Finance Act 1999 (c. 16)

(The document as of February, 2008)

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(3) After subsection (8) insert--

" (8A) Subject to subsections (8B), (8C) and (9) below, for the purposes of subsection (8) above living accommodation is job-related for a person if--

(a) it is provided for him by reason of his employment, or for his spouse by reason of her employment, in any of the following cases--

(i) where it is necessary for the proper performance of the duties of the employment that the employee should reside in that accommodation;

(ii) where the accommodation is provided for the better performance of the duties of the employment, and it is one of the kinds of employment in the case of which it is customary for employers to provide living accommodation for employees;

(iii) where, there being a special threat to the employee's security, special security arrangements are in force and the employee resides in the accommodation as part of those arrangements;

(b) under a contract entered into at arm's length and requiring him or his spouse to carry on a particular trade, profession or vocation, he or his spouse is bound--

(i) to carry on that trade, profession or vocation on premises or other land provided by another person (whether under a tenancy or otherwise); and

(ii) to live either on those premises or on other premises provided by that other person.

(8B) If the living accommodation is provided by a company and the employee is a director of that or an associated company, subsection (8A)(a)(i) or (ii) above shall not apply unless--

(a) the company of which the employee is a director is one in which he or she has no material interest; and

(b) either--

(i) the employment is as a full-time working director, or

(ii) the company is non-profit making, that is to say, it does not carry on a trade nor do its functions consist wholly or mainly in the holding of investments or other property, or

(iii) the company is established for charitable purposes only.

(8C) Subsection (8A)(b) above does not apply if the living accommodation concerned is in whole or in part provided by--

(a) a company in which the borrower or his spouse has a material interest; or

(b) any person or persons together with whom the borrower or his spouse carries on a trade or business in partnership.

(8D) For the purposes of this section--

(a) a company is an associated company of another if one of them has control of the other or both are under the control of the same person; and

(b) "employment", "director", "full-time working director", "material interest" and "control", in relation to a body corporate, have the same meanings as they have for the purposes of Chapter II of Part V of the Taxes Act. "

(4) In subsection (9)--

(a) for "Section 356(3)(b) and (5) of the Taxes Act" substitute "Subsections (8A)(b) and (8C) above"; and

(b) for "within the meaning of that section" substitute "for the purposes of that subsection".

Commencement

18 (1) Paragraph 9(2) above has effect in relation to any loan the only payments under which are payments falling within subsection (3) or (4) of section 38 of this Act.

(2) Paragraph 15 above has effect in relation to any claim for (or for part of) the year 2000-01 or any subsequent year of assessment.

(3) Paragraph 16 above has effect in relation to loans made on or after 6th April 2000.

(4) Paragraph 17 above has effect for the year 2000-01 and subsequent years of assessment.

(5) The other provisions of this Schedule have effect in relation to any payment of interest falling within subsection (3) or (4) of section 38 of this Act.

Section 52.

SCHEDULE 5 Scottish Parliament and devolved assemblies: exemptions and reliefs

Payments on dissolution, etc., or loss of office

1 For section 190 of the Taxes Act 1988 (exemption from charge as emoluments of certain payments made to members of Parliament and others) substitute--

" 190 Payments to MPs and others

(1) Grants and payments to which this section applies shall be exempt from income tax under Schedule E as emoluments, but without prejudice to any charge to tax under section 148 (payments in connection with termination of employment, etc.).

(2) This section applies to grants and payments if they are made--

(a) in pursuance of a resolution of the House of Commons to a person ceasing to be a member of that House on a dissolution of Parliament;

(b) under section 13 of the [1984 c. 52.] Parliamentary Pensions etc. Act 1984 or section 4 of the [1991 c. 5.] Ministerial and other Pensions and Salaries Act 1991 (grants to persons ceasing to hold certain Ministerial and other offices); or

(c) under section 3 of the [1979 c. 50.] European Parliament (Pay and Pensions) Act 1979 (resettlement grants for persons ceasing to be Representatives).

(3) This section also applies to grants and payments if they are not pension payments and they are made--

(a) under section 81(3) of the [1998 c. 46.] Scotland Act 1998--

(i) to a person ceasing to be a member of the Scottish Parliament on the dissolution of the Scottish Parliament, or

(ii) to a person ceasing to hold an office corresponding to a relevant office;

(b) under section 18(1) of the [1998 c. 38.] Government of Wales Act 1998 to a person ceasing to be a member of the National Assembly for Wales on the expiry of his term of office; or

(i) to a person ceasing to be a member of the Northern Ireland Assembly on the dissolution of the Assembly, or

(ii) to a person ceasing to hold an office corresponding to a relevant office.

(4) In subsection (3) above "a relevant office" has the same meaning as in section 4 of the [1991 c. 5.] Ministerial and other Pensions and Salaries Act 1991. "

Payments in respect of overnight expenses or EU travel

2 (1) After section 200 of the Taxes Act 1988 insert--

" 200ZA Expenses of members of Scottish Parliament, National Assembly for Wales or Northern Ireland Assembly

(1) This section applies to payments made--

(a) to members of the Scottish Parliament under section 81(2) of the [1998 c. 46.] Scotland Act 1998,

(b) to members of the National Assembly for Wales under section 16(2) of the [1998 c. 38.] Government of Wales Act 1998, or

(2) If a payment to which this section applies is expressed to be made in respect of necessary overnight expenses or EU travel expenses, the payment shall not be regarded as income for any purpose of the Income Tax Acts.

(3) For the purposes of subsection (2) above--

"necessary overnight expenses" are additional expenses necessarily incurred by the member for the purpose of performing duties as a member in staying overnight away from the member's only or main residence, either in the area in which the body of which he is a member sits or in the constituency or region for which he has been returned, and
"EU travel expenses" are the cost of, and any additional expenses incurred in, travelling between the United Kingdom and--
(a)
any European Union institution in Brussels, Luxembourg or Strasbourg, or
(b)
the national parliament of another member State. "

(2) For section 198(4) of that Act (exclusion of deduction in respect of expenditure for which parliamentary allowance may be given) substitute--

" (4) No deduction shall be made under this section in respect of expenditure incurred by--

(a) a member of the House of Commons, or

(b) a member of the Scottish Parliament, or

(d) a member of the Northern Ireland Assembly,

in, or in connection with, the provision or use of residential or overnight accommodation to enable him to perform his duties as such a member in or about the place where the body of which he is a member sits or the constituency or region for which he has been returned. "

(3) For section 74 of the [1990 c. 1.] Capital Allowances Act 1990 (exclusion of capital allowances in respect of expenditure for which parliamentary allowance may be given) substitute--

" 74 Allowances not available: expenses of MPs and others

No allowance shall be made under this Part in respect of expenditure incurred by--

(a) a member of the House of Commons, or

(b) a member of the Scottish Parliament, or

(d) a member of the Northern Ireland Assembly,

Office-holders' transport and subsistence

3 In section 200AA of the Taxes Act 1988 (exemption from Schedule E charge of expenses payments to holders of ministerial offices, etc.), in subsection (2) after paragraph (b) insert--

" , and

(c) any office under the [1998 c. 46.] Scotland Act 1998, the [1998 c. 38.] Government of Wales Act 1998 or the [1998 c. 47.] Northern Ireland Act 1998 that corresponds to any of the offices mentioned in paragraph (a) or (b) above. "

Trustees' income from parliamentary pension funds

4 In section 613(4) of the Taxes Act 1988 (Parliamentary pension funds: exemption from tax on income derived from funds), after paragraph (b) insert--

" (bb) any fund maintained for the purposes of a pension scheme--

(i) established for members of the Scottish Parliament under section 81(4) of the Scotland Act 1998,

(ii) established for members of the Welsh Assembly under section 18(2) of the Government of Wales Act 1998, or

(iii) established for members of the Northern Ireland Assembly under section 48(2) of the Northern Ireland Act 1998; " ;

and in the closing words for "Funds" (twice) substitute "funds".

Relevant statutory schemes

5 (1) In section 611A of the Taxes Act 1988 (definition of relevant statutory scheme), for subsection (1) substitute--

" (1) In this Chapter any reference to a relevant statutory scheme is to--

(a) a statutory scheme established before 14th March 1989, or

(b) a statutory scheme established on or after that date and entered in the register maintained by the Board for the purposes of this section, or

(2) At the end of that section add--

" (5) In subsection (1)(c) "parliamentary pension scheme" means--

(a) the Parliamentary pension scheme within the meaning of the [1987 c. 45.] Parliamentary and other Pensions Act 1987;

(b) any pension scheme established for members of the Scottish Parliament under section 81(4) of the Scotland Act 1998;

(c) any pension scheme established for members of the Welsh Assembly under section 18(2) of the Government of Wales Act 1998;

(d) any pension scheme established for members of the Northern Ireland Assembly under section 48(2) of the Northern Ireland Act 1998;

(e) the pension scheme established for members of the European Parliament under section 4 of the [1979 c. 50.] European Parliament (Pay and Pensions) Act 1979;

(f) the pension scheme established under section 3 of the [1965 c. 18(N.I.).] Ministerial Salaries and Members' Pensions Act (Northern Ireland) 1965;

(g) the pension scheme established under the [S.I. 1976/1779.] Assembly Pensions (Northern Ireland) Order 1976. "

Pensions of members of the Scottish Executive

6 (1) Sub-paragraph (2) below applies if provision under the [1998 c. 46.] Scotland Act 1998 is made for the salary paid to members of the Scottish Parliament who are also members of the Scottish Executive to be lower than that of other members of the Scottish Parliament.

(2) In that case, sections 629 and 654 of the Taxes Act 1988 (under which part of the salary of the holder of certain offices is treated as remuneration as a member of the House of Commons) apply in relation to the salary of a member of the Scottish Executive who is also a member of the Scottish Parliament as they apply in relation to the salary of the holder of a qualifying office within the meaning of those sections who is also a member of the House of Commons, with such modifications as the Treasury may specify by order.

(3) In this paragraph references to a member of the Scottish Executive include a junior Scottish Minister.

Section 54.

SCHEDULE 6 Tax treatment of receipts by way of reverse premium

Application of this Schedule

1 (1) This Schedule applies where--

(a) a person receives a payment or other benefit by way of inducement in connection with a transaction being entered into by him or a person connected with him;

(b) that transaction (the "relevant transaction") is one under which the person receiving the payment or other benefit, or as the case may be the person connected with him, becomes entitled to an estate or interest in, or a right in or over, land; and

(i) the person ("the grantor") by whom that estate, interest or right is granted or was granted at an earlier time, or

(ii) a person connected with the grantor, or

(iii) a nominee of, or a person acting on the directions of, the grantor or a person connected with the grantor.

(2) The payment or other benefit is referred to in this Schedule as a "reverse premium".

Tax treatment of receipts by way of reverse premium

2 (1) A reverse premium shall be regarded for the purposes of the Tax Acts as a receipt of a revenue nature.

(2) Where the relevant transaction is entered into--

(a) by the person receiving the reverse premium, and

(b) for the purposes of a trade, profession or vocation carried on or to be carried on by that person,

the reverse premium shall be taken into account in computing the profits of that trade, profession or vocation under Case I or II of Schedule D.

(3) If sub-paragraph (2) does not apply, the person receiving the reverse premium is chargeable to tax as if it were a receipt of a transaction entered into by him for the exploitation, as a source of rents or other receipts, of an estate, interest or right in or over the land in question.

Arrangements not at arm's length

3 (1) Where--

(a) two or more of the parties to the relevant arrangements are connected persons, and

(b) the terms of those arrangements are not such as would reasonably have been expected if those persons had been dealing at arm's length,

the whole amount or value of the reverse premium shall be brought into account under paragraph 2(2) or (3) in the first relevant period of account.

(2) The "first relevant period of account" means the period of account in which the relevant transaction is entered into, subject to sub-paragraph (3).

(3) If the relevant transaction is entered into--

(a) by the person receiving the reverse premium, and

(b) for the purposes of a trade, profession or vocation which is not then carried on by him but which he subsequently begins to carry on,

the first relevant period of account is the first period of account in which he carries on the trade, profession or vocation.

(4) The condition in sub-paragraph (1)(b) is met if the terms differ to a significant extent from the terms which at the time the arrangements were entered into would be regarded as normal and reasonable in the market conditions then prevailing between persons dealing with each other at arm's length in the open market.

(5) In this paragraph "period of account" means a period for which accounts of the trade, profession, vocation or business in question are drawn up.

Special rules for insurance companies carrying on life assurance business

4 (1) Paragraphs 2 and 3 have effect subject to the provisions of this paragraph.

(2) Nothing in paragraph 2 or 3 shall prevent any amount from being brought into account in accordance with section 83 of the [1989 c. 26.] Finance Act 1989 (receipts to be brought into account in Case I computation of profits in respect of life assurance).

(3) Where a reverse premium is received by an insurance company carrying on life assurance business in respect of which it is chargeable to tax otherwise than in accordance with the rules applicable to Case I of Schedule D, there shall be deducted from the amount treated as the company's expenses of management for the accounting period in which the reverse premium is received such part of the reverse premium as is attributable--

(a) to its life assurance business, and

(b) to its basic life assurance and general annuity business.

(4) In this paragraph "insurance company", "life assurance business" and "basic life assurance and general annuity business" have the same meaning as in Chapter I of Part XII of the Taxes Act 1988.

Exclusion of receipts taken into account for capital allowances

5 This Schedule does not apply to a payment or benefit if or to the extent that it is taken into account under section 153 of [1990 c. 1.] the Capital Allowances Act 1990 (subsidies, contributions, etc.) to reduce the recipient's expenditure qualifying for capital allowances.

Exclusion of transaction relating to individual's only or main residence

6 This Schedule does not apply to a payment or benefit received in connection with a relevant transaction where the person entering into the transaction is an individual and the transaction relates to premises occupied or to be occupied by him as his only or main residence.

Exclusion of consideration under sale and lease-back arrangement

7 This Schedule does not apply to a payment or benefit to the extent that it is consideration for the transfer of an estate or interest in land which constitutes the sale in a sale and lease-back arrangement.

A "sale and lease-back arrangement" means any such arrangement as is described in section 779(1) or (2) or section 780(1) of the Taxes Act 1988.

Connected persons and relevant arrangements

8 (1) For the purposes of this Schedule persons are connected with each other if they are connected within the meaning of section 839 of the Taxes Act 1988 at any time during the period when the relevant arrangements are entered into.

(2) In this Schedule "the relevant arrangements" means the relevant transaction and any arrangements entered into in connection with it, whether before, at the same time or after it.

Section 72.

SCHEDULE 7 Application of taper relief to EIS deferred gains

After Schedule 5B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (EIS re-investment) insert--

" Schedule 5BA Enterprise investment scheme: application of taper relief

Application of Schedule

1 (1) This Schedule applies where--

(a) a chargeable gain ("the original gain") accrues on the disposal of shares ("the original shares") to which deferral relief or relief under Chapter III of Part VII of the Taxes Act (EIS income tax relief), or both, is attributable;

(b) the whole or part of the original gain is treated as not having accrued at the time of that disposal because of expenditure on shares being set against it under paragraph 2 of Schedule 5B; and

(c) a chargeable gain ("the revived gain") is subsequently treated as accruing in accordance with paragraph 4 of Schedule 5B as a result of the disposal ("the relevant disposal") of shares expenditure on which has been set under paragraph 2 of Schedule 5B against the whole or part of the original gain or the whole or part of a gain derived from the original gain.

(2) This Schedule applies only if the original shares were issued on or after 6th April 1998 and disposed of on or after 6th April 1999.

Taper relief on revived gains

2 (1) Where this Schedule applies, the provisions of paragraphs 3 to 5 below have effect for applying taper relief under section 2A in relation to the revived gain.

(2) Those provisions do not apply to the extent that the revived gain is treated as not having accrued at the time of the relevant disposal because of expenditure being set against it under paragraph 2 of Schedule 5B.

Qualifying holding period

3 (1) The qualifying holding period of the original shares for the purposes of taper relief is the period beginning with the date of issue of the original shares and ending with the date of the relevant disposal.

(2) Sub-paragraph (1) is subject to paragraph 2(4) of Schedule A1 (periods that do not count for taper relief purposes).

Periods that do not count

4 A period--

(a) which falls within the period beginning with the date of issue of the original shares and ending with the date of the relevant disposal, and

(b) during which neither the original shares nor any relevant re-investment shares were held,

does not count for the purposes of taper relief.

Gains on disposal of business or non-business assets

5 (1) The following rules apply to determine whether, or to what extent, the revived gain is for taper relief purposes a gain on the disposal of a business asset or a gain on the disposal of a non-business asset.

(2) The revived gain is treated as a gain on the disposal of an asset which was acquired on the issue of the original shares and disposed of on the date of the relevant disposal.

(3) That asset is treated as being the original shares during the period for which they were held.

(4) That asset is treated as being any relevant re-investment shares during the period for which those shares were held, or so much of that period as is not an overlap period in relation to those shares.

(5) For the purposes of sub-paragraph (4) an "overlap period", in relation to any relevant re-investment shares, means a period during which those shares and also--

(a) any of the original shares, or

(b) any relevant re-investment shares issued before the relevant re-investment shares in question,

are held.

Savings

6 The application of paragraphs 3 to 5 above in relation to the revived gain does not affect the treatment for the purposes of taper relief under section 2A of--

(a) any gain which is treated as accruing in accordance with paragraph 4 of Schedule 5B at the same time as the revived gain, or

(b) any part of a gain where no expenditure was set under paragraph 2 of Schedule 5B against that part of the gain.

Relevant re-investment shares

7 For the purposes of this Schedule--

(a) shares are "re-investment shares" if expenditure on them is set under paragraph 2 of Schedule 5B against all or part of a gain; and

(b) re-investment shares are "relevant re-investment shares", in relation to a revived gain, if--

(i) their disposal results in a gain being treated as accruing under paragraph 4 of Schedule 5B, and

(ii) that gain is the revived gain or a gain from which the revived gain is derived.

Derivation of gains

8 For the purposes of this Schedule a gain ("the later gain") is derived from another gain ("the earlier gain") if--

(a) the later gain is treated as accruing in accordance with paragraph 4 of Schedule 5B on the disposal of any shares, and

(b) expenditure on those shares has been set under paragraph 2 of Schedule 5B against all or part of the earlier gain or a gain which, by virtue of this paragraph, is derived from the earlier gain.

Interpretation

9 Expressions defined for the purposes of Schedule 5B (apart from "the original gain") have the same meaning for the purposes of this Schedule as they have for the purposes of that Schedule. " .

Section 73.

SCHEDULE 8

EIS deferred gains: gains accruing on part disposal

Introductory

1 Schedule 5B to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (relief in respect of re-investment under the enterprise investment scheme) is amended as follows.

Paragraph 4

2 (1) In paragraph 4(1) (amount of gain accruing on chargeable event), for paragraph (b) substitute--

" (b) the amount of the gain shall be equal to so much of the deferred gain as is attributable to the shares in relation to which the chargeable event occurs. "

(2) For paragraph 4(5)(a) (amount of gain where shares represented by other assets) substitute--

" (a) so much of the deferred gain as is attributable to those shares shall be treated, in determining for the purposes of this paragraph the amount of the deferred gain to be treated as attributable to each of those assets, as apportioned in such manner as may be just and reasonable between those assets; and " .

(3) After paragraph 4(5) insert--

" (6) In order to determine, for the purposes of this paragraph, the amount of the deferred gain attributable to any shares, a proportionate part of the amount of the gain shall be attributed to each of the relevant shares held, immediately before the occurrence of the chargeable event in question, by the investor or a person who has acquired any of the relevant shares from the investor on a disposal within marriage.

(7) In this paragraph "the deferred gain" means--

(a) the amount of the original gain against which expenditure has been set under this Schedule, less

(b) the amount of any gain treated as accruing under this paragraph previously as a result of a disposal of any of the relevant shares. "

Paragraph 19

3 (1) In paragraph 19(1) (interpretation) omit the definition of "relevant shares".

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