment of it at the end of that part of that period; C is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the end of that part of that period; D is the annual rate of the pension which would, on the valuation assumptions, be payable to the individual under the arrangement if the individual became entitled to payment of it at the beginning of that part of that period; E is the amount of the lump sum to which the individual would, on the valuation assumptions, be entitled under the arrangement (otherwise than by commutation of pension) if the individual became entitled to payment of it at the beginning of that part of that period.$ (5) The hybrid relevant relievable amount is the greater or greatest of such of— (a) what would be the cash balance relevant relievable amount (under section 225) if the recognised overseas scheme arrangement had been a cash balance arrangement, (b) what would be the other money purchase relevant relievable amount (under that section) if that arrangement had been a collective money purchase arrangement, (c) what would be the other money purchase relevant relievable amount (under that section) if that arrangement had been a money purchase arrangement other than a cash balance arrangement or a collective money purchase arrangement, and (d) what would be the defined benefits relevant relievable amount (under sub-paragraph (3) and (4)) if that arrangement had been a defined benefits arrangement, as are relevant to that arrangement. (6) An amount is relevant to a hybrid arrangement if, in any circumstances, the benefits that may be provided to or in respect of the individual under the arrangement may be benefits linked to that amount. (7) For the purposes of sub-paragraph (6)— (a) cash balance benefits are linked to the cash balance relevant relievable amount; (b) other money purchase benefits are linked to the other money purchase relevant relievable amount; (c) defined benefits are linked to the defined benefits relevant relievable amount.

Amendments of Part 3 of Schedule 36 to FA 2004

79

Part 3 of Schedule 36 to FA 2004 (transitional provision and saving: pre-commencement benefit rights) is amended as follows.

80

Omit paragraph 23A (pre-commencement benefit rights: lump sums before normal minimum pension age) and the italic heading before it.

81

(b) paragraph 29A (which makes provision modifying the value of the individual’s lump sum allowance),

.

82

For paragraph 27 (pre-commencement benefit rights: enhanced protection: permitted maximum) substitute—

(27) If (and for so long as) paragraph 12 (enhanced protection) applies in relation to the individual, that paragraph has effect as if, for paragraph (i) of sub-paragraph (3B) there were substituted— (i) paragraph 2 of Schedule 29 to FA 2004 (pension commencement lump sum: definition of “permitted maximum”) has effect as if, for sub-paragraphs (b) and (c), there were substituted— (b) an amount equal to— (i) the maximum amount of a pension commencement lump sum that could have been paid to the individual on 5 April 2023 under the arrangement pursuant to which the individual becomes entitled to the relevant pension mentioned in paragraph 1(1)(aa), less (ii) the aggregate of the amounts of any pension commencement lump sums to which the member has previously become entitled under that arrangement after that date.

83

(3) Otherwise, for paragraph 2 of Schedule 29 substitute— (2) (1) In paragraph 1 “the permitted maximum”, in relation to a lump sum, means an amount equal to— $$A - B$ where— A is the value of the individual’s relevant uncrystallised lump sum rights on 5 April 2006 (calculated in accordance with paragraphs 25 and 26), as adjusted under sub-paragraph (2); B is the aggregate of the amounts of each pension commencement lump sum to which the individual has previously become entitled, as adjusted under sub-paragraph (3) (or, if the individual has not previously become entitled to a pension commencement lump sum, is nil).$ (2) The adjustment referred to in the definition of A is the multiplication of the value of the individual’s relevant uncrystallised lump sum rights on 5th April 2006 by 1.2 (being £1,800,000 divided by £1,500,000). (3) The adjustment of the amount of a pension commencement lump sum to which the individual has previously become entitled referred to in the definition of B is the multiplication of the amount by— $$£ 1 , 800 , 000 C$ where C is— if the individual became entitled to the lump sum before 6th April 2012, the standard lifetime allowance at that time; otherwise, £1,800,000.$

84

For paragraph 29 (pre-commencement benefit rights: enhanced protection: applicable amount) substitute—

(29) (1) If (and for so long as) paragraph 12 (enhanced protection) applies in relation to the individual, paragraphs 2A to 2D of Schedule 29 (meaning of “the applicable amount” in relation to a relevant pension) apply with the following modifications. (2) Paragraph 2A of that Schedule (meaning of “the applicable amount” where the relevant pension is income withdrawal) applies as if, for sub-paragraphs (2) to (4), there were substituted— (2) The applicable amount is— $$A B × C + D$ where— A is the value of the individual’s relevant uncrystallised lump sum rights on 5 April 2006, calculated in accordance with paragraphs 25 and 26 of Schedule 36; B is the value of the individual’s uncrystallised pension rights on 5 April 2006, calculated in accordance with paragraphs 8 and 9 of that Schedule; C is the pension commencement lump sum paid; D is— the aggregate of the sums, and the market value of the assets, designated as available for the payment of drawdown pension on that occasion, less so much (if any) of that amount as represents rights which are attributable to a disqualifying pension credit.$ (3) Paragraph 2B of that Schedule (meaning of “the applicable amount” where the relevant pension is a lifetime annuity) applies as if, for sub-paragraph (2) there were substituted— (2) The applicable amount is (subject to sub-paragraph (4))— $$A B × C + D - E$ where— A is the value of the individual’s relevant uncrystallised lump sum rights on 5 April 2006, calculated in accordance with paragraphs 25 and 26 of Schedule 36 to FA 2004; B is the value of the individual’s uncrystallised pension rights on 5 April 2006, calculated in accordance with paragraphs 8 and 9 of that Schedule; C is the pension commencement lump sum paid; D is the annuity purchase price; E is— if the annuity is purchased (in whole or in part) by the application of sums or assets representing the whole or part of the member’s drawdown pension fund or flexi-access drawdown fund, the aggregate of the amount of those sums and the market value of those assets; otherwise, so much (if any) of the aggregate of the lump sum and the annuity purchase price as represents the rights which are attributable to a disqualifying pension credit.$ (4) Paragraph 2C of that Schedule (meaning of “the applicable amount” where the relevant pension is a defined benefits arrangement or a collective money purchase arrangement) applies as if— (a) for sub-paragraph (2) there were substituted— (2) The applicable amount is (subject to sub-paragraph (3))— $$A B × C + D$ where— A is the value of the individual’s relevant uncrystallised lump sum rights on 5 April 2006, calculated in accordance with paragraphs 25 and 26 of Schedule 36; B is the value of the individual’s uncrystallised pension rights on 5 April 2006, calculated in accordance with paragraphs 8 and 9 of that Schedule; C is the pension commencement lump sum paid; D is an amount equal to the value of the pension rights crystallised by reason of the individual becoming entitled to the pension (see sub-paragraph (4)).$ (b) after sub-paragraph (3) there were inserted— (4) The Commissioners for His Majesty’s Revenue and Customs may by regulations make provision about how the value of the pension rights crystallised by reason of the individual becoming entitled to the pension is to be determined for the purposes of sub-paragraph (2). (5) Paragraph 2D of that Schedule (meaning of “the applicable amount” where the relevant pension is a money purchase arrangement) applies as if, for sub-paragraph (2), there were substituted— (2) The applicable amount is— $$A B × C + D$ where— A is the value of the individual’s relevant uncrystallised lump sum rights on 5 April 2006, calculated in accordance with paragraphs 25 and 26 of Schedule 36; B is the value of the individual’s uncrystallised pension rights on 5 April 2006, calculated in accordance with paragraphs 8 and 9 of that Schedule; C is the pension commencement lump sum paid; D is the scheme pension purchase price.$

85

After paragraph 29 (substituted by paragraph 84) insert—

(29A) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if the amount specified in section 637P of ITEPA 2003 (individual’s lump sum allowance) were an amount equal to the maximum amount of a pension commencement lump sum that could have been paid to the member on 5th April 2023.

86

Omit paragraph 30 (pre-commencement benefit rights: exemption for pension commencement lump sum exceeding permitted maximum from being scheme chargeable).

87

For paragraph 34 (pre-commencement benefit rights: application of Schedule 29 to FA 2004 where paragraph 31 applies) substitute—

(34) (1) Paragraph 2 of Schedule 29 (pension commencement lump sums: definition of “permitted maximum”) applies as if the permitted maximum were— $$A × 1 . 2 + B$ where— A is the value of the individual’s uncrystallised lump sum rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 32; B is the additional lump sum amount.$ (2) The additional lump sum amount is— $$C + ( D × 4 ) - E × 0 . 7154 4$ where— C is the pension commencement lump sum paid; D is the applicable amount in relation to the relevant pension (see paragraphs 2A to 2D of Schedule 29); E is the value of the individual’s uncrystallised rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 33.$ (3) For the purposes of section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance), the “non-taxable amount” of a pension commencement lump sum paid to the individual is to be treated as an amount equal to the applicable amount in relation to the relevant pension. (4) Any part of what would otherwise be D or E which represents rights attributable to a disqualifying pension credit is to be disregarded.

88

Omit paragraph 35 (pre-commencement benefit rights: winding-up lump sums paid by former approved superannuation funds) and the italic heading before it.

Amendment of Part 4 of Schedule 36 to FA 2004

89

In Part 4 of Schedule 36 to FA 2004 (transitional provisions and savings: other provisions), in paragraph 51 (individuals with pre-commencement entitlement to corresponding relief), in sub-paragraph (4), for “events that are benefit crystallisation events in relation to the individual” substitute “an event that is the individual becoming entitled to a benefit under a pension scheme”.

Amendments of Schedule 18 to FA 2011

90

(3) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if— (a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were £450,000, and (b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were £1,800,000.

Amendments of Schedule 22 to FA 2013

91

(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if— (a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were £375,000, and (b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were £1,500,000.

Amendments of Schedule 6 to FA 2014

92

(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if— (a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were the lower of— (i) 25% of the individual’s relevant amount; (ii) £375,000, and (b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the lower of— (i) the individual’s relevant amount; (ii) £1,500,000.

Amendments of Schedule 4 to FA 2016

93

(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if— (a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were £312,500, and (b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were £1,250,000.

;

(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if— (a) the amount specified in section 637P of that Act (individual’s lump sum allowance) were the lower of— (i) 25% of the individual’s relevant amount; (ii) £312,500, and (b) the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the lower of— (i) the individual’s relevant amount; (ii) £1,250,000.

Amendments of the Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006

94
  • “relevant lump sum death benefit” means— a defined benefits lump sum death benefit, other than one paid after the end of the relevant two-year period by a registered pension scheme in respect of a member of the scheme who had not reached the age of 75 at the date of the member’s death, or an uncrystallised funds lump sum death benefit, other than one paid after the end of the relevant two-year period by a registered pension scheme in respect of a member of the scheme who had not reached the age of 75 at the date of the member’s death;

;

  • “relevant benefit crystallisation event” has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance);
  • “the relevant two-year period”, in relation to a member of a registered pension scheme, means the period of two years beginning with the earlier of the day on which the scheme administrator of the scheme first knew of the member’s death and the day on which the scheme administrator could first reasonably have been expected to have known of it;

.

(3A) The closing date is the earlier of— (a) the relevant date found under paragraph (4), and (b) 5 April 2025.

;

(3A) The closing date is the earlier of— (a) the relevant date found under paragraph (4), and (b) 5 April 2025.

;

(3A) The closing date is the earlier of— (a) the relevant date found under paragraph (4), and (b) 5 April 2025.

;

Amendments of the Taxation of Pension Schemes (Transitional Provisions) Order 2006

95

(1A) Articles 25CA to 25CC apply for the purposes of determining the tax treatment of a stand-alone lump sum.

(25CA) (1) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect with the following modifications for the purposes of determining the income tax treatment of a stand-alone lump sum paid to a member of a pension scheme in circumstances where article 25B(2) (circumstance A) applies. (2) That Chapter has effect as if, after section 637G (trivial commutation lump sums and winding-up lump sums) there were inserted— (637GA) (1) Subject to subsection (2), no liability to income tax arises on a stand-alone lump sum paid under a registered pension scheme. (2) If the amount of the stand-alone lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) In subsection (2) “the permitted maximum”, in relation to a stand-alone lump sum, means the lower of— (a) the maximum amount of a stand-alone lump sum that could have been paid to the individual with no liability to income tax on 5 April 2023, and (b) so much of the individual’s lump sum and death benefit allowance as is available immediately before the individual becomes entitled to the lump sum (see section 637S). (3) Section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) has effect as if, in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included a reference to a stand-alone lump sum. (4) Section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) has effect as if, in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included a reference to a stand-alone lump sum. (25CB) (1) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect with the following modifications for the purposes of determining the income tax treatment of a stand-alone lump sum paid to a member of a pension scheme in circumstances where article 25B(3) (circumstance B) applies. (2) That Chapter has effect as if, after section 637G (trivial commutation lump sums and winding-up lump sums) there were inserted— (637GA) (1) Subject to subsection (2), no liability to income tax arises on a stand-alone lump sum paid under a registered pension scheme. (2) If the amount of the stand-alone lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) In subsection (2) “the permitted maximum”, in relation to a stand-alone lump sum, means— (a) the amount of a stand-alone lump sum that could have been paid to the individual with no liability to income tax on 5 April 2023 under the arrangement pursuant to which the entitlement to the stand-alone lump sum arises in respect of the individual, less (b) the aggregate of the amounts of any stand-alone lump sums and pension commencement lump sums previously paid to the individual under that arrangement after that date. (3) Section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) has effect as if, in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included a reference to a stand-alone lump sum. (4) Section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) has effect as if, in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included a reference to a stand-alone lump sum. (25CC) (1) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect with the following modifications for the purposes of determining the income tax treatment of a stand-alone lump sum paid to a member of a pension scheme in circumstances where article 25B(4) (circumstance C) applies. (2) That Chapter has effect as if, after section 637G (trivial commutation lump sums and winding-up lump sums) there were inserted— (637GA) (1) Subject to subsection (2), no liability to income tax arises on a stand-alone lump sum paid under a registered pension scheme. (2) If the amount of the stand-alone lump sum exceeds the permitted maximum, section 579A (pensions) applies to the excess as it applies to any pension under a registered pension scheme. (3) In subsection (2) “the permitted maximum”, in relation to a stand-alone lump sum, means the lower of— (a) the maximum amount of a stand-alone lump sum that could have been paid to the individual with no liability to income tax on 5 April 2023, and (b) so much of the individual’s lump sum and death benefit allowance as is available immediately before the individual becomes entitled to the lump sum (see section 637S). (3) Section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance), has effect as if, in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included a reference to a stand-alone lump sum. (4) For the purposes of that section, the “non-taxable amount” of a stand-alone lump sum is to be treated as being an amount equal to 25% of the lump sum. (5) Section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance), in the definition of “relevant lump sum” in subsection (2)(b) of that section, there were included a reference to a stand-alone lump sum.

Amendments of the Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011

96

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013

97

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014

98

Part 5 — Provision of information

Amendments of Part 4 of FA 2004

99

Part 4 of FA 2004 (pension schemes etc) is amended as follows.

100

(g) paragraph 20A(1)(d) of that Schedule (enhancement factor: pension credits from previously crystallised rights), (h) paragraph 20B(1)(b) of that Schedule (enhancement factor: non-residence), and (i) paragraph 20E(1)(b) of that Schedule (enhancement factor: transfers from recognised overseas pension scheme).

101
102
103

Amendments of the Registered Pension Schemes (Provision of Information) Regulations 2006

104

The Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567) are amended as follows.

105

In regulation 2 (interpretation), in paragraph (1)—

  • “relevant benefit crystallisation event”— in relation to a member’s lump sum allowance, has the same meaning as in section 637Q of ITEPA 2003 (availability of individual’s lump sum allowance) in relation to the member; in relation to a member’s lump sum and death benefit allowance, has the same meaning as in section 637S of ITEPA 2003 (availability of individual’s lump sum and death benefit allowance) in relation to the member;
  • “relevant reference number”, in relation to a member, means a reference number given by or on behalf of the Commissioners in respect of the member under— the Registered Pension Schemes (Enhanced Allowances) Regulations 2006 (S.I. 2006/131) (where the member relies on any provision of Schedule 36 to FA 2004); the Registered Pension Schemes (Enhanced Allowances Transitional Protection) Regulations 2011 (S.I. 2011/1752) (where the member relies on fixed protection under Schedule 18 to FA 2011); the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Enhanced Allowances Transitional Protection) (Notification) Regulations 2013 (S.I. 2013/1741) (where the member relies on fixed protection 2014 under Schedule 22 to FA 2013); the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Enhanced Allowances Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014 (S.I. 2014/1842) (where the member relies on individual protection 2014 under Schedule 6 to FA 2014); paragraph 14 of Schedule 4 to the Finance Act 2016 (where the member relies on fixed or individual protection 2016 under that Schedule);
106
24 Payment of lump sum or lump sum death benefit in relation to relevant benefit crystallisation event 24 Payment of lump sum or lump sum death benefit in relation to relevant benefit crystallisation event
In relation to a relevant benefit crystallisation event, the scheme pays— a lump sum to the member of the scheme in relation to whom the relevant benefit crystallisation event occurs, or a lump sum death benefit to a person in respect of the death of that member. The information is— the member’s name and national insurance number, the nature and amount of the lump sum or lump sum death benefit giving rise to the relevant benefit crystallisation event, the date of the relevant benefit crystallisation event, confirmation of whether or not the payment of the lump sum or lump sum death benefit has resulted in the member’s lump sum allowance or lump sum and death benefit allowance being exceeded, so far as the payment of the lump sum or lump sum death benefit has resulted in the member’s lump sum allowance or lump sum and death benefit allowance being exceeded, confirmation that any amount of tax due on the excess as a result of the charge to tax on pension income under Part 9 of ITEPA 2003 has been paid, and each relevant reference number (if any).
107

(1) The amount of a member’s lump sum allowance or lump sum and death benefit allowance expended on the happening of a relevant benefit crystallisation event is the non-taxable amount in relation to the lump sum to which the member becomes entitled, or the lump sum death benefit which a person is paid in respect of the member.

(4) The total amount of a member’s lump sum allowance or lump sum and death benefit allowance expended is the sum of the amounts calculated in accordance with paragraph (1) in respect of each relevant benefit crystallisation event that has occurred in relation to the member.

(5) In this regulation “non-taxable amount”— (a) in relation to a member’s lump sum allowance, has the meaning given by section 637Q(6) of ITEPA 2003; (b) in relation to a member’s lump sum and death benefit allowance, has the meaning given by section 637S(6) of ITEPA 2003.

108
109
110

(aa) the name of each other pension scheme (if any) of which the deceased member was a member, and the name and address of the scheme administrator of each such scheme;

;

(ba) each relevant reference number (if any) in relation to the deceased member; (bb) the name, address, date of birth and national insurance number of the individual to whom the relevant lump sum death benefit is paid;

;

111

(1A) The provisions are— (a) the Registered Pension Schemes (Enhancement of Allowances) Regulations 2006 (S.I. 2006/131); (b) the Registered Pension Schemes (Enhanced Allowances Transitional Protection) Regulations 2011 (S.I. 2011/1752); (c) the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Enhanced Allowances Transitional Protection) (Notification) Regulations 2013 (S.I. 2013/1741); (d) Schedule 4 to the Finance Act 2016 (pensions: lump sum allowance and lump sum and death benefit allowance: transitional provision).

112

Omit regulation 11B (information provided by members to scheme administrators: pension commencement lump sums).

113

In regulation 11BA (information provided by members to scheme administrators: recognised transfers), in paragraph (2), after paragraph (ac) insert—

(ad) a statement of the nature and transferred value of any transfers that have previously been made in relation to the member— (i) from any registered pension scheme or relieved relevant non-UK scheme of which the member is, or was at any time after 6 April 2006, a member, and (ii) to a qualifying recognised overseas pension scheme.

114

In regulation 11BB (information provided by members to scheme administrators: overseas transfers), in paragraph (1)(b)—

115

Omit regulation 12 (information about scheme administrator’s liability for a lifetime allowance charge).

116

(b) whether the overseas transfer charge arises under section 244AC or 244IA in the case of the transfer,

.

(ba) the transferred value of the transfer,

.

117
118

In regulation 14ZCA (further information provided by scheme administrators on recognised transfers to overseas schemes), in paragraph (2)—

(b) in a case where an overseas transfer charge arose in the case of the transfer, stating— (i) the transferred value of the transfer, (ii) whether the charge arose under section 244AC or 244IA, and (iii) the amount of the charge, and (c) in a case where the transfer is excluded from the overseas transfer charge under section 244AC by or under any of sections 244B to 244H, the section under which it is so excluded.

119
120
121
122

Omit regulations 19 (lump sums to which paragraph 1B of Schedule 29 applies) and 20 (lump sums to which paragraph 1B of Schedule 29 fails to apply).

Amendments of the Registered Pension Schemes and Overseas Pension Schemes (Electronic Communication of Returns and Information) Regulations 2006

123
  • “the EA regulations” means the Pension Schemes (Enhanced Allowances) Regulations 2006 (S.I. 2006/131);

Part 6 — Commencement and transitional provision etc

Commencement

124

The amendments made by section 14 and this Schedule have effect for the tax year 2024-25 and subsequent tax years.

Availability of individual’s lump sum allowance

125

or, if that produces a negative result, nil.

sub-paragraph (3) has effect as if the amount determined under paragraph (b) of that sub-paragraph were £375,000.

or, if that produces a negative result, nil.

Availability of individual’s lump sum and death benefit allowance

126

or, if that produces a negative result, nil.

sub-paragraph (3) has effect as if the amount determined under paragraph (b) of that sub-paragraph were £375,000.

or, if that produces a negative result, nil.

Transitional tax-free amount certificates

127
Paragraph 127 of Schedule 9 to the Finance Act 2024

.

Provision of information by scheme administrators to members

128

Paragraphs 125 to 128: interpretation

129

that is comprised, or any part of which is comprised, in the individual’s lump sum and death benefit transitional tax-free amount.

Statements for certain members who would not otherwise receive one in the tax year 2024-25

130

Lump sum death benefits paid on or after 6 April 2024 that crystallised before that date

131

References in scheme rules to lifetime allowance excess lump sums

132

Power to make further transitional provision

133

Power to make further provision in connection with the abolition of lifetime allowance charge

134

Schedule 10

Part 1 — Main provisions

Introduction of cash basis default

1

Chapter 3 of Part 2 of ITTOIA 2005 (trade profits: basic rules) is amended as follows.

2

After section 24 insert—

(24A) (1) The profits of a trade for a tax year must be calculated on the cash basis, unless— (a) the trade is an excluded trade in relation to the tax year (see section 25B), or (b) an election under section 25C(1) has effect in relation to the trade for the tax year. (2) In this Part— (a) references to calculating the profits of a trade on the cash basis are references to doing so in accordance with this section, and (b) references to a trade in relation to which the cash basis applies are to a trade the profits of which are required by virtue of subsection (1) to be calculated on the cash basis. (3) Chapter 3A contains provision about the calculation of profits on the cash basis and the application of the rest of this Part in relation to the cash basis. (4) Where the cash basis applies in relation to a trade, sections 27, 28 and 30 do not apply in relation to the calculation of the profits of the trade. (5) This section does not affect provisions of the Income Tax Acts relating to the calculation of the profits of Lloyd's underwriters.

3

In section 25 (generally accepted accounting practice)—

4

Omit section 25A (cash basis for small businesses).

5

Before section 26 insert—

(25C) (1) A person who is or has been carrying on a trade, other than an excluded trade, may elect for the profits of the trade to be calculated in accordance with generally accepted accounting practice (instead of on the cash basis). (2) An election made in relation to a trade under subsection (1) has effect— (a) for the tax year for which it is made, and (b) for every subsequent tax year (subject to subsection (3)). (3) An election made in relation to a trade under subsection (1) ceases to have effect if— (a) the trade is an excluded trade in relation to a tax year, or (b) the person who is or has been carrying on the trade, other than an excluded trade, elects to calculate its profits for a subsequent tax year on the cash basis. (4) Subsection (3) does not prevent an election being made under subsection (1) for any subsequent tax year. (5) For the meaning of “excluded trade”, see section 25B.

Removal of turnover restrictions etc

6

In Chapter 3A of Part 2 of ITTOIA 2005 (trade profits: cash basis) omit—

Removal of interest payments restriction

7

In Part 2 of ITTOIA 2005—

Removal of loss restrictions

8

In ITA 2007—

Part 2 — Minor and consequential amendments

Chapter 1 — Amendments of ITTOIA 2005

Other amendments of Chapter 3 of Part 2

9

Chapter 3 of Part 2 of ITTOIA 2005 (trade profits: basic rules) is amended as follows.

10

Before section 24 insert the following italic heading—

.

11

Before section 25C (inserted by paragraph 5 of this Schedule) insert —

(25B) (1) A trade is an excluded trade in relation to a tax year if the trade meets any of conditions A to G. (2) Condition A is that— (a) the person who is or has been carrying on the trade is a firm, and (b) one or more of the persons who have been partners in the firm at any time during the tax year was not an individual at that time. (3) Condition B is that the person who is or has been carrying on the trade was a limited liability partnership at any time during the tax year. (4) Condition C is that an election under Chapter 8 (trade profits: herd basis rules) has effect in relation to the trade for the tax year. (5) Condition D is that a claim under Chapter 16 (claim for averaging of fluctuating profits) has been made in relation to the trade for the tax year. (6) Condition E is that, at any time within the period of 7 years ending immediately before the tax year, the person who is or has been carrying on the trade obtained an allowance under Part 3A of CAA 2001 (business premises renovation allowances) in relation to the trade. (7) Condition F is that the trade is or was at any time during the tax year a mineral extraction trade within the meaning of Part 5 of CAA 2001 (see section 394(2) of that Act). (8) Condition G is that— (a) at any time before the beginning of the tax year the person who is or has been carrying on the trade obtained an allowance under Part 6 of CAA 2001 (research and development allowances) in respect of qualifying expenditure incurred by the person in relation to the trade, and (b) the person owns an asset representing the expenditure. In this subsection “qualifying expenditure” has the same meaning as in Part 6 of CAA 2001. (9) The Treasury may by regulations amend this section. (10) A statutory instrument containing regulations under subsection (9) that restricts the circumstances in which an election may be made under section 25C may not be made unless a draft of the instrument containing the regulations has been laid before, and approved by a resolution of, the House of Commons.

12

Before section 27 insert the following italic heading—

.

13

Before section 30 insert the following italic heading—

.

14

Before section 31 insert the following italic heading—

.

Amendments of other provisions

15

ITTOIA 2005 is amended as follows.

16

Omit section 31C (excluded persons) (but see paragraph 11, which inserts substantially similar provision).

17

In section 32A (application of Chapter 4 of Part 2 to the cash basis), in subsection (2)—

18

In section 56A (application of Chapter 5 of Part 2 to the cash basis), omit subsection (2).

19

In section 58 (incidental costs of obtaining finance), in subsection (5) omit paragraph (a) (including the “and” at the end).

20

In section 94E (excluded vehicles), in subsection (3)(b), for “25A” substitute “24A”.

21
22

Section 96B (section 96A: supplementary provision), in subsection (3)—

23

In section 97A (cash basis: value of trading stock on cessation of trade), in subsection (1)(b), for “an election under section 25A (cash basis for small business) has effect” substitute “the cash basis applies”.

24

In section 97B (cash basis: value of work in progress on cessation of profession or vocation), in subsection (1)(b), for “an election under section 25A (cash basis for small business) has effect” substitute “the cash basis applies”.

25

In section 227A (application of Chapter 17 of Part 2 where cash basis used), in subsection (1)—

(a) the cash basis does apply in relation to a trade for a tax year but does not apply in relation to the trade for the following tax year.

(b) the cash basis does not apply in relation to a trade for a tax year but does apply in relation to the trade for the following tax year.

26

In section 227B (cash basis treatment: full relief under Chapter 1 of Part 6A (trading allowance)), in subsection (2), for “an election under section 25A is to be treated as having effect” substitute “the cash basis is to be treated as not applying”.

27

In section 239A (spreading on leaving cash basis), in subsection (1)—

28

In section 240B (meaning of “entering the cash basis”)—

29

In section 246 (basic meaning of “post-cessation receipt”), in subsection (2A), for “an election under section 25A (cash basis for small businesses) has effect” substitute “the cash basis applies”.

30

In section 254 (allowable deductions), for subsection (2A) substitute—

(2A) If, immediately before the person permanently ceases to carry on the trade, the cash basis applies in relation to the trade, assume for the purposes of subsection (2) that the cash basis applies in relation to the trade.

31

In section 783AE (full relief: introduction), in subsection (3)—

(a) the cash basis applies for the tax year in relation to one or more of the trades mentioned in subsection (2)(a);

;

32

In section 786 (meaning of “rent-a-room receipts”), in subsection (5), for paragraph (b) substitute—

(b) the profits of the trade are required under section 24A to be calculated on the cash basis.

33

In section 805 (meaning of “qualifying care receipts”), in subsection (4), for paragraph (b) substitute—

(b) the profits of the trade are required under section 24A to be calculated on the cash basis.

34

In section 820 (periods of account not ending on 5 April), in subsection (2), for “an election under section 25A (cash basis for small businesses) has effect in relation to the trade” substitute “the profits of the trade are required under section 24A to be calculated on the cash basis”.

35

In Part 2 of Schedule 4 (index of defined expressions), in the entry for “the cash basis (in Part 2)”, for “section 25A” substitute “section 24A”.

Chapter 2 — Amendments of other Acts

TMA 1970

36

In section 42(7)(e) of TMA 1970 (procedure for making claims etc), for “25A” substitute “25C”.

TCGA 1992

37

In section 41(9)(a) of TCGA 1992 (restriction of losses by reference to capital allowances and renewals allowances), for the words from “calculating”, in the second place it occurs, to “effect” substitute “be construed in accordance with Part 2 of ITTOIA 2005 (see section 24A of that Act)”.

CAA 2001

38

CAA 2001 is amended as follows.

39

(za) references to a trade, profession or vocation in relation to which the cash basis applies are to a trade, profession or vocation the profits of which are required by virtue of section 24A(1) of ITTOIA 2005 to be calculated on the cash basis,

;

40

In section 4(2ZA)(a) (capital expenditure)—

41

In section 66A(6) (persons leaving cash basis)—

42

(4A) Subsection (11)(za) of section 1A (capital allowances and charges: cash basis) applies for the purposes of this section as it applies for the purposes of that section.

43

(4A) Subsection (11)(za) of section 1A (capital allowances and charges: cash basis) applies for the purposes of this section as it applies for the purposes of that section.

44

(5A) Subsection (11)(za) of section 1A (capital allowances and charges: cash basis) applies for the purposes of this section as it applies for the purposes of that section.

Application of Pillar Two rules to members of a group

45

Consequential repeals

46

In consequence of the repeals made by this Schedule, omit the following provisions (which insert or amend provisions repealed by this Schedule)—

Part 3 — Commencement and transitional provision

Commencement

47

The amendments made by this Schedule have effect for the tax year 2024-25 and subsequent tax years.

Transitional provision

48
49

and related expressions are to be construed accordingly.

and related expressions are to be construed accordingly.

50

Paragraphs 48 and 49 apply to professions and vocations as they apply to trades.

Schedule 11

Part 1 — Depositary receipts and clearance services

Introduction

1

FA 1986 is amended as follows.

Stamp duty

2

In section 67 (stamp duty: depositary receipts)—

(1A) For the purposes of subsection (1) “instrument” does not include— (a) a bearer instrument (see subsection (9A)); (b) an exempt capital-raising instrument (see section 72ZA); (c) an exempt listing instrument (see section 72ZB).

;

(9ZA) Where an instrument transfers shares in a company which are held by the company (whether in accordance with section 724 of the Companies Act 2006 (treasury shares) or otherwise), subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.

3

In section 69 (depositary receipts: supplementary), in subsection (1), in the words before paragraph (a), for “sections 67 and 68 above” substitute “sections 67, 68 and 72ZB”.

4

In section 70 (stamp duty: clearance services)—

(1A) For the purposes of subsection (1) “instrument” does not include— (a) a bearer instrument (see subsection (9A)); (b) an exempt capital-raising instrument (see section 72ZA); (c) an exempt listing instrument (see section 72ZB).

;

(9ZA) Where an instrument transfers shares in a company which are held by the company (whether in accordance with section 724 of the Companies Act 2006 (treasury shares) or otherwise), subsections (2) to (5) do not apply and stamp duty is not chargeable on the instrument.

5

After section 72 (clearance services: supplementary) insert—

(72ZA) (1) For the purposes of sections 67 and 70, an instrument is an “exempt capital-raising instrument” if the instrument transfers relevant securities in the course of capital-raising arrangements. (2) In this section, “capital-raising arrangements” means arrangements pursuant to which relevant securities are issued by a company for the purpose of raising new capital. (3) An instrument is not prevented from being an exempt capital-raising instrument by reason only of a delay in transferring relevant securities where— (a) a person (“the transferor”) acquires the relevant securities— (i) before capital-raising arrangements are entered into, or (ii) in the course of capital-raising arrangements, (b) the transferor is subject to a restriction that has the effect of preventing the transfer of the relevant securities in the course of the capital-raising arrangements, and (c) the instrument transfers the relevant securities as soon as reasonably practicable after the time at which the restriction ceases to have effect. (72ZB) (1) For the purposes of sections 67 and 70, an instrument is an “exempt listing instrument” if— (a) the instrument transfers relevant securities of a company in the course of qualifying listing arrangements, and (b) those arrangements do not affect the beneficial ownership of the relevant securities. (2) In this section, “listing arrangements” means arrangements pursuant to which relevant securities, or depositary receipts for relevant securities, are listed on a recognised stock exchange. (3) For the purposes of this section, listing arrangements are “qualifying” if, immediately before the first transfer of relevant securities in the course of the listing arrangements, no relevant securities in the company or depositary receipts for relevant securities in the company are listed on the recognised stock exchange to which the listing arrangements relate. (4) An instrument is not prevented from being an exempt listing instrument by reason only of a delay in transferring relevant securities where— (a) a person (“the transferor”) acquires the relevant securities before qualifying listing arrangements are entered into, (b) the transferor is subject to a restriction that has the effect of preventing the transfer of the relevant securities in the course of the qualifying listing arrangements, and (c) the instrument transfers the relevant securities as soon as reasonably practicable after the time at which the restriction ceases to have effect. (5) Section 1005 of the Income Tax Act 2007 (meaning of “recognised stock exchange”, “listed” etc) applies in relation to this section as it applies in relation to the Income Tax Acts.

Stamp duty reserve tax

6

, or (b) which would fall within section 93(1) or section 96(1) if the references in section 93 or section 96 (as the case may be) to the transfer of chargeable securities included the issue of chargeable securities.

7

(1A) The following provisions contain exceptions to the charge to stamp duty reserve tax under this section— (a) subsection (7) of this section (exception so far as stamp duty is chargeable); (b) section 95 (general exceptions); (c) section 95A (replacement securities); (d) section 97AB (exempt capital-raising transfers); (e) section 97AC (exempt listing transfers); (f) section 97AD (exception for transfers of shares held by issuing company); (g) section 97B (transfers between depositary receipt system and clearance system).

;

8

In section 94 (depositary receipts: supplementary), in subsection (1), in the words before paragraph (a), for “section 93 above” substitute “sections 93 and 97AC”.

9

In section 95 (depositary receipts: exceptions)—

10

In section 95A (depositary receipts: exception for replacement securities)—

11

.

(1A) The following provisions contain exceptions to the charge to stamp duty reserve tax under this section— (a) subsection (5) of this section (exception so far as stamp duty is chargeable); (b) section 97 (general exceptions); (c) section 97ZA (exception for replacement securities); (d) section 97A (election for alternative system of charge); (e) section 97AB (exempt capital-raising transfers); (f) section 97AC (exempt listing transfers); (g) section 97AD (exception for transfers of shares held by issuing company); (h) section 97B (transfers between depositary receipt system and clearance system).

;

12
13
14
15

After section 97A insert—

(97AB) (1) There is to be no charge to tax under section 93 or 96 in respect of an exempt capital-raising transfer. (2) For the purposes of subsection (1), a transfer of chargeable securities is an “exempt capital-raising transfer” if the transfer is in the course of capital-raising arrangements. (3) In this section, “capital-raising arrangements” means arrangements pursuant to which chargeable securities are issued by a company for the purpose of raising new capital. (4) A transfer of chargeable securities is not prevented from being an exempt capital-raising transfer by reason only of a delay in transferring the chargeable securities where— (a) a person (“the transferor”) acquires the chargeable securities— (i) before capital-raising arrangements are entered into, or (ii) in the course of capital-raising arrangements, (b) the transferor is subject to a restriction that has the effect of preventing the transfer of the chargeable securities in the course of the capital-raising arrangements, and (c) the transfer is made as soon as reasonably practicable after the time at which the restriction ceases to have effect. (97AC) (1) There is to be no charge to tax under section 93 or 96 in respect of an exempt listing transfer. (2) For the purposes of subsection (1), a transfer of chargeable securities issued by a company is an “exempt listing transfer” if— (a) it is a transfer in the course of qualifying listing arrangements, and (b) those arrangements do not affect the beneficial ownership of the chargeable securities. (3) In this section, “listing arrangements” means arrangements pursuant to which chargeable securities, or depositary receipts for chargeable securities, are listed on a recognised stock exchange. (4) For the purposes of this section, listing arrangements are “qualifying” if, immediately before the first transfer of chargeable securities in the course of the listing arrangements, no chargeable securities in the company or depositary receipts for chargeable securities in the company are listed on the recognised stock exchange to which the listing arrangements relate. (5) A transfer of chargeable securities is not prevented from being an exempt listing transfer by reason only of a delay in transferring the chargeable securities where— (a) a person (“the transferor”) acquires the chargeable securities before qualifying listing arrangements are entered into, (b) the transferor is subject to a restriction that has the effect of preventing the transfer of the chargeable securities in the course of the qualifying listing arrangements, and (c) the transfer is made as soon as reasonably practicable after the time at which the restriction ceases to have effect. (6) Section 1005 of the Income Tax Act 2007 (meaning of “recognised stock exchange”, “listed” etc) applies in relation to this section as it applies in relation to the Income Tax Acts. (97AD) There is to be no charge to tax under section 93 or 96 in respect of a transfer of shares in a company which are held by the company (whether in accordance with section 724 of the Companies Act 2006 (treasury shares) or otherwise).

16

In section 97B (transfer between depositary receipt system and clearance system) omit subsection (1A).

17

Omit section 97C (transfers to non-EU depositary receipt and clearance services systems).

Part 2 — Bearer instruments

18

In section 79 of FA 1986 (stamp duty: loan capital: new provisions), in subsection (2)—

19

Part 3 — Minor and consequential amendments

20

In section 131 of FA 1976 (Inter-American Development Bank), in subsection (3) omit “on the issue of any instrument by the Bank or”.

21
22

In section 99 of FA 1986 (interpretation), in subsection (10), in the words before paragraph (a), for “97AA” substitute “97ZA”.

23
24

Part 4 — Commencement and transitional provision

Commencement

25

The amendments made by this Schedule have effect—

Transitional provision: depositary receipts: exception from SDRT for replacement securities

26

Transitional provision: clearance services: exception from SDRT for replacement securities

27

Transitional provision: bearer instruments

28

Transitional provision: warrants to purchase Government stock etc

29

Schedule 12

Part 1 — Introduction

1

Part 2 — Multinational top-up tax

Partnerships

2

(232A) (1) A partnership is to be regarded for the purposes of this Part as continuing to be the same partnership regardless of a change in membership, provided that a person who was a member before the change remains a member after the change. (2) Where— (a) ownership interests in a partnership are transferred to more than one individual or entity, and (b) the result is a partnership of which none of the original partners are members, that new partnership is to be treated as if it were the same partnership as the old partnership. (3) Where a partnership is otherwise dissolved in an accounting period— (a) the partnership is to be treated as a continuing entity for the purpose of dealing with its rights and obligations under this Part in respect of that accounting period and previous accounting periods, and (b) for the purposes of Schedule 14 (administration) each person who was a partner in that accounting period (before the partnership’s dissolution) is to be treated as a partner of the continuing entity. (4) The reference in subsection (2) to a transfer of ownership interests includes any series of transactions having the effect of a transfer (including by way of the cancellation of interests and the issue of corresponding interests).

  • “partnership” does not include anything that is a body corporate;

(268A) Section 232A (partnerships) applies for the purposes of this Part as it applies for the purposes of Part 3.

(3) In this Schedule— (a) “limited partnership” includes an entity established under the law of a territory outside the United Kingdom that is equivalent to a limited partnership, and (b) “general partner” includes a partner of such an entity that corresponds to a general partner. (4) See also section 232A, which contains provision about the continuity of partnerships which is relevant to this paragraph. (5) Where an obligation of a partnership may be met by one of its partners and the partnership does not comply with that obligation— (a) an officer of Revenue and Customs may by notice require any such partner to meet the obligation, and (b) that partner is to be treated for that purpose as the filing member (and accordingly may be subject to any penalty for a failure to comply).

,

(37A) (1) An officer of Revenue and Customs may issue a partnership payment notice if an amount of multinational top-up tax payable by a member of a multinational group that is a partnership (including any interest on that amount) is not paid by the end of the period of three months beginning with the relevant date (see paragraph 34(7) to (9)). (2) A partnership payment notice may be issued to any person (wherever in the world they are located) who— (a) is a partner, or (b) was a partner at any time in the accounting period to which the amount payable relates. (3) A partnership payment notice is a notice requiring the recipient to pay an outstanding amount of multinational top-up tax payable by a member of the group that is a partnership by a date specified in the notice. (4) Sub-paragraphs (4) to (9) of paragraph 34 and paragraph 36 apply to a partnership payment notice as they apply to a group payment notice. (5) In this paragraph and in paragraph 37B, reference to a partner, in the case of a limited partnership, is to a general partner. (37B) (1) This paragraph applies where a partner of a member of a multinational group that is a partnership (the “payer”) makes a payment in respect of the liability to pay multinational top-up tax of the partnership (whether or not in consequence of a partnership payment notice). (2) The payer may recover the amount from the other partners. (3) In calculating the payer's income, profits or losses for tax purposes— (a) the payment is not allowed as a deduction, and (b) the reimbursement of any such payment is not to be regarded as a receipt. (4) The payment or its reimbursement— (a) is not (otherwise) to be taken into account in calculating the profits or losses of for corporation tax or income tax purposes of either the payer or the other partners, and (b) is not to be regarded as a distribution for income tax or corporation tax purposes. (5) The amount paid by the payer is to be taken into account in calculating— (a) the amount of multinational top-up tax unpaid by the partnership, and (b) the amount due by virtue of a partnership payment notice relating to the amount unpaid. (6) Similarly, any payment by the partnership or by any of the other partners of any of the amount unpaid is to be taken into account in calculating the amount due by virtue of a partnership payment notice (or by virtue of any other partnership payment notice relating to the amount unpaid). (7) In this paragraph, “for tax purposes” means for the purposes of income tax, corporation tax, multinational top-up tax or domestic top-up tax.

, and

(aa) a partner of a partnership makes a payment on behalf of the partnership or another partner, or

, and

(aa) deeming a payment made by a partner of a partnership to have been made by the partnership or another partner;

.

general partner (in Schedule 14) paragraph 3(3) of Schedule 14

;

limited partnership (in Schedule 14) paragraph 3(3) of Schedule 14

;

partnership section 259(1);

.

Qualifying non-profit subsidiaries

3

In section 127 (excluded entities), in subsection (5)—

(b) the revenue (see section 129(5)) of the multinational group of which the entity is a member, excluding the revenues of each member that is a non-profit organisation, a qualifying service entity or a qualifying exempt income entity— (i) would not exceed the threshold set out in section 129(4), and (ii) is less than 25% of the total revenue of the group, and

, and

Charging permanent establishments of intermediate/partially-owned parent members

4

(c) at least one member of the group in which it has an ownership interest, or a permanent establishment for which it is the main entity, has a top-up amount or an additional top-up amount.

— (a) every permanent establishment for which it is the main entity, and (b)

.

(b) at least one member of the group in which it has an ownership interest, or a permanent establishment for which it is the main entity, has a top-up amount or an additional top-up amount.

— (a) every permanent establishment for which it is the main entity, and (b)

.

(3A) But an entity with a permanent establishment is not to be taken as having ownership interests in that permanent establishment.

De-merged groups

5

(2) In this section “qualifying de-merger” means the separation of members of a relevant multinational group into two or more consolidated groups in an accounting period of the relevant multinational group, such that those members cease to all be consolidated by the same ultimate parent. (3) A multinational group is relevant in an accounting period if— (a) it meets condition A in section 129(2) for that period (revenue threshold exceeded in at least 2 of previous 4 accounting periods), and (b) Pillar Two rules apply to any member of the group for that period.

Adjustment for changes in accounting policies and prior period errors

6

In section 146 (adjustment for changes in accounting policies and prior period errors), in paragraph (b), for the words from “correction”, in the second place it occurs, to the end substitute “error results in a recalculation under section 217(5) (post filing adjustments of covered taxes)”.

Pension expense

7

For section 147 (accrued pension expense) substitute—

(147) (1) This section applies in an accounting period where a member of a multinational group— (a) has made contributions to a pension fund in the period, (b) has received amounts from the pension fund in the period, or (c) otherwise has amounts of income or expense relating to the pension fund reflected in its underlying profits. (2) Take the amount of income or expense (expressed as a negative number where expense) that has arisen directly in respect of the fund as reflected in the member’s underlying profits and— (a) add the sum of contributions made to the fund by the member in the period, and (b) subtract any amount received by the member from the fund in the period. (3) If the result of subsection (2)— (a) is more than nil, reduce the underlying profits by that result, or (b) is less than nil, increase the underlying profits by that result (as expressed a positive number).

Tax credits

8

(147A) (1) The underlying profits of a member of a multinational group, and the covered tax balance of that member (see Chapter 5), are to be adjusted (if necessary) to secure that— (a) qualifying refundable tax credits are accounted for as income rather than as tax expense, (b) tax credits that are marketable transferable tax credits in relation to the member are accounted for as income rather than as tax expense, and (c) other tax credits are accounted for as tax expense rather than as income. (2) Section 148 sets out when tax credits are qualifying refundable tax credits. (3) Section 148A sets out the meaning of “transferable tax credit” and “marketable transferable tax credit”. (4) Sections 148B and 148C set out rules about the value of marketable transferable tax credits. (5) Sections 176A to 176C (in Chapter 5) set out rules about the value of tax credits that are not marketable transferable tax credits but which are transferable or were transferred (and which as a result of subsection (1)(c) are generally to be accounted for as tax expense). (6) See also sections 176D to 176F which contain special rules for tax credits received in under a tax equity partnership arrangement.

(148A) (1) A tax credit is a transferable tax credit in relation to a member of a multinational group if— (a) the member is— (i) the person to whom the credit was originally granted (“the originator”), or (ii) a person (“a purchaser”) who has acquired the credit (whether from the originator or anyone else), and (b) the transferability condition is met in relation to the member. (2) A transferable tax credit is a marketable transferable tax credit in relation to a member of a multinational group if— (a) it is a transferable tax credit, and (b) the marketable condition is met in relation to the member. (3) Those conditions are met differently depending on whether the member is the originator or a purchaser. (4) The transferability condition is met— (a) in relation to the originator if, under the law of the territory in which the credit was granted, credits of that type may be transferred to a person or entity that is not connected with originator before the end of 15 months after the end of the accounting period in which the credit is granted, and (b) in relation to a purchaser if, under the law of that territory, credits of that type may be transferred to a person or entity that is not connected with the purchaser— (i) under the same or similar conditions as would apply to the originator, and (ii) before the end of the accounting period in which it was transferred to the purchaser. (5) The marketable condition is met— (a) in relation to the originator, if— (i) the credit is transferred to a person or entity that is not connected with the originator before the end of 15 months of the accounting period in which the credit was granted at a price equal to or in excess of 80% of its net present value, or (ii) similar credits are traded between persons or entities that are not connected to each other before the end of 15 months of the accounting period in which they are granted, and are typically traded at a price equal to or in excess of 80% of their net present value, and (b) in relation to a purchaser, if the purchaser acquired the credit from a person or entity that is not connected to the purchaser at a price equal to or in excess of 80% of its net present value. (6) Subsections (7) and (8) apply for the purposes of determining the net present value of a tax credit. (7) In making that determination, assume that the entity that holds it will be able to use it in the accounting periods in which it may be used. (8) The discount rate to be used in making that determination is to be determined by reference to the return on debt instruments that are issued by the government of the territory in which the credit was granted— (a) that have— (i) the same, or a similar, maturity to the period over which the credit is to be used, or (ii) in a case in which the credit is to be used over a period exceeding 5 years, a maturity of 5 years, and (b) that are issued— (i) in relation to a credit that has been transferred, in the accounting period in which the credit was transferred, or (ii) in relation to a credit held that has not been transferred, in the accounting period in which it was granted. (9) References in subsections (6) and (8) to an accounting period are— (a) in relation to determining net present value in connection with determining whether the marketable condition is met by the originator, an accounting period of the originator, and (b) in relation to determining net present value in connection with determining whether the marketable condition is met by a purchaser, an accounting period of the purchaser. (10) Where a transferable tax credit is also a qualifying refundable tax credit, it is to be treated as not being a transferable tax credit for the purposes of this Part. (148B) (1) The underlying profits of a member of a multinational group that is the originator in relation to a marketable transferable tax credit are to be adjusted to secure that the value of marketable transferable tax credits it holds, and has held, as originator are reflected as follows. (2) Where the credit is not transferred before the end of 15 months after the end of the accounting period in which it was granted, the full value of the credit is to be recognised as income. (3) Where the credit is subsequently transferred for consideration which is less than the value of the credit, the difference between the value of the credit and the consideration received for its transfer is to be recognised as a loss in the accounting period in which it is transferred. (4) Where the credit is transferred before the end of 15 months after the end of the accounting period in which the credit is granted, the consideration for the transfer (rather than the value of the credit) is to be recognised as income. (5) Where the credit has not been transferred, and was not fully used, before its expiry, the value of so much of the credit as has not been used is to be reflected as a loss in the accounting period in which the credit expired. (148C) (1) The underlying profits of a member of a multinational group that is the purchaser in relation to a marketable transferable tax credit are to be adjusted to secure that the value of marketable transferable tax credits it holds, and has held, as purchaser are reflected as follows. (2) On using an amount of the credit in an accounting period, the amount given by subsection (3) is to be recognised as income. (3) That amount is the amount given by multiplying— (a) the amount used divided by the full value of the credit, by (b) the amount given by subtracting the purchase price of the credit from the full value of the credit. (4) On transferring the credit, the amount in subsection (5) is to be reflected in the underlying profits for the accounting period in which the transfer occurred— (a) if positive, as a gain, or (b) if negative, as a loss. (5) That amount is the amount given by subtracting— (a) the sum of— (i) the purchase price of the credit, and (ii) any amounts recognised as income in accordance with subsection (2) (whether in that accounting period or a previous accounting period), from (b) the sum of— (i) the amount of the credit that has been used, and (ii) the consideration for the transfer. (6) Where the credit has not been transferred, and was not fully used, before its expiry, the amount in subsection (7) is to be reflected as a loss in the accounting period in which the credit expired. (7) That amount is the amount given by subtracting— (a) the amount of the credit that was used, from (b) the sum of the purchase price of the credit and any amounts recognised in accordance with subsection (2).

(176A) (1) Sections 176B and 176C make provision about “non-marketable transferable tax credits”. (2) A tax credit held by a member of a multinational group that is the originator of the credit is a non-marketable transferable tax credit if— (a) it may be transferred to another person or entity, and (b) it is neither a marketable transferable tax credit nor a qualifying refundable tax credit. (3) A tax credit held by a member of a multinational group as a purchaser of the credit is a non-marketable transferable tax credit if it is neither a marketable transferable tax credit nor a qualifying refundable tax credit. (4) In this section and in sections 176B and 176C “originator” and “purchaser” are to be construed in accordance with section 148A(1)(a). (176B) (1) The covered tax balance of a member of a multinational group that holds a non-marketable transferable tax credit as originator is to be adjusted to secure that the value of the credit is reflected as follows. (2) The value of the tax credit is to be reflected as it is used. (3) If the credit is transferred (after the end of the period of 15 months after the accounting period in which the credit is granted), the consideration for the transfer is to be reflected as a credit in the accounting period in which the transfer occurred. (176C) (1) The covered tax balance of a member of a multinational group that holds a non-marketable transferable tax credit as purchaser is to be adjusted to secure that the value the credit is reflected as follows. (2) On using an amount of the credit, the amount given by subsection (3) is to be reflected as a credit in the covered tax balance for the accounting period in which it is used. (3) That amount is the amount given by multiplying— (a) the amount used divided by the full value of the credit, by (b) the amount given by subtracting the purchase price of the credit from the full value of the credit. (4) On transferring the credit, the amount in subsection (5) is— (a) if positive, to be reflected as a credit in the covered tax balance for the accounting period in which the transfer occurred, or (b) if negative, to be reflected as a loss in the underlying profits of the member for that period. (5) That amount is the amount given by subtracting— (a) the sum of— (i) the purchase price of the credit, and (ii) any amounts recognised reflected in the covered tax balance in accordance with subsection (2) (whether in that accounting period or a previous accounting period), from (b) the sum of— (i) the amount of the credit that has been used, and (ii) the consideration for the transfer. (6) Where the credit has not been transferred, and was not fully used, before its expiry, the amount in subsection (7) is to be reflected as a loss in the underlying profits of the member for the accounting period in which the credit expired. (7) That amount is the amount given by subtracting— (a) the amount of the credit that was used, from (b) the sum of the purchase price of the credit and any amounts recognised in accordance with subsection (2).

Adjustments for companies in distress

9

(aa) that release is reflected in the underlying profits of the member for that period,

, and

, and (c) the filing member of the group elects that this section should apply to the member for that period.

(6A) For the purposes of subsection (6)(c) “local tax attributes” means any tax attributes (which may include foreign tax credits) of the member that are recognised under the law of the territory in which the member is located (whether or not such tax attributes are excluded from the member’s covered tax balance).

(7) Where more than one debt is released at the same time, the debts released are to be treated as a single aggregate amount for the purpose of assessing whether conditions in this section are met (for example, whether the member’s assets exceed its liabilities at any time).

(8) Paragraph 2 of Schedule 15 (annual elections) applies to an election under subsection (1)(c).

Adjustments where life assurance business carried on

10

(4) In this section “life assurance business” means— (a) a life assurance business within the meaning of section 56 of FA 2012, or (b) a business regulated as a life assurance business under the law of a territory outside the United Kingdom.

Exclusion of certain insurance reserve movement expense

11

In section 153 (exclusion of certain insurance reserve movement expense), in subsection (1) after “excluded dividends” insert “falling within section 141(2)(b)”.

Permanent establishment income and expense attribution

12

(a) reflect all amounts of income and expense that are attributable to it in accordance with the tax treaty under which it is treated as a permanent establishment, and (b) do not reflect amounts attributable to its main entity in accordance with that treaty.

— (a) reflect all amounts of income and expense that are attributable to it in accordance with the law of the territory in which the member is located, and (b) do not reflect amounts attributable to its main entity in accordance with the law of that territory.

— (a) reflect all amounts of income and expense that would be attributed to it in accordance with Article 7 of the OECD tax model, and (b) do not reflect amounts that would be attributed to its main entity in accordance with the OECD tax model.

(4) Amounts are to be reflected (or, as the case may be, not reflected) in the underlying profits of a permanent establishment in accordance with subsections (1) to (3) whether or not— (a) in the case of an amount of income, it is subject to tax or not, or (b) in the case of an amount of expense, it is deductible or not.

Election to spread certain capital gains

13
  • Step 1 For each standard member of the group in the territory in the first accounting period of the look-back period (“the carry-back period”), determine whether it has net losses in respect of the disposal of local tangible assets (ignoring any losses in relation to which these steps have previously been carried out).

, and

  • Step 9 Determine which of the standard members of the group (“current gain members”) located in the territory have net gains from the disposal of local tangible assets in the election period. A current gain member is not to be regarded as a current gain member in any accounting period in which— it is not a standard member of the group, or it is not located in the territory.
  • Step 10 For the election period and each accounting period that is in the look-back period, adjust the underlying profits for that period (“the adjustment period”) of each current gain member by adding the amount given by multiplying— the result of Step 8, by the amount given by dividing— the net gains of the current gain member from the disposal of local tangible assets in the election period, by the sum of net gains from the disposal of local tangible assets in the election period of all current gain members in the adjustment period.
  • Step 11 Where there are no current gain members in an accounting period in the look-back period, adjust the underlying profits for that period of each standard member located in the territory for that period by adding the amount given by multiplying— the result of Step 8, by the amount given by dividing 1 by the number of standard members of the group in the territory in that accounting period.
  • Step 12 Where there are no standard members of the group in the territory in one or more accounting periods in the look-back period, further adjust the underlying profits for the election period of each current gain member by adding the amount given by multiplying— the result of Step 8 multiplied by the number of accounting periods in the look-back period in which no standard members of the group were located in the territory, by the amount given by dividing— the net gains of the current gain member from the disposal of local tangible assets in the election period, by the sum of net gains from the disposal of local tangible assets in the election period of all current gain members.

Transparent entities etc

14

(9) Where underlying profits of M— (a) are allocated to an individual or an entity that is not a member of the group of which M is a member, or (b) would be allocated to such an individual or entity if M were regarded as tax transparent in the territory in which the individual or entity is located, those profits are to be excluded from the adjusted profits of M.

(12) For the purposes of applying this section in relation to a multinational group whose ultimate parent is a flow-through entity, the ultimate parent is to be treated as if it were not regarded as tax transparent in the territory in which it is located.

(2A) Where profits are allocated to the ultimate parent as a result of section 168 (underlying profits of transparent and reverse hybrid entities), those profits are to be regarded, for the purposes of this section, as profits to which holders of ownership interests in the ultimate parent are entitled (to each in proportion to the proportion of those profits to which they would have been entitled had those profits actually accrued to the ultimate parent).

Covered taxes

15

In section 173 (covered taxes), in subsection (1)(c) for “of the member” substitute “in which the tax is imposed”.

Tax equity partnerships

16

(176D) (1) Where— (a) a member of a multinational group is an investor in a tax equity partnership arrangement, and (b) an election under section 165 (excluded equity gains and losses included) applies in relation to the member for an accounting period, qualifying flow-through tax benefits provided to the member under that arrangement in that period are to be excluded from the covered tax balance of that member for that period. (2) “Flow-through tax benefits” means tax credits, other than qualifying refundable tax credits, and the value of amounts of tax deductible losses made available to be used by an investor in a tax equity partnership arrangement under that arrangement (whether or not those credits or losses are used by the investor). (3) Section 176E (proportional amortisation method) applies for the purposes of determining the extent to which flow-through tax benefits are “qualifying” where— (a) in determining the underlying profits of the investor, the proportional amortisation method is used to account for the arrangement, or (b) the filing member of the multinational group of which the investor is a member has elected that section 176D should apply for those purposes in relation to the member. (4) Otherwise, section 176F (subtraction method) applies for those purposes. (5) For the purposes of this Part, a member of a multinational group is an investor in a tax equity partnership arrangement if— (a) the member has made an investment in an entity that is tax transparent in the territory in which the member is located, (b) the investment is treated as an equity interest for tax purposes in the territory in which the member is located, (c) the investment would, under an authorised accounting standard of the territory in which the entity operates, be treated as an equity interest, (d) the entity is not a member of the multinational group, and (e) it is reasonable to expect, at the time of making the investment, that the return on the investment would be negative in the absence of the provision of flow-through tax benefits. (6) But a member of a multinational group is not to be regarded as an investor in a tax equity partnership arrangement if— (a) the investment in the entity does not represent a genuine economic interest in that entity such that the member is exposed to the possibility of a loss on the investment, or (b) the territory in which the member is located limits the use of tax equity partnership arrangements to arrangements that involve a multinational group subject to multinational top-up tax or its equivalent under the law of a territory outside the United Kingdom. (7) Flow-through tax benefits provided to a member of a multinational group in an accounting period that are not qualifying are to be reflected as a credit in the covered tax balance for that period. (8) Flow-through tax benefits (whether qualifying or not) provided to a member of a multinational group are not to be reflected in the underlying profits of that member, even if that would be the effect of the election under section 165. (9) For the purposes of subsection (3)(a), the “proportional amortisation method” means a method of accounting under which— (a) the initial capital investment in the arrangement is amortised over the term of the investment with the amortisation expense for an accounting period based on the proportion of the flow-through tax benefits expected to be provided over the term of the arrangement that are expected to be provided in that period, and (b) the difference between the flow-through tax benefits received in an accounting period and that amortisation expense for that period is reflected as tax expense. (10) For the purposes of this section and sections 176E and 176F, the value of an amount of tax deductible losses made available to be used by an investor is given by multiplying the amount multiplied by the tax rate that applies to the investor. (11) Paragraph 2 of Schedule 15 (annual elections) applies to an election under subsection (3)(b). (176E) (1) Where this section applies, to determine the extent to which flow-through tax benefits provided to an investor in an accounting period under a tax equity partnership arrangement are qualifying, take the following steps— - Step 1 Determine the amount of capital investment provided by the investor to the arrangement at its commencement. - Step 2 Divide the flow-through through tax benefits provided under the arrangement in the accounting period by the total flow-through tax benefits expected to be provided over the whole term of the arrangement. - Step 3 Multiply the result of Step 1 by the result of Step 2. - Step 4 Add the following together— the amounts, if any, of tax credits made available to be used by the investor under the arrangement in the accounting period; the value of the amounts, if any, of tax deductible losses made available to be used by the investor under the arrangement in the accounting period; the amounts, if any, of distributions made to the investor in the accounting period; the amounts, if any, received by the investor for the sale of any part of its investment in the arrangement in the accounting period. - Step 5 If the result of Step 3 is equal to or greater than the result of Step 4, all of the flow-through tax benefits provided under the arrangement in the accounting period are qualifying. Otherwise proceed to Step 6. - Step 6 Subtract the result of Step 3 from the result of Step 4. - Step 7 The amount of the flow-through benefits provided under the arrangement in the accounting period that is qualifying is the amount given by reducing the amount of those benefits (but not below nil) by the result of Step 6. (2) Accordingly, the amount by which those benefits are reduced in accordance with Step 7 represents non-qualifying flow-through tax benefits which are to be reflected as a credit in the investor’s covered tax balance. (176F) Where this section applies, to determine the extent to which flow-through tax benefits provided to an investor in an accounting period under a tax equity partnership arrangement are qualifying, take the following steps— - Step 1 Determine the amount of capital investment provided by the investor to the arrangement at its commencement. - Step 2 Subtract the following from that amount— the amounts, if any, of tax credits made available to be used by the investor under the arrangement since the commencement of the arrangement, other than tax credits that are not qualifying refundable tax credits that were made available in the accounting period; the value of the amounts, if any, of tax deductible losses made available to be used by the investor under the arrangement since its commencement, other than losses made available in the accounting period; the amounts, if any, of distributions made to the investor since the arrangement’s commencement; the amounts, if any, received by the investor for the sale of any part of its investment in the arrangement. - Step 3 If the result of Step 2 is nil or less, no flow-through tax benefits provided under arrangement in the accounting period are qualifying. If the result of that step is more than nil, proceed to Step 4. - Step 4 Subtract the flow-through tax benefits provided to the investor in the accounting period under the arrangement from the result of Step 2. - Step 5 If the result of Step 4 is nil or greater, all of the flow-through tax benefits provided under the arrangement in the accounting period are qualifying. Otherwise, the amount of those benefits that is qualifying is the amount of those benefits that when subtracted from the result of Step 2 would give a result of nil.

(za) section 176D(3)(b);

.

Reallocation of tax expense

17

(1A) Where— (a) a member of a multinational group has an amount of qualifying current tax expense, (b) that amount is in respect of profits not included in the member’s underlying profits, and (c) if those profits had been included in the member’s underlying profits, a corresponding amount of adjusted profits would have been allocated to another member of the group (“O”) under section 167 or 168, that qualifying current tax expense is to be allocated to O (and is to be regarded as qualifying current tax expense of O for the purposes of applying section 175(2)(a)). (1B) Section 175(2)(a) (exclusion of amounts relating to income or gains not included in adjusted profits) applies to an amount of qualifying current tax expense allocated in accordance with subsection (1) as if— (a) the reference to the member’s adjusted profits were to the adjusted profits of the member from whom the amount of qualifying current tax expense was allocated, and (b) profits allocated from that member to O under section 167 or 168 were not excluded from the adjusted profits of that member.

(5) Where an amount of qualifying current tax expense would have been allocated to O, but the amount allocated is limited as a result of subsection (2) the amount not allocated remains with the member from whom it otherwise would have been allocated. (6) But if an amount would, ignoring this subsection, remain with the member from whom it would have otherwise been allocated, and that amount relates to income or gains that are not included in the adjusted profits of O, that amount is to be excluded from the covered tax balance of both the member and O.

(1A) Qualifying current tax expense allocated to F is to be regarded as qualifying current tax expense of F for the purposes of applying section 175(2)(a).

(3A) Where an amount of qualifying current tax expense would have been allocated to F but the amount allocated is limited as a result of subsection (2), the amount not allocated remains with C. (3B) But if an amount would, ignoring this subsection, remain with C and that amount relates to income or gains that are not included in the adjusted profits of F, that amount is to be excluded from the covered tax balance of both C and F.

Controlled foreign company tax regimes

18
  • “CFC entity”, in relation to a member of a multinational group who is subject to a controlled foreign company tax regime, means— a controlled foreign company in relation to that member, a permanent establishment of such a controlled foreign company, or an entity whose profits are treated, for the purposes of the regime, as the profits of such a controlled foreign company;

.

CFC entity section 179(4)

.

Blended CFC regimes

19

(ii) the result of Step 2 in section 132(1) for those entities were the aggregate of their profits (and losses) before tax as shown in their financial accounts, (iia) the combined covered tax balance for those entities were the aggregate of the taxes shown in their financial accounts,

.

Qualifying foreign tax credits (substitute loss carry forward assets)

20

(183A) (1) A special foreign tax asset of a member of a multinational group is to be used to increase its covered tax balance in accordance with this section. (2) Subsection (3) applies where— (a) the territory in which a member of a multinational group is located requires that domestic losses are offset against relevant foreign income before foreign tax credits can be applied against tax on foreign income, (b) the territory limits the extent to which foreign tax credits can be applied against tax in a taxable period, (c) the territory allows foreign tax credits to be used to a greater extent where a domestic loss has been used to offset (in whole or in part) relevant foreign income in a prior period, and (d) the member has used a domestic loss to offset (in whole or in part) relevant foreign income. (3) Where this subsection applies, the member has a special foreign tax asset arising in the accounting period in which the loss was used. (4) The amount of that special foreign tax asset is the amount of the domestic loss used to offset relevant foreign income multiplied by the lesser of— (a) the nominal rate of tax in the member’s territory for the taxable period in which it was used, and (b) 15%. (5) Where a member of a multinational group has a special foreign tax asset that arose in any previous accounting period, the member is to use that amount to increase its covered tax balance. (6) The amount of the special foreign tax asset that is to be used in an accounting period is the lesser of— (a) the amount of the asset, and (b) so much of the amount of foreign tax credits credited against tax in the taxable period corresponding to that accounting period as is capable of being credited only as a result of the prior use of the domestic loss. Any remainder continues to be a special foreign tax asset (and is available for use in subsequent account periods where subsection (5) applies).

Substance based income exclusion: inter-jurisdictional employees and assets

21

(1A) But where— (a) an employee carries out the work in the period both in the territory in which the member is located and outside that territory, and (b) the proportion of the time spent carrying out the work in that territory in the period is 50% or less, the payroll costs in respect of the employee are to be multiplied by that proportion to determine how much of those costs are eligible payroll costs.

(6A) Where an asset falling within paragraph (a), (c) or (d) of subsection (6) is only located in the same territory as the member for part of the period— (a) it is to be regarded for the purposes of this section as located in that territory for the whole period, but (b) where the proportion of the period in which the asset (or in the case of a right, the asset to which the right relates) is located in the territory is 50% or less, the carrying values for the purposes of subsection (1)(a) and (b) are to be multiplied by that proportion.

Substance based income exclusion: inclusion of payroll costs and assets voluntary

22

, and, (e) the filing member chooses to include those costs in calculating the substance based income exclusion for the period.

and, (c) the filing member chooses to include the asset in calculating the substance based income exclusion for the period.

Substance based income exclusion: impairment losses

23

In section 197(4)—

(d) any impairment loss, and (e) so much of the reversal of a previous impairment loss as does not cause the carrying value to exceed the value it would have been had the impairment loss not been recognised,

.

Substance based income exclusion: dual use assets

24

In section 197, after subsection (7) insert—

(7A) Where part of an asset comprising property is held by a member of a multinational group for lease, but another part of that property is retained for use by the member— (a) the parts are to be treated as separate assets for the purposes of this section and section 197A, and (b) the carrying value of the asset is to be allocated between the separate parts on a just and reasonable basis.

Substance based income exclusion: leases

25

(7A) Section 197A sets out the treatment of operating leases.

(197A) (1) Subsection (2) applies where— (a) a member of a multinational group holds property located in the same territory as the member in an accounting period, (b) that property is held for lease by the member, and (c) the lease is accounted for in the underlying profits accounts of the member as an operating lease for that period. (2) The operating lease is to be regarded as an eligible tangible asset of the member for that period (despite the exclusion in section 197(7)(a)). (3) But where the property is not a short-term rental asset for that period, any carrying value of the operating lease recorded at the start or the end of the period is to be reduced by the right-of-use amount for the property at that time for the purposes of carrying out the calculation in section 197(1). (4) In a case where the lessee is a member of the same multinational group as the lessor, the right-of-use amount in relation to the property at the start or the end of the period is the carrying value of the lessee’s right-of-use asset in relation to the property recorded at that time. (5) Where the lessee is not a member of the same multinational group as the lessor, the right-of-use amount in relation to the property at the start or end of the period is the undiscounted value of any outstanding payments under the lease at that time. (6) In determining the value of those outstanding payments— (a) apply the accounting standard used in determining the underlying profits of the member, (b) include the value of any outstanding payments that would be due under any extension to the lease that would fall to be accounted for in accordance with that standard. (7) For the purposes of this section, property held for lease is a short-term rental asset in an accounting period if— (a) the property was leased regularly during that period to different lessees, and (b) the average length of the periods for which it was leased does not exceed 30 days.

Substance based income exclusion: power to make further provision

26

After section 198 insert—

(198A) (1) The Treasury may by regulations make provision about the treatment of payroll costs and tangible assets in specified circumstances. (2) Regulations may, in particular, provide that in determining the substance based income exclusion for a territory— (a) specified eligible tangible assets or eligible payroll costs are to be treated as having a different value; (b) specified eligible tangible assets or eligible payroll costs are to be attributed to a different member of a multinational group or to a different territory; (c) specified eligible tangible assets or eligible payroll costs are to be excluded from that determination; (d) specified assets that are not eligible tangible assets are to be treated as eligible tangible assets; (e) specified costs that are not eligible payroll costs are to be treated as eligible payroll costs. (3) In this section “specified” means specified or described in regulations.

Transfer of assets or liabilities to a member of a multinational group

27

In section 211 (transfer of assets or liabilities to a member of a multinational group)—

(1) Subsection (1A) applies where there has been a transfer of assets or liabilities to a member of a multinational group and— (a) the transfer forms part of a qualifying reorganisation (see section 212), or (b) the transferor is a member of the group and— (i) the transferee is located in the same territory as the transferor, (ii) the transferee and transferor are included in the same tax consolidation group in that territory (within the meaning of section 164(5)), and (iii) an election under section 164 (election to exclude intra-group transactions) has effect in relation to those members at the time of the transfer. (1A) The value of the assets or liabilities is, for the purpose of determining the adjusted profits of the member, the carrying value of the assets or liabilities in the hands of the transferor immediately before the transfer. (1B) Subsection (1C) applies where there has been a transfer of assets or liabilities to a member of a multinational group and subsection (1A) does not apply. (1C) The value of the assets or liabilities is, for the purpose of determining the adjusted profits of the member, the carrying value of the assets or liabilities immediately after the transfer as determined under the accounting standard used in determining the underlying profits of the member for the purposes of this Part and subject to the adjustments to those profits made in accordance with Chapter 4.

, and

Investment entity tax transparency election

28

In section 213 (investment entity tax transparency election), after subsection (6) insert—

(6A) Where, ignoring the election, profits and amounts of qualifying tax expense would be allocated to M in accordance with sections 168 and 178 to 181, those profits and amounts are to be allocated— (a) first to M, and then (b) to O in proportion to the direct ownership interests O is treated as having in M.

Meaning of country-by-country report

29

(251A) (1) In this Part “country-by-country report” means a country-by-country report in respect of a multinational group that is prepared and filed in accordance with legislation implementing the OECD’s guidance on country-by-country reporting. (2) But where the legislation of a territory permits the preparation and filing of a partial country-by country report, such a partial report is not to be regarded as country-by-country report for the purposes of this Part. (3) Reference to a country-by-country report in respect of a multinational group that is a multi-parent group is to a report in respect of all of the constituent groups. (4) “The OECD’s guidance on country-by-country reporting” means the guidance on country-by-country reporting contained in the Organisation for Economic Co-operation and Development (“OECD”) Guidance on Transfer Pricing Documentation and Country-by-Country Reporting, published in 2014, as modified, supplemented or replaced from time to time.

(7) For the purposes of this Part of this Schedule, a country-by-country report in relation to a territory is “qualifying” if the information relating to the territory is prepared on the basis of qualified financial statements of the multinational group (see paragraph 4). (8) Where there is no requirement under the law of any territory for a country-by-country report to be prepared and filed in respect of a multinational group, the filling member may include, in the information return in which the election is made, the information that would have been in such a report— (a) prepared in accordance with legislation implementing the OECD’s guidance on country-by-country reporting under the law of the territory of the ultimate parent, or (b) where there is no such legislation, prepared in accordance with that guidance. (9) Where such information has been included in that information return, that information is to be treated as if it were a country-by-country report in relation to the territory for the purposes of this Chapter (and where that information complies with sub-paragraph (7), the condition in sub-paragraph (2)(b) is to be treated as met).

Joint ventures

30

In section 227 (application of Part to joint venture groups), in subsection (2) for “the multinational group” substitute “each multinational group”.

Insurance investment entities

31

(c) the income or gains the entity is designed to generate are intended to offset liabilities under insurance or annuity contracts;

, and

(e) regulated entities hold 100% of the ownership interests in it (see section 244 for how to calculate this).

(2A) An entity is a regulated entity if— (a) the entity is subject to a regulatory regime in the territory in which it is established or managed, and (b) that regime is specific to persons engaged in the business of entering into insurance or annuity contracts or of performing activities ancillary to such business.

Location of entities

32

(1) Where a flow-through entity would be a responsible member of a multinational group if the entity were located in the territory in which it is created, it is located in that territory.

Currency

33

(254) (1) Calculations under this Part in relation to a multinational group, or any member of such a group, are to be carried out in the currency of the consolidated financial statements of the ultimate parent (“the CFS currency”). (2) Where it is necessary to convert an amount into the CFS currency, that conversion is to be made in accordance with the authorised accounting standard— (a) that was used in preparing the consolidated financial statements of the ultimate parent, or (b) where no such statements were prepared, that is used as the basis for the statements that would have been prepared. (3) For the purpose of comparing an amount to a figure expressed in this Part in euros, the amount is to be converted to euros for that purpose (from the CFS currency) by reference to the average exchange rate for the month of December that preceded the beginning of the accounting period to which the amount relates. (4) Where the European Central Bank publishes exchange rates for the CFS currency, use those rates for the purposes of the conversion under subsection (3) and any conversion under step 4 in section 123 (amount charged by reference to top-up amounts). (5) Otherwise— (a) where the Bank of England publishes exchange rates for the CFS currency, use those rates for the purposes of that conversion, or (b) where the Bank of England does not publish exchange rates for that currency, use such a rate as appears, on a just and reasonable basis, to reflect the average exchange rate for the period in question.

  • Step 4 Convert the result of Step 3 (which in accordance with section 254 will be expressed in the CFS currency) to sterling using the average exchange rate for the accounting period (if the CFS currency is not sterling).

Application of Pillar Two rules to members of a group

34

(2A) Pillar Two rules apply to a member of a multinational group (“the relevant member”) in an accounting period if conditions A, B and C are met.

,

(4) Condition B is that— (a) the ultimate parent is subject to Pillar Two IIR tax for the accounting period and is not located in the same territory as the relevant member, (b) an intermediate parent member of the group is subject to Pillar Two IIR tax for the accounting period, is not located in the same territory as the relevant member and has an ownership interest in— (i) the relevant member, or (ii) a member of the group located in the same territory as the relevant member, or (c) any member of the group is located in a territory in which a qualifying undertaxed profits tax is in force for the accounting period. (5) Condition C is that no transitional safe harbour election applies to the relevant member for that period. (6) For the purposes of this Part “transitional safe harbour election” means— (a) an election under paragraph 3(1) (transitional safe harbour), or (b) an election corresponding to that election for the purposes of a tax imposed by a Pillar Two territory that is equivalent to multinational top-up tax so far as it relates to top-up tax under the IIR (within the meaning of the Pillar Two rules).

(b) the Pillar Two rules do not apply to the transferor for the accounting period in which the transfer takes place (but in determining this, section 255(4) has effect as if sub-paragraph (ii) of paragraph (b) were omitted), (ba) a qualifying domestic top-up tax does not apply in relation to the transferor for that period, and

,

(a) the ultimate parent had been located in the United Kingdom and the accounting period commenced on or after 31 December 2023, and

, and

(b) a qualifying domestic top-up tax is not to be taken as applying to a member of a multinational group if provision for a QDMTT Safe Harbour (within the meaning of the Pillar Two rules) applies to it.

Qualifying domestic top-up tax not treated as accruing

35

(256A) (1) Subsection (2) applies for the purposes of sections 194(2) to (7), 203(3) to (7) and 206(4) to (8) (application of QDT credits in determination of top-up amounts). (2) An amount of qualifying domestic tax accruing to a member of a multinational group is to be treated as not accruing to the member where the enforceability of the amount is in question. (3) For the purposes of this section, the enforceability of an amount of qualifying domestic top-up tax accruing to a member of a multinational group is in question if— (a) the member disputes its enforceability on any of the grounds set out in subsection (4), or (b) the tax authority of the territory in which the qualifying domestic top-up tax is imposed considers the amount unenforceable on the basis of any of those grounds. (4) Those grounds are that— (a) the amount is unenforceable on constitutional grounds or as a result of other superior law applying in the territory in which the qualifying domestic top-up tax is imposed, or (b) the amount is unenforceable as a result of a specific agreement with the government of that territory as to the tax liability of the member or the group. (5) Subsection (2) ceases to apply where the enforceability of an amount of qualifying domestic top-up tax ceases to be in question. (6) Where the enforceability of an amount of qualifying domestic top-up tax was in question, it ceases to be in question where— (a) the amount has been paid, and (b) the enforceability of the amount may no longer be disputed as a result of— (i) a settlement, (ii) the time for any appeal having passed and there being no reasonable prospect of the time being extended, or (iii) the exhaustion of any rights to appeal.

Consistency with Pillar Two rules

36

In section 262 (power to amend to ensure consistency with Pillar Two) after subsection (1) insert—

(1A) The provision that may be made by regulations under subsection (1) includes provision designed to secure the effective implementation of the Pillar Two rules including— (a) provision to ensure consistency with commentaries or guidance published by the OECD that has effect from a time before the commentary or guidance was published; (b) provision that the Treasury consider necessary to secure the effective operation of multinational top-up tax or domestic top-up tax (see Part 4) where— (i) the provision does not, at the time of making it, reflect the Pillar Two rules, but (ii) it is reasonable for the Treasury to believe that changes will be made to the rules that are consistent with, or are similar to, the provision. (1B) Provision made by regulations under subsection (1) may not have effect— (a) in the case of provision falling within subsection (1A)(a), in relation to accounting periods ending before the commentary or guidance was published, or (b) in the case of any other provision, in relation to accounting periods ending before the regulations are made. (1C) Provision that has effect in relation to accounting periods that begin before the regulations are made may only be made if the Treasury consider that the provision is generally beneficial to— (a) persons affected by the implementation of the Pillar Two rules, or (b) persons affected by the provision. (1D) The reference in subsection (1C) to provision being generally beneficial includes the provision being beneficial by reference to it— (a) simplifying, or reducing the costs of, compliance with— (i) multinational top-up tax or domestic top-up tax, or (ii) taxes imposed under the law of a territory outside the United Kingdom that correspond to multinational top-up tax or domestic top-up tax; (b) generally (but not necessarily in every case) resulting in a reduction or elimination of a liability to— (i) multinational top-up tax or domestic top-up tax, or (ii) taxes imposed under the law of a territory outside the United Kingdom that correspond to multinational top-up tax or domestic top-up tax.

Overpaid tax

37

(a) pursuant to a claim under this paragraph, or (b) in accordance with another provision of this Schedule.

, and

(33A) (1) Where a person has paid an amount that has been paid by way of multinational top-up tax but the amount is not due, the amount incurs interest at the rate provided for in regulations made under section 178 of FA 1989 from the later of— (a) the day after the latest day (under paragraph 32) by which the amount paid would have been required to be paid as multinational top-up tax if it were due, and (b) the day on which the amount was paid. (2) See paragraph 51 for provision about making claims for the repayment of an amount that is not tax that was due (but see also paragraph 52 which, for example, prevents such a claim being made where an amendment to an assessment can be, or could have been, made).

Intragroup transfers before entry into regime

38

(i) the value of deferred tax assets that arose in relation to the assets before their transfer, and (ii)

.

(3A) For the purposes of determining the value of a deferred tax asset under sub-paragraph (3)(b)(i)— (a) if the rate of tax in relation to that asset is greater than 15%, the value is to be adjusted so that it reflects the value it would be if the rate had been 15%, and (b) exclude the impact of any valuation adjustments or accounting recognition adjustments.

(7) In determining the tax expense of the transferor in relation to the transfer of the assets— (a) where any loss arising in the accounting period in which the transfer took place is offset against any taxable gain arising on the transfer, ignore that offsetting, and (b) exclude the impact of any valuation adjustments or accounting recognition adjustments.

(12) Where assets are transferred from one member of a multinational group to another member of that group as a result of a series of transfers that— (a) fall within sub-paragraph (1), but (b) do not fall within sub-paragraph (2), that series is to be treated as a single transfer of assets that falls within sub-paragraph (1). (13) This paragraph applies to that single transfer as if— (a) the reference to the transferor in sub-paragraph (3)(a) were to the transferor in relation to the first transfer in the series, (b) the references in sub-paragraph (3)(b) to the cap amount, the value of deferred tax assets that arose in relation to the assets before their transfer and the tax paid amount were to the aggregate of each such amount or value as determined for the purpose of each transfer that makes up the series, (c) the reference to the date of the transfer in sub-paragraph (4)(a) were to the date of the last transfer in the series, and (d) the references to the transferee in sub-paragraph (4)(b) were to the transferee in relation to the last transfer in the series.

Transitional safe harbour

39

(1) The filing member of a multinational group may make a transitional safe harbour election for an accounting period in respect of a territory. (1A) The effect of the election is that all of the standard members of the group located in the territory are to be treated as not having top-up amounts or additional top-up amounts for the purpose of determining the liability of any member of the group to multinational top-up tax.

, and (d) qualified substance based income amount (see paragraph 9(2)).

, and

Transitional reporting election

40

(13) (1) HMRC may publish a notice that provides for alternative requirements for the information that must be contained in an information return in respect of members of a multinational group to which an election under sub-paragraph (3) applies. (2) Where— (a) HMRC have published a notice under paragraph (1) containing alternative requirements, and (b) an election under sub-paragraph (3) applies to members of a multinational group for an accounting period, paragraph 10 of Schedule 14 applies to the filing member of the group for that period subject to the notice. (3) An election under this sub-paragraph— (a) is to be made in respect of all of the members of a multinational group in a territory, (b) is to be made by the filing member of the group, (c) may only have effect in relation to an accounting period that begins on or before 31 December 2028 and ends before 1 July 2030, and (d) may only be made if condition A, B or C is met. (4) Condition A is that none of the members in the territory have top-up amounts or additional top-up amounts for the accounting period to which the election is to apply. (5) Condition B is that— (a) there is only one responsible member responsible for all of the members in the territory for the accounting period to which the election is to apply, and (b) the sum of amounts attributed under Chapter 7 of Part 3 to that responsible member for that period in respect of those members’ top-up amounts and additional top-up amounts is equal to the sum of the members’ top-up amount and additional top-up amounts. (6) Condition C is that— (a) there is more than one responsible member responsible for the members of the group in the territory for the accounting period to which the election is to apply, and (b) each responsible member is responsible for every member of the group in the territory and has the same inclusion ratio for each member it is responsible for. (7) Paragraph 2 of Schedule 15 (annual elections) applies to an election under this paragraph.

(k) paragraph 14 of Schedule 16;

.

Qualifying domestic top-up tax safe harbour

41

Schedule 16A (1) (1) The filing member of a multinational group may make a qualifying domestic top-up tax safe harbour election for an accounting period in respect of a territory. (2) The effect of the election is that all of the standard members of the group located in the territory are to be treated as not having top-up amounts or additional top-up amounts for the purpose of determining the liability of any member of the group to multinational top-up tax. (3) An election may only be made for an accounting period if— (a) a qualifying domestic top-up tax applies in that territory for that period, (b) that tax is accredited for the purposes of the election (see paragraph 2), and (c) none of the disqualifying conditions in paragraph 3 apply for that period. (4) Paragraph 2 of Schedule 15 (annual elections) applies to an election under this paragraph. (2) A qualifying domestic top-up tax is accredited for the purposes of an election under paragraph 1 if that tax is specified as such in regulations made by the Treasury. (3) (1) Conditions A to D are disqualifying conditions for the purposes of paragraph 1(3)(c) in relation to a multinational group and a territory. (2) Condition A is that— (a) the ultimate parent is located in the territory, (b) the ultimate parent is a flow-through entity, and (c) the qualifying domestic top-up tax applying in the territory— (i) does not generally impose a charge on the ultimate parent as a result of it being a flow-through entity, and (ii) does not include provision for a charge to be imposed on the ultimate parent in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (3) Condition B is that— (a) a responsible member of the group is located in the territory, (b) the member is not the ultimate parent of the group, (c) the member is a flow-through entity, and (d) the qualifying domestic top-up tax applying in the territory— (i) does not generally impose a charge on the member as a result of it being a flow-through entity, and (ii) does not include provision for a charge to be imposed on the member in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (4) Condition C is that— (a) the qualifying domestic top-up tax applying in the territory provides that it does not apply to a multinational group in the initial phase of the group’s international expansion, (b) that provision is not limited in application to circumstances where the members of a multinational group in the territory are not subject to Pillar Two rules, and (c) that provision applies to the group. (5) Condition D is that the enforceability of an amount of qualifying domestic top-up tax accruing to a standard member of the group is in question. (6) Subsections (3), (4) and (6) of section 256A (qualifying domestic top-up tax treated as not accruing where contested) apply for the purpose of determining whether the enforceability of an amount of qualifying domestic top-up tax is in question. (4) (1) For the purpose of applying Chapter 1 of this Part of this Schedule to a joint venture group (see section 227 which applies this Schedule generally, with modifications, to joint venture groups), that Chapter has effect as if in paragraph 3— (a) in sub-paragraph (1), for “Conditions A to D” there were substituted “Conditions A to E”, (b) after sub-paragraph (6), there were inserted— (7) Condition E is that the qualifying domestic top-up tax applying in the territory— (a) does not generally impose a charge on members of the group that are members of a joint venture group, and (b) does not include provision for a charge to be imposed on such members in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (2) For that purpose ignore section 227(1)(a) (reference to ultimate parent treated as reference to joint venture parent). (3) Accordingly, the filing member of a multinational group may make a separate qualifying domestic top-up tax safe harbour election in respect of joint venture members of a joint venture group in a territory. (5) (1) Chapter 1 of this Part of this Schedule to applies to investment entities and has effect for that purpose as if— (a) references to standard members of a multinational group were to members of the group that are investment entities, and (b) in paragraph 3— (i) in sub-paragraph (1), for “Conditions A to D” there were substituted “Conditions A to E”, (ii) after sub-paragraph (6), there were inserted— (7) Condition E is that the qualifying domestic top-up tax applying in the territory— (a) does not generally impose a charge on members of the group that are investment entities, and (b) does not include provision for a charge to be imposed on such members in circumstances where there would otherwise be an amount of tax that was not charged to any member of the group in that territory. (2) Accordingly, the filing member of a multinational group may make a separate qualifying domestic top-up tax safe harbour election in respect of members of the group that are investment entities. (6) (1) Chapter 1 of this Part of this Schedule to applies to minority owned members of a multinational group and has effect for that purpose as if references to standard members of a multinational group were to members of the group that are minority owned members. (2) Accordingly, the filing member of a multinational group may make a separate qualifying domestic top-up tax safe harbour election in respect of minority owned members of the group.

(260) (1) Schedule 16 contains transitional provision and provision about a general transitional safe harbour. (2) Schedule 16A contains provision about other safe harbours.

(l) paragraph 1 of Schedule 16A.

Part 3 — Domestic top-up tax

Securitisation entities

42

(3A) A securitisation company that is not a member of a group for the purposes of domestic top-up tax is a DTT excluded entity (and see section 267A).

  • “securitisation company” has the meaning it has in the Taxation of Securitisation Companies Regulations 2006 (see regulation 4).

(267A) (1) Subsection (2) applies to a securitisation company that is a member of a group. (2) The company is only to be regarded as a member of the group for the purposes of applying Condition C in section 266 in relation to other members of the group (revenue threshold for group). (3) Otherwise, the company is to be treated as not being a member of any group for the purposes of domestic top-up tax.

(272A) (1) This section applies where— (a) a covered bond vehicle that is a member of a group would, ignoring this section, have a top-up amount or an additional top-up amount for an accounting period, and (b) at least one of the other members of the group in that period— (i) is located in the United Kingdom, and (ii) is not a covered bond vehicle. (2) For domestic purposes, section 193 (calculation of top-up amounts) has effect for the purpose of determining the top-up amounts (and additional top-up amounts) of— (a) the covered bond vehicle, and (b) the other members of the group that are located in the United Kingdom, as if the adjusted profits of the covered bond vehicle were nil. (3) But subsection (4) applies if none of the members of the group that are located in the United Kingdom, and are not covered bond vehicles, have made a profit for that period (and accordingly will not, ignoring that subsection, have top-up amounts). (4) Each of those members has a top-up amount equal to the amount given by dividing— (a) the sum of the top-up amounts and additional top-up amounts that, ignoring subsection (2), each covered bond vehicle located in the United Kingdom would otherwise have, by (b) the number of those members. (5) For the purposes of this section “covered bond vehicle” has the meaning given by paragraph 53(7) of Schedule 19 to FA 2011.

Investment entities

43

(3B) An investment entity is a DTT excluded entity if— (a) it is not a member of a group, or (b) it is a member of group that is comprised only of members located in the United Kingdom. (3C) An investment entity that is a member of a group that is not comprised only of members located in the United Kingdom— (a) is not to be regarded as a qualifying entity, but (b) top-up amounts of that entity are to be determined under sections 220 to 224 (see also section 272(8)(e) which has the effect of attributing those amounts to standard members of the group that are qualifying entities and are located in the same territory as the investment entity). (3D) An investment entity that falls within subsection (3C) is not to be regarded as a member of any group for any purpose other than for the purposes of— (a) determining the top-up amounts of that entity under those sections, (b) applying Condition C in section 266 in relation to other members of the group (revenue threshold for group), and (c) subsections (8)(e) (9), (10) and (11) of section 272.

(9) An investment entity is a qualifying investment entity in relation to a qualifying entity if it is (a) a member of the same group as the qualifying entity, and (b) located in United Kingdom. (10) Subsection (11) applies to qualifying entities that are standard members of a group for an accounting period where— (a) the total top-up amount referred to in section 193 for that period is greater than nil as a result of the modification of that section set out in subsection (8)(e), and (b) none of those members have made a profit for that period (and accordingly will not, ignoring subsection (11), have top-up amounts). (11) Where this subsection applies, each of those members has a top-up amount (for the purposes of domestic top-up tax) equal to the total top-up amount divided by the number of qualifying entities that are standard members of the group.

Treatment of qualifying refundable tax credits

44

(da) in section 182(2)(e), after “credits”, in the first place it occurs, there were inserted “other than qualifying refundable tax credits”;

.

(ba) in section 182(2)(e), after “credits”, in the first place it occurs, there were inserted “other than qualifying refundable tax credits”;

.

Effect of becoming subject to Pillar Two rules

45

(273A) (1) The provisions mentioned in subsection (2) apply to a qualifying entity, for domestic or domestic entity purposes, as if the references to the first accounting period for which the Pillar Two rules apply were to the first accounting period for which the entity is a qualifying entity. (2) Those provisions are— (a) section 185; (b) section 187; (d) sub-paragraph (4) of paragraph 2 of Schedule 16 (but see also section 276(c)(iii) which omits that paragraph in the case of a qualifying entity that is not a member of a group). (273B) (1) This section applies where the Pillar Two rules did not apply to a qualifying entity for one or more accounting periods (each a “pre-Pillar Two period”). (2) Where— (a) the entity has a recaptured deferred tax liability arising as a result of section 184 (recaptured deferred tax liabilities), (b) the initial period, in relation to that liability, is a pre-Pillar Two period, and (c) the first accounting period in which the Pillar Two rules apply to the entity is earlier than the sixth accounting period after the initial period, section 184(2) (recalculation in initial period taking account of recaptured deferred tax liability) does not apply in relation to that recaptured deferred tax liability. (3) Where an election under section 187 (election for losses to be treated as special loss deferred tax assets) applied to the entity in a pre-Pillar Two period— (a) the election ceases to have effect for the first accounting period in which the Pillar Two rules apply, and (b) subsection (2)(b) of section 187 does not apply to prevent the making of an election under section 187 that applies to the entity and that has effect for that period, but (c) no remaining amount of special loss deferred tax assets that arose in a pre-Pillar Two period may be used in that first accounting period or any subsequent accounting period. (4) Subsection (5) or (6) (as the case may be) applies where— (a) a deferred tax asset arises to the entity in a pre-Pillar Two period, (b) section 185(7)— (i) applies to that asset for the purposes of multinational top-up tax, or (ii) would, ignoring subsection (5) below, apply to that asset for those purposes, and (c) the asset is reflected in a collective additional amount for the purposes of domestic top-up tax. (5) Where— (a) an election has been made under section 205 (election to carry forward) in relation to the collective additional amount, (b) the subtraction required by subsection (2)(a) of that section has not occurred in a pre-Pillar Two period, the amount to be subtracted as a result of that subsection is to be reduced by so much of that amount as reflects the asset. (6) Otherwise, section 185(7) does not apply to the asset for the purposes of multinational top-up tax to the extent it was reflected in a collective additional amount for the purposes domestic top-up tax.

(aa) where a qualifying member is a member of a group, for paragraph 3(2)(c) there were substituted— (c) the election has been made in respect of the territory for each preceding accounting period that commenced on or after 31 December 2023— (i) in which the Pillar Two rules would, ignoring any transitional safe harbour election, have applied to any member of the group in the territory, and (ii) in which any member of the group is a qualifying entity for the purposes of domestic top-up tax,

, and

(iiia) for paragraph 3(2)(c) there were substituted— (c) the election has been made in respect of the territory for each preceding accounting period that commenced on or after 31 December 2023 in which the member was a qualifying entity for the purposes of domestic top-up tax,

.

Dividends from protected cell companies

46

After section 273B (as inserted by paragraph 45) insert—

(273C) (1) This section applies to a dividend or other distribution made by a protected cell company that is received or accrued by— (a) a qualifying entity that is not a member of a group, or (b) a member of a group that has no members located outside of the United Kingdom. (2) A dividend or other distribution to which this section applies is to be treated as an excluded dividend (see section 141) for domestic purposes and domestic entity purposes.

Consistency with Pillar Two rules

47

Part 4 — Minor and technical changes

Chapter 2 of Part 3 (qualifying multinational groups and their members)

48

Chapter 3 of Part 3 (effective tax rate)

49

Chapter 4 of Part 3 (calculation of adjusted profits)

50

(6A) But— (a) for the purposes of subsection (6)(b), ignore any accounting period in which there was no standard member of the group in that territory to which the Pillar Two rules applied, and (b) a standard member of a multinational group is always to be regarded as a high tax member for an accounting period if a transitional safe harbour election applies to it for that period.

(a) either—

,

, and (b) in the case of gains or losses falling within section 142(2)(b), the gains or losses are not in respect of an interest to which section 142(3) applies.

Chapter 5 of Part 3 (covered tax balance)

51

(2) But this section only applies in relation to a deferred tax asset of the member falling within subsection (1) if the filing member accounts for all such assets of the member in accordance with this section in an information return submitted to HMRC or a qualifying authority (see paragraph 10(5) of Schedule 14).

, and

(b) the result of Step 2 in section 132(1) multiplied by 15%.

, and

Chapter 6 of Part 3 (calculation of top-up amounts)

52

(1) To determine the eligible tangible asset amount of a member of a multinational group for an accounting period— (a) add together— (i) the sum of the recorded carrying values of each eligible tangible asset held by the member at the start of the period, and (ii) the sum of the recorded carrying values of each eligible tangible asset held by the member at the end of the period, and (b) divide the result of paragraph (a) by 2.

, and

Chapter 7 of Part 3 (allocating top-up amounts)

53

Chapter 8 of Part 3 (further adjustments)

54

Chapter 9 of Part 3 (special provision for investment entities etc)

55

Chapter 10 of Part 3 (definitions etc)

56

(va) a resident investment entity that is not a member of the group, or

.

  • “deemed distribution” has the meaning given by section 215(4)(c);

, and

Part 4 (domestic top-up tax)

57

(pa) in section 173 (covered taxes), subsection (1)(b);

.

Schedules 14 to 17

58

(1A) The reference to a multinational group in sub-paragraph (1) does not include a group exclusively comprised of excluded entities (who are only regarded as members of the group for certain purposes in accordance with section 127(2)).

(2A) The references to a member of a group in sub-paragraph (2) do not include a member of a group that is— (a) a securitisation company (within the meaning given by section 267(4)), (b) a covered bond vehicle (within the meaning given by section 272A(5)), or (c) an investment entity.

,

(aa) section 141(7);

, and

(ea) section 199;

, and

(fa) section 216;

.

(2) For that purpose ignore section 227(1)(a) (reference to ultimate parent treated as reference to joint venture parent). (3) Accordingly, the filing member of a multinational group may make a separate transitional safe harbour election in respect of joint venture members of a joint venture group in a territory.

CFS currency section 254(1)

;

country-by-country report section 251A

;

covered bond vehicle section 272A(5)

;

domestic purposes (in Part 4) section 272(1)

;

domestic entity purposes (in Part 4) section 273(1)

;

securitisation company section 267(4)

;

tax equity partnership arrangement section 176D(5)

;

transitional safe harbour election section 255(6)

.

Schedule 13

Disqualification for promoting tax avoidance

1

In CDDA 1986, after section 8ZE insert—

(8ZF) (1) The court must make a disqualification order against a person if, on an application under this section, it is satisfied— (a) that the person has at any time after the coming into force of this section been a director of a company while the company was a relevant body within the meaning of section 85(4) of the Finance Act 2022 (winding up of promoters of tax avoidance schemes), and (b) that a court has made a winding-up order in respect of the company under section 85(3) of that Act (whether while the person was a director or subsequently). (2) An officer of Revenue and Customs may make an application to the court for a disqualification order against a person under this section if it appears to the officer that it is expedient in the public interest for such an order to be made. (3) Except with the permission of the court, an application under subsection (2) may not be made after the end of the period of 3 years beginning with the day on which the winding-up order in question is made. (4) Under this section the minimum period of disqualification is 2 years, and the maximum is 15 years. (5) An officer of Revenue and Customs may accept a disqualification undertaking if it appears to the officer— (a) that the conditions mentioned in subsection (1) are satisfied in relation to the person who has offered to give the disqualification undertaking, and (b) that it is expedient in the public interest that the officer should accept the undertaking (instead of applying, or proceeding with an application, for a disqualification order). (6) In this section— - “company” includes overseas company; - “court” means— the court having jurisdiction for the purposes of the Insolvency Act 1986, or the High Court in Northern Ireland; - “director” includes a shadow director. (8ZG) (1) The court may make a disqualification order against a person if, on an application under this section, it is satisfied— (a) that the person— (i) is a director of a company that carries on business as a promoter within the meaning of Part 5 of the Finance Act 2014 (promoters of tax avoidance schemes), or (ii) after the coming into force of this section, was a director of a company at a time at which it did so, and (b) that the person’s conduct in relation to the company (either taken alone or taken together with the person’s conduct as a director of one or more other companies) makes the person unfit to be concerned in the management of a company. (2) For the purposes of subsection (1)(a)(i), Part 5 of the Finance Act 2014 has effect as if, in section 234 of that Act— (a) references to “tax” included value added tax and other indirect taxes, and (b) the definition of “tax advantage” also included a tax advantage as defined for VAT in paragraph 6, and for other indirect taxes in paragraph 7, of Schedule 17 to the Finance (No. 2) Act 2017 (disclosure of tax avoidance schemes: VAT and other indirect taxes). (3) References in subsection (1)(b) to a person’s conduct include conduct occurring before, as well as after, the coming into force of this section. (4) An officer of Revenue and Customs may make an application to the court for a disqualification order against a person under this section if it appears to the officer that it is expedient in the public interest for such an order to be made. (5) The maximum period of disqualification under this section is 15 years. (6) An officer of Revenue and Customs may accept a disqualification undertaking if it appears to the officer— (a) that the conditions mentioned in subsection (1) are satisfied in relation to the person who has offered to give the disqualification undertaking, and (b) that it is expedient in the public interest that the officer should accept the undertaking (instead of applying, or proceeding with an application, for a disqualification order). (7) In this section— - “company” includes overseas company; - “the court” means— in England and Wales, the High Court; in Scotland, the Court of Session; in Northern Ireland, the High Court in Northern Ireland; - “director” includes a shadow director; - “indirect tax” has the same meaning as in Schedule 17 to the Finance (No. 2) Act 2017 (see paragraph 2(1) of that Schedule).

Minor and consequential amendments

2

(5) In this section “the appropriate authority” means— (a) in relation to an undertaking under section 8ZF or 8ZG, an officer of Revenue and Customs; (b) in any other case, the Secretary of State.

(2ZA) Subsection (2) does not apply to an application in the case of an undertaking given under section 8ZF or 8ZG, and in such a case on the hearing of the application an officer of Revenue and Customs— (a) must appear and call the attention of the court to any matters which appear to the officer to be relevant; (b) may give evidence or call witnesses.

;

(3A) This section also applies where an officer of Revenue and Customs must determine— (a) whether a person's conduct as a director of one or more companies or overseas companies makes the person unfit to be concerned in the management of a company; (b) whether to exercise any discretion the officer has to accept a disqualification undertaking under section 8ZF or 8ZG.

;

(ba) an officer of Revenue and Customs;

.

(3ZC) Where a person is subject to a disqualification undertaking accepted at any time under section 8ZF or 8ZG, any application for leave for the purposes of section 1A(1)(a) must be made to any court to which, if an officer of Revenue and Customs had applied for a disqualification order under the section in question at that time, the application could have been made.

;

(5A) Subsection (5) does not apply to an application for leave— (a) for the purposes of section 1(1)(a) if the application for the disqualification order was made by an officer of Revenue and Customs, or (b) for the purposes of section 1A(1)(a) if the disqualification undertaking was accepted by an officer of Revenue and Customs. (5B) In such a case, on the hearing of the application an officer of Revenue and Customs— (a) must appear and call the attention of the court to any matters which appear to the officer to be relevant; (b) may give evidence or call witnesses.

(aa) disqualification undertakings accepted by an officer of Revenue and Customs under section 8ZF or 8ZG;

.

; or (e) an offence under Article 10 of the Perjury (Northern Ireland) Order 1979 (S.I. 1979/1714 (N.I. 19)) (false statements made otherwise than on oath).

;

(5) In subsection (1), “the 1989 Order” means the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

(5) Sections 8ZF and 8ZG and the other provisions of this Act so far as relating to applications and orders made, and undertakings accepted, under those provisions in Northern Ireland, are deemed included in Parts 2 to 7 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) for the purposes of the following Articles of that Order— - Article 359 (power to make insolvency rules); - Article 361 (fees orders).

(2B) So far as this Act extends to Northern Ireland, subsections (2) and (2A) do not apply and instead— - “company” means— a company registered under the Companies Act 2006 in Northern Ireland, or a company that may be wound up under Part 6 of the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) (unregistered companies), and - “overseas company” means a company which is incorporated or formed outside Northern Ireland.

(aa) so far as this section extends to Northern Ireland, “protected cell company” means a protected cell company incorporated under Part 4 of the Risk Transformation Regulations 2017 which has its registered office in Northern Ireland;

(k) so far as this section extends to Northern Ireland, references to an overseas company include references to a protected cell company incorporated under the Risk Transformation Regulations 2017 which has its registered office in England and Wales (or Wales) or Scotland.

(3) For provision extending this Act (other than sections 13 to 15) to Northern Ireland so far as relating to applications and orders made, and undertakings accepted, under section 8ZF or 8ZG, see paragraph 4 of Schedule 13 to the Finance Act 2024.

3

In the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I. 4)), in the heading of Article 17, for “in Great Britain” substitute “under the Company Directors Disqualification Act 1986”.

Extent

4

Practice and procedure

5

Interpretation

6

In this Schedule, “CDDA 1986” means the Company Directors Disqualification Act 1986.

Permanent full expensing etc for expenditure on plant or machinery

New regime for research and development carried out by companies

Films, television programmes and video games produced by companies

Theatrical productions made by companies

Orchestral concerts produced by companies

Museum and gallery exhibitions produced by companies

Sections 3 to 6: administration of reliefs

Miscellaneous amendments relating to REITs

Theatrical productions made by companies

Increase in capital allowances limit for ship leasing

Extension of EIS relief and VCT relief to shares issued before 6 April 2035

Relief for payments of compensation by government etc to companies

Enterprise management incentives: time limits

Provision in connection with abolition of the lifetime allowance charge

Provision relating to the cash basis

PAYE regulations: special types of payer or payee

Carer’s allowance supplement: correction of statutory reference

Growth market exemption: qualifying UK multilateral trading facilities etc

Capital-raising arrangements etc

New investment exemption

Ensuring consistency of Parts 3 and 4 of F(No.2)A 2023 with OECD rules etc

Rates of tobacco products duty

Rates of vehicle excise duty

Rates of air passenger duty

Rebate on heavy oil and certain bioblends used for heating

Vehicle excise duty exemption for foreign vehicles

Interpretation of VAT and excise law

Rates of landfill tax

Rate of aggregates levy

Rate of plastic packaging tax

Increase in maximum terms of imprisonment for tax offences

Disqualification of directors etc promoting tax avoidance schemes

Promoters of tax avoidance: failure to comply with stop notice etc

Construction industry scheme: gross payment status

Additional information to be contained in returns under TMA 1970 etc

Commencement of rules imposing penalties for failure to make returns etc

Abbreviations used in Act

Short title

FA 1998

Films Act 1985

FA 1998

FA 2007

CTA 2009

CTA 2010

Films Act 1985

ICTA

FA 1998

FA 2007

CTA 2009

FA 2009

CTA 2010

FA 2016

General commencement

Closure of existing regimes to new productions

Opting into new regime during transitional period

Productions not moving into new regime

Continuity between regimes: taxation as separate trade

Continuity between regimes: calculation of expenditure credit

Continuity between regimes: British certification

Continuity between regimes: UK expenditure (films and television programmes)

Transition of video games from European expenditure condition to UK expenditure condition

Transfer of terminal losses between productions in existing and new regimes

Introduction

Meaning of “theatrical production”

Meaning of “core expenditure”

Provision to emphasise that capital expenditure does not generally qualify for relief

UK expenditure threshold to replace EEA expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of R&D exclusion

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 5

Transitional provision in relation to paragraph 6

Introduction

Time of election for orchestral concerts to be treated as a series

Meaning of “core expenditure”

Provision to emphasise that capital expenditure does not generally qualify for relief

UK expenditure threshold to replace EEA expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of exclusion for other reliefs

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 5

Transitional provision in relation to paragraph 6

Introduction

Museum and gallery exhibitions not to be wholly remote

Meaning of “core expenditure”

UK expenditure threshold to replace European expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of exclusion for R&D relief and other creative sector reliefs

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 4

Transitional provision in relation to paragraph 5

Power to recover overpayments

Time limit for claims

Supporting information

Amendment of CTA 2010

CoACS to be institutional investors

Non-close condition

Certain institutional investors required to meet GDO or non-close condition

Paragraph 4: transitional provision

Insurance companies may be included in group UK REIT

Property financing costs

Single property rule

Disposal of rights or interests in UK property rich funds

Holders of excessive rights

Corporate interest restriction and disposal of interests in UK property rich companies

Introduction

Qualifying companies to include companies managing qualifying ships

Daily profits of managed ships

Tonnage tax activities include activities in managing ships

Effect of temporarily ceasing to manage or operate qualifying ships

Training requirement

Disapplication of 75% limit for ship managers

Commencement

Amendments of Part 4 of FA 2004 (pension schemes etc)

Amendments of Part 9 of ITEPA 2003

Amendments of the Registered Pension Schemes (Authorised Payments) Regulations 2009

Amendments of Part 4 of FA 2004

Amendments of Chapter 4 of Part 9 of ITEPA 2003

Amendments of the Pension Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006

Amendments of Schedule 29 to FA 2004

Amendments of Schedule 34 to FA 2004

Amendments of Part 2 of Schedule 36 to FA 2004

Amendments of Part 3 of Schedule 36 to FA 2004

Amendment of Part 4 of Schedule 36 to FA 2004

Amendments of Schedule 18 to FA 2011

Amendments of Schedule 22 to FA 2013

Amendments of Schedule 6 to FA 2014

Amendments of Schedule 4 to FA 2016

Amendments of the Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006

Amendments of the Taxation of Pension Schemes (Transitional Provisions) Order 2006

Amendments of the Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014

Amendments of Part 4 of FA 2004

Amendments of the Registered Pension Schemes (Provision of Information) Regulations 2006

Amendments of the Registered Pension Schemes and Overseas Pension Schemes (Electronic Communication of Returns and Information) Regulations 2006

Commencement

Availability of individual’s lump sum allowance

Availability of individual’s lump sum and death benefit allowance

Transitional tax-free amount certificates

Provision of information by scheme administrators to members

Paragraphs 125 to 128: interpretation

Statements for certain members who would not otherwise receive one in the tax year 2024-25

Lump sum death benefits paid on or after 6 April 2024 that crystallised before that date

References in scheme rules to lifetime allowance excess lump sums

Power to make further transitional provision

Power to make further provision in connection with the abolition of lifetime allowance charge

Introduction of cash basis default

Removal of turnover restrictions etc

Removal of interest payments restriction

Removal of loss restrictions

Other amendments of Chapter 3 of Part 2

Amendments of other provisions

TMA 1970

TCGA 1992

CAA 2001

ITA 2007

Consequential repeals

Commencement

Transitional provision

Introduction

Stamp duty

Stamp duty reserve tax

Commencement

Transitional provision: depositary receipts: exception from SDRT for replacement securities

Transitional provision: clearance services: exception from SDRT for replacement securities

Transitional provision: bearer instruments

Transitional provision: warrants to purchase Government stock etc

Partnerships

Qualifying non-profit subsidiaries

Charging permanent establishments of intermediate/partially-owned parent members

De-merged groups

Adjustment for changes in accounting policies and prior period errors

Pension expense

Tax credits

Adjustments for companies in distress

Adjustments where life assurance business carried on

Exclusion of certain insurance reserve movement expense

Permanent establishment income and expense attribution

Election to spread certain capital gains

Transparent entities etc

Covered taxes

Tax equity partnerships

Reallocation of tax expense

Controlled foreign company tax regimes

Blended CFC regimes

Qualifying foreign tax credits (substitute loss carry forward assets)

Substance based income exclusion: inter-jurisdictional employees and assets

Substance based income exclusion: inclusion of payroll costs and assets voluntary

Substance based income exclusion: impairment losses

Substance based income exclusion: dual use assets

Substance based income exclusion: leases

Substance based income exclusion: power to make further provision

Transfer of assets or liabilities to a member of a multinational group

Investment entity tax transparency election

Meaning of country-by-country report

Joint ventures

Insurance investment entities

Location of entities

Currency

Application of Pillar Two rules to members of a group

Qualifying domestic top-up tax not treated as accruing

Consistency with Pillar Two rules

Overpaid tax

Intragroup transfers before entry into regime

Transitional safe harbour

Transitional reporting election

Qualifying domestic top-up tax safe harbour

Securitisation entities

Investment entities

Treatment of qualifying refundable tax credits

Effect of becoming subject to Pillar Two rules

Dividends from protected cell companies

Consistency with Pillar Two rules

Dividends from protected cell companies

Chapter 3 of Part 3 (effective tax rate)

Chapter 4 of Part 3 (calculation of adjusted profits)

Chapter 5 of Part 3 (covered tax balance)

Chapter 6 of Part 3 (calculation of top-up amounts)

Chapter 7 of Part 3 (allocating top-up amounts)

Chapter 8 of Part 3 (further adjustments)

Chapter 9 of Part 3 (special provision for investment entities etc)

Chapter 10 of Part 3 (definitions etc)

Part 4 (domestic top-up tax)

Schedules 14 to 17

Disqualification for promoting tax avoidance

Minor and consequential amendments

Extent

Practice and procedure

Interpretation

Editorial notes

[^key-697b2e40cf259745f6b2d36fb443dfb0]: Sch. 9 para. 127A and cross-heading inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(12)

[^key-19d5f6ca5c8442ff1eaf413b09f4534c]: Sch. 9 para. 130A and cross-heading inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(21)

[^key-105fdf2a72adf4a959087012c0bc4063]: Sch. 9 para. 132A and cross-heading inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(24)

[^key-52455820dae27d36760a530b37f7b4d9]: Sch. 9 para. 125(2) omitted (with effect in accordance with reg. 1(3) of the amending S.I.) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(4)

[^key-c9d17b62474f3a6ab5bce8742ec9297d]: Sch. 9 para. 125(1)(c) and word inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(3)(b)

[^key-034e486d3e79b7b2aa3da78849481c90]: Sch. 9 para. 125(3A) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(6)

[^key-28031f4c4af84564f64ce0ab7c7fa547]: Word in Sch. 9 para. 125(1)(a) omitted (with effect in accordance with reg. 1(3) of the amending S.I.) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(3)(a)

[^key-9c9742916bfcf9f855442275bb923e15]: Word in Sch. 9 para. 125(3) substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(5)

[^key-2540fae79caa218798254f56518c31d0]: Words in Sch. 9 para. 125(4) substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(7)

[^key-4eafd66fe9b44b4b71e7919ea7a51fff]: Sch. 9 para. 126(3A) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(10)

[^key-c60aa3a1ae39dab9759eb23900ced6b6]: Word in Sch. 9 para. 126(1)(a) omitted (with effect in accordance with reg. 1(3) of the amending S.I.) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(9)(a)

[^key-b3e5d2938c122f2370d980dfa0f714d4]: Word in Sch. 9 para. 126(1)(b) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(9)(b)

[^key-4003b912783025bf3d60a7e9e30f269d]: Sch. 9 para. 126(1)(c) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(9)(c)

[^key-2c41446258f2dde7754382d01c978d4a]: Words in Sch. 9 para. 126(4) substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(11)

[^key-35f4812a2a801c481b26547bb801134e]: Sch. 9 para. 128(6)(a)(zi) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(13)

[^key-6b6c2ec99ecd6a31e000e90605605cd6]: Word in Sch. 9 para. 129(1)(a) omitted (with effect in accordance with reg. 1(3) of the amending S.I.) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(15)(a)

[^key-a8fed48d73ed7f298e9465fd41b136b7]: Sch. 9 para. 129(1)(c)(d) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(15)(b)

[^key-858050dcd5059212efb07c4edfc8b99e]: Words in Sch. 9 para. 129(5) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(17)(a)

[^key-dbd272522a0228dd684adb13634960bf]: Word in Sch. 9 para. 129(5) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(17)(b)

[^key-f651fa4e77afefffe7df38b94cd26197]: Sch. 9 para. 130(3) substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(19)

[^key-7b4f3db4ded3d9b685394a399f5cc6e1]: Words in Sch. 9 para. 130(4) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(20)

[^key-a8411c8b8efed4fb7ac4cb385fcfee9c]: Sch. 9 para. 132 substituted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(22)

[^key-36df30aeea8bbbd4929e7286d375357d]: Sch. 9 para. 132 renumbered as Sch. 9 para. 132(1) (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(23)(a)

[^key-9d7a8e55d3e8fb37538a9c721f0510d6]: Sch. 9 para. 132(2)-(5) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(23)(c)

[^key-1a56b1c592ae35df82127d29d4f1ea58]: Words in Sch. 9 para. 132(1) inserted (with effect in accordance with reg. 1(3) of the amending S.I.) by The Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2024 (S.I. 2024/356), reg. 4(23)(b)

[^key-b7bccb07a6f6f27635c74f6d12fed1c4]: S. 11 in force at 3.9.2024 by S.I. 2024/897, reg. 2

[^M_I_6e69f8ef-530d-4212-9bdb-054a28d4dd5e]: Sch. 1 para. 6: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_P_ac94cca8-fef9-421a-ba46-2426ae07bc5a]: Sch 1 para. 16: 1.4.2024 appointed for the purposes of Sch. 1 para. 16 by S.I. 2024/286, reg. 2

[^M_I_41ef3c45-5dad-4b90-d100-fd6c1bdae224]: Sch. 1 para. 10: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_77eab75f-adb8-4332-e389-f0339c86ef86]: Sch. 1 para. 15: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_66e64acd-f6b0-4812-a933-6a14bb3e1d57]: Sch. 1 para. 13: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_51ea6980-35d3-4559-9ea0-e6451591df54]: Sch. 1 para. 11: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_83c2034d-bac2-45f0-c53b-8521d22ee163]: Sch. 1 para. 5: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_e6f3442d-51bd-41b5-8048-daebd66328ef]: Sch. 1 para. 14: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_e3590b69-c216-4e48-c709-36d6fd85e00b]: Sch. 1 para. 2: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_43b8c7ab-2ddc-419e-fd52-d0d4be3dda3a]: Sch. 1 para. 8: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_03ae88ae-34c3-4d16-c9cb-5f051862550e]: Sch. 1 para. 9(1)-(15): amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_e4a5ed11-eb8a-458b-e384-b0af0808dbc3]: Sch. 1 para. 12: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_7321294b-e0e0-4a6a-c809-2bdf60c88b10]: Sch. 1 para. 3: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_e0c3908e-dc21-4830-e010-531584daed10]: Sch. 1 para. 4: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^M_I_ca6e07c1-4c52-4025-e7b3-030b1139be28]: Sch. 1 para. 7: amendments have effect in relation to accounting periods beginning on or after 1.4.2024 by 2024 c. 3, Sch. 1 para. 16; S.I. 2024/286, reg. 2

[^key-ffbff9eb0da49b61728fc215ac45a541]: Sch. 9 para. 128 modified (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2010/1187, reg. 21 (as inserted by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 27(23))

[^key-38a880cb28e95bb1b470a9db29fd1d54]: Sch. 9 para. 127 applied (with modifications) (18.11.2024 for the tax year 2024-25 and subsequent tax years) by S.I. 2010/1187, reg. 20 (as inserted by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 27(23))

[^key-81c4bf124c7bc65878f83b171d2d23ba]: Sch. 9 para. 128(6A) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(6)(d)

[^key-cb043296b228838f3459079c27ca8bc1]: Sch. 9 para. 128(6B) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(6)(e)

[^key-aa64a937b6d21a63bb0677e225aab1e3]: Words in Sch. 9 para. 128(2) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(6)(a)

[^key-6f1a322c876f53d3359246e26a8ff588]: Words in Sch. 9 para. 128(3)(a) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(6)(b)

[^key-44ee66605c3941525f32f5733a4ab1d8]: Words in Sch. 9 para. 128(5)(a) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(6)(b)

[^key-e61a5bfd4bc2e149d0598fcdb255f38d]: Words in Sch. 9 para. 128(6)(a)(ii) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(6)(c)

[^key-3393d699d8f2dc08acd04bb41327b33b]: Sch. 9 para. 127B and cross-heading inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(5)

[^key-947b3b927fa8ab1b3fbc36c120fb6608]: Sch. 9 para. 126(4A) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(2)(b)

[^key-ff4baa6c3f04bdf2751888e061281e27]: Sch. 9 para. 126(6A) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(2)(d)

[^key-cfeb928e76de147e6c8d4a94a88e2750]: Words in Sch. 9 para. 126(4)(a)(ii) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(2)(a)

[^key-33569ea1d73ac157a3017672ee07218f]: Word in Sch. 9 para. 126(5) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(2)(c)(i)

[^key-cc1aee9b5f4193caa1e986122b4308de]: Words in Sch. 9 para. 126(5) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(2)(c)(ii)

[^key-021d33c6f8fc9b91e226acdeae944f27]: Words in Sch. 9 para. 127(1)(a) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(a)(i)

[^key-409b1ea0392cd2ce3b0bda49e257311c]: Words in Sch. 9 para. 127(1)(b) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(a)(ii)

[^key-2e66441b81493aa0c18de3f349e76131]: Sch. 9 para. 127(2)(d)(e) substituted for Sch. 9 para. 127(2)(d) (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(b)(ii)

[^key-c8dd60f7d8df6e3e19978c5d0c746456]: Sch. 9 para. 127(2)(b) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(b)(i)

[^key-979aa7eab3d938150a9447e8833d7efa]: Words in Sch. 9 para. 127(3) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(c)(i)

[^key-e8f25c6ea4542c2f1648cb7eaef41617]: Words in Sch. 9 para. 127(3) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(c)(ii)

[^key-349542590e5f7bc68585005e649298a6]: Words in Sch. 9 para. 127(4)(b) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(d)(i)

[^key-78684ee3d316cd985e6ba2a03347e44b]: Words in Sch. 9 para. 127(4)(c) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(d)(ii)

[^key-99db0e5f86e3107be4085e86b74ff4ee]: Words in Sch. 9 para. 127(4)(d) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(d)(ii)

[^key-11fafc52377a7d84fa17c08a6240669c]: Words in Sch. 9 para. 127(5) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(e)(i)

[^key-57f2f8be600e4e98655b6df77e359e80]: Words in Sch. 9 para. 127(5) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(e)(ii)

[^key-ad733c4ca27d8409f2cb513ca0a75269]: Words in Sch. 9 para. 127(6) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(3)(f)

[^key-789dd5b326188232cef1762990fcc323]: Sch. 9 para. 127A(4) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(4)(c)

[^key-dda070257d79dcd4c6328603b5ad765c]: Word in Sch. 9 para. 127A(2) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(4)(a)

[^key-108c98de49803d1cb1114fa262140069]: Word in Sch. 9 para. 127A(3)(b) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(4)(b)

[^key-c4d29323d3681986d14110e782cb5863]: Sch. 9 para. 129(4A)-(4C) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(b)

[^key-b356d431a25c04a6eff3a8e68a50dfb1]: Words in Sch. 9 para. 129(2)(a) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(ii)

[^key-2995bc9d550cefeee85f3c9f5211ef7c]: Word in Sch. 9 para. 129(2)(a) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(iii)

[^key-714e4830207146dd907b38011d830b22]: Sch. 9 para. 129(2)(za) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(i)

[^key-8c50fd6fc049a781f0abb420604bfd52]: Sch. 9 para. 129(2)(c) omitted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(a)(iv)

[^key-8db09401cf67a2fe10203ee8744ccbad]: Words in Sch. 9 para. 129(5) substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(c)(i)

[^key-7240e20b0bd2d6242243cd1d93ae8d9d]: Words in Sch. 9 para. 129(5) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(7)(c)(ii)

[^key-37aee2caebf8067335740bfca27a1c8c]: Words in Sch. 9 para. 130(4) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(8)

[^key-13deed529ca36d330305d018f91a4cce]: Sch. 9 para. 130A substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(9)

[^key-b3eab1119e9eb5006ab9d67fbfcea07d]: Sch. 9 para. 131 substituted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(10)

[^key-3ce0d5eea4fb98097409a213abbcee34]: Words in Sch. 9 para. 132(2) omitted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by virtue of The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(11)(a)(i)

[^key-514b17f93062206551482587f66fecef]: Words in Sch. 9 para. 132(2) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(11)(a)(ii)

[^key-9b1c9b36e7c468e960ded9dbad824bff]: Word in Sch. 9 para. 132(4) inserted (18.11.2024 for the tax year 2024-25 and subsequent tax years) by The Pensions (Abolition of Lifetime Allowance Charge etc) (No. 2) Regulations 2024 (S.I. 2024/1012), regs. 1(2)(3), 17(11)(b)

[^key-03ff3b4fd3a70d598fab44bd36a2b80e]: Sch. 1 para. 21(4) substituted (retrospectively) by Finance Act 2025 (c. 8), s. 30(1)(2)

Permanent full expensing etc for expenditure on plant or machinery

New regime for research and development carried out by companies

Films, television programmes and video games produced by companies

Orchestral concerts produced by companies

Museum and gallery exhibitions produced by companies

Sections 3 to 6: administration of reliefs

Miscellaneous amendments relating to REITs

Managers of ships

Increase in capital allowances limit for ship leasing

Extension of EIS relief and VCT relief to shares issued before 6 April 2035

Relief for payments of compensation by government etc to companies

Enterprise management incentives: time limits

Provision in connection with abolition of the lifetime allowance charge

MPs’ pension scheme etc: rectification of discrimination

Provision relating to the cash basis

PAYE regulations: special types of payer or payee

Carer’s allowance supplement: correction of statutory reference

Growth market exemption: qualifying UK multilateral trading facilities etc

Capital-raising arrangements etc

New investment exemption

Ensuring consistency of Parts 3 and 4 of F(No.2)A 2023 with OECD rules etc

Rates of tobacco products duty

Rates of vehicle excise duty

Rates of air passenger duty

Rebate on heavy oil and certain bioblends used for heating

Vehicle excise duty exemption for foreign vehicles

Interpretation of VAT and excise law

Rates of landfill tax

Rate of aggregates levy

Rate of plastic packaging tax

Increase in maximum terms of imprisonment for tax offences

Disqualification of directors etc promoting tax avoidance schemes

Promoters of tax avoidance: failure to comply with stop notice etc

Construction industry scheme: gross payment status

Additional information to be contained in returns under TMA 1970 etc

Commencement of rules imposing penalties for failure to make returns etc

Abbreviations used in Act

Short title

FA 1998

FA 2007

CTA 2009

CTA 2010

TIOPA 2010

FA 2013

General commencement of Parts 1 and 2

Assignments and nominations

Avoidance of overlaps and gaps in entitlement during transition

Transitional provision relating to claim notifications

Transitional provision relating to the R&D intensity condition

Higher rate of payable credit for R&D-intensive SMEs from 1 April 2023

Films Act 1985

FA 1998

FA 2007

CTA 2009

CTA 2010

Films Act 1985

ICTA

FA 1998

FA 2007

CTA 2009

FA 2009

CTA 2010

FA 2016

General commencement

Closure of existing regimes to new productions

Opting into new regime during transitional period

Productions not moving into new regime

Continuity between regimes: taxation as separate trade

Continuity between regimes: calculation of expenditure credit

Continuity between regimes: British certification

Continuity between regimes: UK expenditure (films and television programmes)

Transition of video games from European expenditure condition to UK expenditure condition

Transfer of terminal losses between productions in existing and new regimes

Introduction

Meaning of “theatrical production”

Meaning of “core expenditure”

Provision to emphasise that capital expenditure does not generally qualify for relief

UK expenditure threshold to replace EEA expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of R&D exclusion

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 5

Transitional provision in relation to paragraph 6

Introduction

Time of election for orchestral concerts to be treated as a series

Meaning of “core expenditure”

Provision to emphasise that capital expenditure does not generally qualify for relief

UK expenditure threshold to replace EEA expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of exclusion for other reliefs

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 5

Transitional provision in relation to paragraph 6

Introduction

Museum and gallery exhibitions not to be wholly remote

Meaning of “core expenditure”

UK expenditure threshold to replace European expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of exclusion for R&D relief and other creative sector reliefs

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 4

Transitional provision in relation to paragraph 5

Power to recover overpayments

Time limit for claims

Supporting information

Amendment of CTA 2010

CoACS to be institutional investors

Non-close condition

Certain institutional investors required to meet GDO or non-close condition

Paragraph 4: transitional provision

Insurance companies may be included in group UK REIT

Property financing costs

Single property rule

Disposal of rights or interests in UK property rich funds

Holders of excessive rights

Corporate interest restriction and disposal of interests in UK property rich companies

Introduction

Qualifying companies to include companies managing qualifying ships

Daily profits of managed ships

Tonnage tax activities include activities in managing ships

Effect of temporarily ceasing to manage or operate qualifying ships

Training requirement

Disapplication of 75% limit for ship managers

Commencement

Amendments of Part 4 of FA 2004 (pension schemes etc)

Amendments of Part 9 of ITEPA 2003

Amendments of the Registered Pension Schemes (Authorised Payments) Regulations 2009

Amendments of Part 4 of FA 2004

Amendments of Chapter 4 of Part 9 of ITEPA 2003

Amendments of the Pension Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006

Amendments of Schedule 29 to FA 2004

Amendments of Schedule 34 to FA 2004

Amendments of Part 2 of Schedule 36 to FA 2004

Amendments of Part 3 of Schedule 36 to FA 2004

Amendment of Part 4 of Schedule 36 to FA 2004

Amendments of Schedule 18 to FA 2011

Amendments of Schedule 22 to FA 2013

Amendments of Schedule 6 to FA 2014

Amendments of Schedule 4 to FA 2016

Amendments of the Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006

Amendments of the Taxation of Pension Schemes (Transitional Provisions) Order 2006

Amendments of the Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014

Amendments of Part 4 of FA 2004

Amendments of the Registered Pension Schemes (Provision of Information) Regulations 2006

Amendments of the Registered Pension Schemes and Overseas Pension Schemes (Electronic Communication of Returns and Information) Regulations 2006

Commencement

127A

or, if that produces a negative result, nil.

$$A-B$where—A is the lifetime allowance previously-used amount;B is the aggregate of any amounts included in A that are attributable to the occurrence, before 6 April 2024, of benefit crystallisation event 1.$

130A
132A

Introduction of cash basis default

Removal of turnover restrictions etc

Removal of interest payments restriction

Removal of loss restrictions

Other amendments of Chapter 3 of Part 2

Amendments of other provisions

TMA 1970

TCGA 1992

CAA 2001

ITA 2007

Consequential repeals

Commencement

Transitional provision

Introduction

Stamp duty

Stamp duty reserve tax

Commencement

Transitional provision: depositary receipts: exception from SDRT for replacement securities

Transitional provision: clearance services: exception from SDRT for replacement securities

Transitional provision: bearer instruments

Transitional provision: warrants to purchase Government stock etc

Partnerships

Qualifying non-profit subsidiaries

Charging permanent establishments of intermediate/partially-owned parent members

De-merged groups

Adjustment for changes in accounting policies and prior period errors

Pension expense

Tax credits

Adjustments for companies in distress

Adjustments where life assurance business carried on

Exclusion of certain insurance reserve movement expense

Permanent establishment income and expense attribution

Election to spread certain capital gains

Transparent entities etc

Covered taxes

Tax equity partnerships

Reallocation of tax expense

Controlled foreign company tax regimes

Blended CFC regimes

Qualifying foreign tax credits (substitute loss carry forward assets)

Substance based income exclusion: inter-jurisdictional employees and assets

Substance based income exclusion: inclusion of payroll costs and assets voluntary

Substance based income exclusion: impairment losses

Substance based income exclusion: dual use assets

Substance based income exclusion: leases

Substance based income exclusion: power to make further provision

Transfer of assets or liabilities to a member of a multinational group

Investment entity tax transparency election

Meaning of country-by-country report

Joint ventures

Insurance investment entities

Location of entities

Currency

Application of Pillar Two rules to members of a group

Qualifying domestic top-up tax not treated as accruing

Consistency with Pillar Two rules

Overpaid tax

Intragroup transfers before entry into regime

Transitional safe harbour

Transitional reporting election

Qualifying domestic top-up tax safe harbour

Securitisation entities

Investment entities

Treatment of qualifying refundable tax credits

Effect of becoming subject to Pillar Two rules

Dividends from protected cell companies

Consistency with Pillar Two rules

Chapter 2 of Part 3 (qualifying multinational groups and their members)

Chapter 3 of Part 3 (effective tax rate)

Chapter 4 of Part 3 (calculation of adjusted profits)

Chapter 5 of Part 3 (covered tax balance)

Chapter 6 of Part 3 (calculation of top-up amounts)

Chapter 7 of Part 3 (allocating top-up amounts)

Chapter 8 of Part 3 (further adjustments)

Chapter 9 of Part 3 (special provision for investment entities etc)

Chapter 10 of Part 3 (definitions etc)

Part 4 (domestic top-up tax)

Schedules 14 to 17

Disqualification for promoting tax avoidance

Minor and consequential amendments

Extent

Practice and procedure

Interpretation

FA 2007

Films Act 1985

FA 1998

FA 2007

CTA 2009

CTA 2010

Films Act 1985

ICTA

FA 1998

FA 2007

CTA 2009

FA 2009

CTA 2010

FA 2016

General commencement

Closure of existing regimes to new productions

Opting into new regime during transitional period

Productions not moving into new regime

Continuity between regimes: taxation as separate trade

Continuity between regimes: calculation of expenditure credit

Continuity between regimes: British certification

Continuity between regimes: UK expenditure (films and television programmes)

Transition of video games from European expenditure condition to UK expenditure condition

Transfer of terminal losses between productions in existing and new regimes

Introduction

Meaning of “theatrical production”

Meaning of “core expenditure”

Provision to emphasise that capital expenditure does not generally qualify for relief

UK expenditure threshold to replace EEA expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of R&D exclusion

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 5

Transitional provision in relation to paragraph 6

Introduction

Time of election for orchestral concerts to be treated as a series

Meaning of “core expenditure”

Provision to emphasise that capital expenditure does not generally qualify for relief

UK expenditure threshold to replace EEA expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of exclusion for other reliefs

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 5

Transitional provision in relation to paragraph 6

Introduction

Museum and gallery exhibitions not to be wholly remote

Meaning of “core expenditure”

UK expenditure threshold to replace European expenditure threshold

EEA expenditure not to qualify for relief

Profit element of non-arm's-length payments to connected parties not to qualify for relief

Amendment of exclusion for R&D relief and other creative sector reliefs

Restriction where tax liabilities outstanding: meaning of “payment period”

Relief not to be available for companies in insolvency

Transitional provision in relation to paragraph 4

Transitional provision in relation to paragraph 5

Power to recover overpayments

Time limit for claims

Supporting information

Amendment of CTA 2010

CoACS to be institutional investors

Non-close condition

Certain institutional investors required to meet GDO or non-close condition

Paragraph 4: transitional provision

Insurance companies may be included in group UK REIT

Property financing costs

Single property rule

Disposal of rights or interests in UK property rich funds

Holders of excessive rights

Corporate interest restriction and disposal of interests in UK property rich companies

Introduction

Qualifying companies to include companies managing qualifying ships

Daily profits of managed ships

Tonnage tax activities include activities in managing ships

Effect of temporarily ceasing to manage or operate qualifying ships

Training requirement

Disapplication of 75% limit for ship managers

Commencement

Amendments of Part 4 of FA 2004 (pension schemes etc)

Amendments of Part 9 of ITEPA 2003

Amendments of the Registered Pension Schemes (Authorised Payments) Regulations 2009

Amendments of Part 4 of FA 2004

Amendments of Chapter 4 of Part 9 of ITEPA 2003

Amendments of the Pension Schemes (Application of UK Provisions to Relevant Non-UK Schemes) Regulations 2006

Amendments of Schedule 29 to FA 2004

Amendments of Schedule 34 to FA 2004

Amendments of Part 2 of Schedule 36 to FA 2004

Amendments of Part 3 of Schedule 36 to FA 2004

Amendment of Part 4 of Schedule 36 to FA 2004

Amendments of Schedule 18 to FA 2011

Amendments of Schedule 22 to FA 2013

Amendments of Schedule 6 to FA 2014

Amendments of Schedule 4 to FA 2016

Amendments of the Registered Pension Schemes (Enhanced Lifetime Allowance) Regulations 2006

Amendments of the Taxation of Pension Schemes (Transitional Provisions) Order 2006

Amendments of the Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Notification) Regulations 2013

Amendments of the Registered Pension Schemes and Relieved Non-UK Pension Schemes (Lifetime Allowance Transitional Protection) (Individual Protection 2014 Notification) Regulations 2014

Amendments of Part 4 of FA 2004

Amendments of the Registered Pension Schemes (Provision of Information) Regulations 2006

Amendments of the Registered Pension Schemes and Overseas Pension Schemes (Electronic Communication of Returns and Information) Regulations 2006

Availability of individual’s lump sum allowance

Introduction of cash basis default

Removal of turnover restrictions etc

Removal of interest payments restriction

Removal of loss restrictions

Other amendments of Chapter 3 of Part 2

Amendments of other provisions

TMA 1970

TCGA 1992

CAA 2001

ITA 2007

Consequential repeals

Commencement

Transitional provision

Introduction

Stamp duty

Stamp duty reserve tax

Commencement

Transitional provision: depositary receipts: exception from SDRT for replacement securities

Transitional provision: clearance services: exception from SDRT for replacement securities

Transitional provision: bearer instruments

Transitional provision: warrants to purchase Government stock etc

Partnerships

Qualifying non-profit subsidiaries

Charging permanent establishments of intermediate/partially-owned parent members

De-merged groups

Adjustment for changes in accounting policies and prior period errors

Pension expense

Tax credits

Adjustments for companies in distress

Adjustments where life assurance business carried on

Exclusion of certain insurance reserve movement expense

Permanent establishment income and expense attribution

Election to spread certain capital gains

Transparent entities etc

Covered taxes

Tax equity partnerships

Reallocation of tax expense

Controlled foreign company tax regimes

Blended CFC regimes

Qualifying foreign tax credits (substitute loss carry forward assets)

Substance based income exclusion: inter-jurisdictional employees and assets

Substance based income exclusion: inclusion of payroll costs and assets voluntary

Substance based income exclusion: impairment losses

Substance based income exclusion: dual use assets

Substance based income exclusion: leases

Substance based income exclusion: power to make further provision

Transfer of assets or liabilities to a member of a multinational group

Investment entity tax transparency election

Meaning of country-by-country report

Joint ventures

Insurance investment entities

Location of entities

Currency

Qualifying domestic top-up tax not treated as accruing

Consistency with Pillar Two rules

Overpaid tax

Intragroup transfers before entry into regime

Transitional safe harbour

Transitional reporting election

Qualifying domestic top-up tax safe harbour

Securitisation entities

Investment entities

Treatment of qualifying refundable tax credits

Effect of becoming subject to Pillar Two rules

Consistency with Pillar Two rules

Chapter 2 of Part 3 (qualifying multinational groups and their members)

Chapter 3 of Part 3 (effective tax rate)

Chapter 4 of Part 3 (calculation of adjusted profits)

Chapter 5 of Part 3 (covered tax balance)

Chapter 6 of Part 3 (calculation of top-up amounts)

Chapter 7 of Part 3 (allocating top-up amounts)

Chapter 8 of Part 3 (further adjustments)

Chapter 9 of Part 3 (special provision for investment entities etc)

Chapter 10 of Part 3 (definitions etc)

Part 4 (domestic top-up tax)

Schedules 14 to 17

Disqualification for promoting tax avoidance

Minor and consequential amendments

Extent

Practice and procedure

Interpretation

127B