Income Tax (Trading and Other Income) Act 2005 (c. 5)

(The document as of February, 2008)

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(b) at the end insert--

" Section 75(4) of ITTOIA 2005.
Regulations under Chapter 3 of Part 6 of ITTOIA 2005. "

380 In section 118(1) (interpretation) after the definition of "ITEPA 2003" insert--

" "ITTOIA 2005" means the Income Tax (Trading and Other Income) Act 2005, " .

381 In Schedule 1A (claims etc. not included in returns), in paragraph 10(b), for "(administration of estates)" substitute "(administration of estates: corporation tax) or Chapter 6 of Part 5 of ITTOIA 2005 (administration of estates: income tax)".

382 (1) Amend Schedule 1B (claims for relief involving two or more years) as follows.

(2) In paragraph 1--

(a) in sub-paragraph (2) for the words from "are any of the following" to "and the same" substitute "is a claim to which this Schedule applies and the same", and

(b) in sub-paragraph (3) for "includes--" to the end substitute "includes a reference to amendments and revocations to which paragraph 4 below applies."

(3) In paragraph 3(1)--

(a) for "a trade of farming or market gardening claims that subsection (2) or (3) of section 96 of the principal Act" substitute "a qualifying trade, profession or vocation (within the meaning of Chapter 16 of Part 2 of ITTOIA 2005) claims that Chapter 16 of Part 2 of ITTOIA 2005", and

(b) after "that trade" insert ", profession or vocation".

(4) In paragraph 4(1)--

(a) in paragraph (a) for "claims that subsection (2) or (3) of section 96 of the principal Act" substitute "claims that Chapter 16 of Part 2 of ITTOIA 2005", and

(b) in paragraph (b) for "subsection (9) of that section" substitute "section 224(4) of that Act".

(5) In the italic cross-heading before paragraph 4 for "section 96(9)" substitute "section 224(4) of ITTOIA 2005".

(6) In paragraph 5--

(a) in sub-paragraph (1)--

(i) for "section 108 of the principal Act" substitute "section 257 of ITTOIA 2005", and

(ii) for the words from "the date" to "change of basis took place" substitute "the date of the cessation", and

(b) in sub-paragraph (5) for "section 105 of the principal Act" substitute "section 254 of ITTOIA 2005".

383 In paragraph 10 of Schedule 3 (rules for assigning proceedings to General Commissioners) after "of the principal Act" insert ", section 186 of ITTOIA 2005".

384 In paragraph 2(4) of Schedule 3A (electronic lodgement of tax returns, etc.) after "ITEPA 2003" insert "or ITTOIA 2005".

Finance Act 1971 (c. 68)

385 The Finance Act 1971 is amended as follows.

386 In paragraph 8(2)(b) of Schedule 3 (taxation of refunds of contributions and certain other payments) for "to tax on the amount of the payment under Case VI of Schedule D" substitute " --

(i) to income tax on the full amount of the payment arising in the year of assessment; or

(ii) to corporation tax on the amount of the payment under Case VI of Schedule D " .

Finance Act 1973 (c. 51)

387 The Finance Act 1973 is amended as follows.

388 In Schedule 15 (territorial extension of charge to tax: supplementary provisions), in paragraphs 2(a) and 4(1), for "or section 830 of the Taxes Act 1988" substitute ", section 830 of the Taxes Act 1988 or section 874 of the Income Tax (Trading and Other Income) Act 2005".

Biological Standards Act 1975 (c. 4)

389 The Biological Standards Act 1975 is amended as follows.

390 (1) Amend section 2 (exemption of the National Biological Standards Board from income tax and corporation tax) as follows.

(2) In subsection (4)--

(a) for paragraph (a) substitute--

" (a) under Chapter 3 of Part 3 of the Income Tax (Trading and Other Income) Act 2005 ("ITTOIA 2005") in respect of the profits of a UK property business or under Schedule A; " ,

(b) in paragraph (b) at the beginning insert "under the provisions of ITTOIA 2005 specified in subsection (4A) in respect of the income charged under those provisions received by the Board or", and

(c) in paragraph (c) for "under Schedule F" substitute "under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.)".

(3) After that subsection insert--

" (4A) The provisions are--

(a) Chapter 2 of Part 4 (interest) so far as the income is yearly interest or public revenue dividends (as defined in section 505(1A) of the Income and Corporation Taxes Act 1988),

(b) Chapter 7 of that Part (purchased life annuity payments),

(d) Chapter 13 of that Part (sales of foreign dividend coupons) so far as the income arises from foreign holdings within section 571(1)(a) (meaning of "foreign holdings" in that Chapter),

(e) Chapter 2 of Part 5, so far as it relates to annual payments (receipts from intellectual property),

(f) Chapter 4 of that Part, so far as it relates to annual payments (certain telecommunication rights: non-trading income), and

(g) Chapter 7 of that Part (annual payments not otherwise charged). "

Oil Taxation Act 1975 (c. 22)

391 The Oil Taxation Act 1975 is amended as follows.

392 In section 3(2) (allowance of expenditure (other than expenditure on long-term assets and abortive exploration expenditure))--

(a) in the first sentence--

(i) after "section 579 of the Taxes Act" insert "or under section 77 of the Income Tax (Trading and Other Income) Act 2005 ("ITTOIA 2005")",

(ii) after "under that subsection" insert "or that section", and

(iii) omit "less the amount of the rebate recoverable (within the meaning of that subsection)", and

(b) in the second sentence--

(i) after "section 492 of the Taxes Act" insert "or by virtue of section 16 of ITTOIA 2005",

(ii) after "paragraph (a) or (b) of that subsection" insert "or within the definition of "oil-related activities" in section 16(2) of ITTOIA 2005", and

(iii) after "if that subsection" insert "or section".

Inheritance Tax Act 1984 (c. 51)

393 The Inheritance Tax Act 1984 is amended as follows.

394 In section 6(3) (excluded property), in paragraph (e)--

(a) for "certified contractual savings scheme" substitute "certified SAYE savings arrangement", and

(b) for "section 326 of the Taxes Act 1988" substitute "section 703(1) of the Income Tax (Trading and Other Income) Act 2005".

395 In section 21(3) (normal expenditure out of income)--

(a) for "section 657 of the Taxes Act 1988" substitute "section 423 of the Income Tax (Trading and Other Income) Act 2005", and

(b) for ", for the purposes" to "annuity" substitute "exempt from income tax under section 717 of that Act".

396 In section 174(1) (liabilities for which allowance is to be made in determining the value of an estate) in paragraph (b)--

(a) for "Schedule 13 to the Finance Act 1996 (discounted securities)" substitute "Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (deeply discounted securities)", and

(b) for "paragraph 4(2) of that Schedule" substitute "section 437(2) of that Act".

Films Act 1985 (c. 21)

397 The Films Act 1985 is amended as follows.

398 In section 6(1) (certification of master negatives, tapes and discs) after "1992" insert "or Chapter 9 of Part 2 of the Income Tax (Trading and Other Income) Act 2005".

399 (1) Amend Schedule 1 (certification in case of British films) as follows.

(2) In paragraph 2(1) (applications for certification of master negatives, tapes or discs) after "1992" insert ", or Chapter 9 of Part 2 of the Income Tax (Trading and Other Income) Act 2005,".

(3) In paragraph 3(1) (certification by Secretary of State of master negatives, tapes or discs) at the end insert "or, as the case may be, Chapter 9 of Part 2 of the Income Tax (Trading and Other Income) Act 2005".

Finance Act 1988 (c. 39)

400 The Finance Act 1988 is amended as follows.

401 (1) Amend section 38 (maintenance payments under existing obligations: 1989-90 onwards) as follows.

(2) In subsection (1) for paragraph (c) substitute--

" (c) is (apart from this section) within a charge to tax under Chapter 7 of Part 5 of the Income Tax (Trading and Other Income) Act 2005 (annual payments not otherwise charged) and is not, by virtue of Chapter 5 of that Part (settlements), treated for any purpose as the income of the person making it. "

(3) In subsection (9) for the words from "65(1)(b)" to "1988" substitute "839 of the Income Tax (Trading and Other Income) Act 2005 (annual payments payable out of relevant foreign income)".

402 In section 73(2) (consideration for certain restrictive undertakings)--

(a) for "person" substitute "company", and

(b) for "tax" substitute "corporation tax".

403 In Schedule 6 (commercial woodlands) in paragraph 3(2) for "person" substitute "company".

404 In Schedule 12 (building societies: change of status) for paragraph 7 substitute--

" Certified SAYE savings arrangements

7 Section 702 of the Income Tax (Trading and Other Income) Act 2005 (interest under certified SAYE savings arrangements to be exempt from income tax) shall have effect in relation to any interest (or bonus) payable after the transfer under a savings arrangement which immediately before the transfer was a certified SAYE savings arrangement (within the meaning of section 703(1) of that Act) in relation to the society despite the fact that it ceased to be such an arrangement by reason of the transfer. "

Water Act 1989 (c. 15)

405 In section 95(11) of the Water Act 1989 (vesting in successor company of liability for loans not to affect directions by the Treasury under section 581 of ICTA) for "section 581 of the Income and Corporation Taxes Act 1988" substitute "section 755 of the Income Tax (Trading and Other Income) Act 2005".

Finance Act 1989 (c. 26)

406 The Finance Act 1989 is amended as follows.

407 In section 68(2) (principal charges to tax: employee share ownership trusts)--

(a) in paragraph (a) for "annual profits or gains whose amount" substitute "income of an amount that", and

(b) for paragraph (b) and the word "and" at the end of it substitute--

" (b) that income shall be chargeable to income tax for the year of assessment in which the event occurs,

(ba) the tax so chargeable shall be charged on the full amount of the income the trustees are treated as receiving in the year of assessment,

(bb) the trustees are liable for any tax so chargeable, and " .

408 In section 71(4) (further charges to tax: borrowing)--

(a) in paragraph (a) for "annual profits or gains whose amount" substitute "income of an amount that", and

(b) for paragraph (b) and the word "and" at the end of it substitute--

" (b) that income shall be chargeable to income tax for the year of assessment at the end of which the further event occurs,

(ba) the tax so chargeable shall be charged on the full amount of the income the trustees are treated as receiving in the year of assessment,

(bb) the trustees are liable for any tax so chargeable, and " .

409 (1) Amend section 76 (non-approved retirement benefits schemes) as follows.

(2) In subsection (1) after "Schedule D" insert "or under Part 2 of the Income Tax (Trading and Other Income) Act 2005".

(3) In subsection (4)(a) after "Schedule D" insert "or under Part 2 of the Income Tax (Trading and Other Income) Act 2005".

(4) In subsection (6C)(a) omit "of the Taxes Act 1988".

410 Omit sections 112 and 113 (security: trades etc.).

411 In section 151(2) (assessment of trustees etc) in each of paragraphs (a) and (b) for "Chapter II of Part XIII of the Taxes Act 1988" substitute "Chapter 9 of Part 4 of the Income Tax (Trading and Other Income) Act 2005".

412 In paragraph 1 of Schedule 12 (close companies: administrative provisions)--

(a) omit the word "and" at the end of paragraph (a), and

(b) after paragraph (b) insert--

" (c) section 397 of the Income Tax (Trading and Other Income) Act 2005, and

(d) Chapter 6 of Part 4 of that Act. "

Electricity Act 1989 (c. 29)

413 In paragraph 10 of Schedule 11 to the Electricity Act 1989 (vesting in successor company of liability for loans not to affect directions by the Treasury under section 581 of ICTA) for "section 581 of the 1988 Act" substitute "section 755 of the Income Tax (Trading and Other Income) Act 2005".

Finance Act 1990 (c. 29)

414 The Finance Act 1990 is amended as follows.

415 (1) Amend section 25 (donations to charity by individuals) as follows.

(2) In subsection (6) for "section 550(2)(a) or (b) of that Act (relief where gain charged at higher rate)" substitute "sections 535 to 537 of the Income Tax (Trading and Other Income) Act 2005 (top slicing relief)".

(3) In subsection (9)--

(a) for paragraph (b) substitute--

" (b) any tax treated as having been paid under--

(i) section 399(2) or 400(2) of the Income Tax (Trading and Other Income) Act 2005 (distributions from UK resident companies etc. on which there is no tax credit);

(ii) section 414(1) of that Act (stock dividend income);

(iii) section 421(1) of that Act (release of loan to participator in close company); or

(iv) section 530(1) of that Act (gains from contracts for life insurance etc); " ,

(b) in paragraph (c) for "of that Act" substitute "of the Taxes Act 1988",

(d) in paragraph (e)(ii) for the words from "a relevant amount" to "Schedule F" substitute "estate income under section 656(3) or 657(4) of the Income Tax (Trading and Other Income) Act 2005, so far as that income is treated under section 679 of that Act as paid from sums within section 680(3)(b) or (4) of that Act".

416 (1) Amend section 126 (pools payments for football ground improvements) as follows.

(2) In subsection (2)--

(a) for "person" substitute "company", and

(b) for "tax purposes" substitute "corporation tax purposes".

(3) In subsection (3) after "not" insert ", for corporation tax purposes,".

(4) In subsection (4) after "2001" insert "(general rule excluding contributions: income and corporation tax)".

Finance Act 1991 (c. 31)

417 The Finance Act 1991 is amended as follows.

418 (1) Amend section 121 (pools payments to support games etc.) as follows.

(2) In subsection (2)--

(a) for "person" substitute "company", and

(b) for "tax purposes" substitute "corporation tax purposes".

(3) In subsection (3) after "not" insert ", for corporation tax purposes,".

Social Security Contributions and Benefits Act 1992 (c. 4)

419 The Social Security Contributions and Benefits Act 1992 is amended as follows.

420 (1) Amend section 15 (Class 4 contributions recoverable under the Income Tax Acts) as follows.

(2) In subsection (1)--

(a) for "annual profits or gains" substitute "profits",

(b) omit the "and" at the end of paragraph (a),

(c) in paragraph (b) for "are profits or gains chargeable to income tax under Case I or Case II of Schedule D" substitute "are profits chargeable to income tax under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005", and

(d) at the end of that paragraph insert " and

(3) In subsections (2), (3) and (3A) omit "or gains" in each place where they occur.

(4) Omit subsection (4).

421 In section 16(1) (application of Income Tax Acts and destination of Class 4 contributions) for "Case I or II of Schedule D" substitute "Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 in respect of the profits of a trade, profession or vocation which is not carried on wholly outside the United Kingdom".

422 (1) Amend Schedule 2 (levy of Class 4 contributions with income tax) as follows.

(2) In paragraph 1 after paragraph (a) insert--

" (ab) "ITTOIA 2005" means the Income Tax (Trading and Other Income) Act 2005; " .

(3) In paragraph 2 for "profits or gains" to the end substitute " profits--

(a) which are the profits of any relevant trade, profession or vocation which is not carried on wholly outside the United Kingdom, and

(b) which are chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005. "

(4) In paragraphs 3(1), (4) and (5) and 4 omit "or gains" in each place where they occur.

(5) In paragraph 5--

(a) in paragraph (a) omit "or gains", and

(b) in paragraph (b)--

(i) for "section 59 of the 1988 Act" substitute "section 8 of ITTOIA 2005", and

(ii) omit "or gains".

(6) In paragraph 7 omit "or gains".

Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7)

423 The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.

424 (1) Amend section 15 (Class 4 contributions recoverable under the Income Tax Acts) as follows.

(2) In subsection (1)--

(a) for "annual profits or gains" substitute "profits",

(b) omit the "and" at the end of paragraph (a),

(d) at the end of that paragraph insert " and

(3) In subsections (2), (3) and (3A) omit "or gains" in each place where they occur.

(4) Omit subsection (4).

425 (1) Amend Schedule 2 (Schedule 2 to the Social Security Contributions and Benefits Act 1992: levy of Class 4 contributions with income tax) as follows.

(2) In paragraph 1 after paragraph (a) insert--

" (ab) "ITTOIA 2005" means the Income Tax (Trading and Other Income) Act 2005; " .

(3) In paragraph 2 for "profits or gains" to the end substitute " profits--

(a) which are the profits of any relevant trade, profession or vocation which is not carried on wholly outside the United Kingdom, and

(b) which are chargeable to income tax under Chapter 2 of Part 2 of ITTOIA 2005. "

(4) In paragraphs 3(1), (4) and (5) and 4 omit "or gains" in each place where they occur.

(5) In paragraph 5--

(a) in paragraph (a) omit "or gains", and

(b) in paragraph (b)--

(i) for "section 59 of the 1988 Act" substitute "section 8 of ITTOIA 2005", and

(ii) omit "or gains".

(6) In paragraph 7 omit "or gains".

Taxation of Chargeable Gains Act 1992 (c. 12)

426 The Taxation of Chargeable Gains Act 1992 is amended as follows.

427 In section 4(2) and (3) (rates of capital gains tax) for "Schedule F" substitute "dividend".

428 (1) Amend section 6 (rates of capital gains tax: special cases) as follows.

(2) In subsection (2)--

(a) in paragraph (a)--

(i) for "549(2) of the Taxes Act (gains under life policy or life annuity contract)" substitute "539 of ITTOIA 2005 (gains from contracts for life insurance etc)", and

(ii) for "excess" substitute "extra", and

(b) in paragraph (c), for "699(1) of that Act (income accruing before death)" substitute "669(1) and (2) of ITTOIA 2005 (reduction in residuary income: inheritance tax on accrued income)".

(3) In subsection (3)--

(a) for "547(1)(a) of the Taxes Act (gains from insurance policies etc)" substitute "465 of ITTOIA 2005 (gains from contracts for life insurance etc)",

(b) in paragraph (a) for "appropriate fraction within the meaning of section 550(3)" substitute "annual equivalent within the meaning of section 536(1) of that Act or (as the case may be) the total annual equivalent within the meaning of section 537", and

(i) for "550" substitute "535",

(ii) for "required by section 550(2)(b)" substitute "under section 536(1) of that Act or (as the case may be) section 537 of that Act", and

(iii) for "Schedule F" substitute "dividend".

429 In section 12(2) (foreign assets of person with foreign domicile) for the words from ", and subsections (6) to (9)" to the end substitute ", and sections 833 and 834 of ITTOIA 2005 shall apply as they would apply for the purposes of section 832 of that Act (remittance basis) if the gain were relevant foreign income."

430 In section 41(4) (restriction of losses by reference to capital allowances and renewals allowances)--

(a) in paragraph (b) after "Taxes Act" insert "or any deduction under section 315 of ITTOIA 2005", and

(b) in paragraph (c) after "Taxes Act" insert "or section 170 of ITTOIA 2005".

431 (1) Amend section 59 (partnerships) as follows.

(2) Renumber the existing text as subsection (1).

(3) After that subsection insert--

" (2) Subsection (3) applies if--

(a) a person resident in the United Kingdom ("the resident partner") is a member of a partnership which resides outside the United Kingdom or which carries on any trade, profession or business the control and management of which is situated outside the United Kingdom, and

(b) by virtue of any arrangements falling within section 788 of the Taxes Act ("the arrangements") any of the capital gains of the partnership are relieved from capital gains tax in the United Kingdom.

(3) The arrangements do not affect any liability to capital gains tax in respect of the resident partner's share of any capital gains of the partnership. "

432 In section 97(7) (supplementary provisions) for "section 660G(1) and (2) of the Taxes Act" substitute "section 620 of ITTOIA 2005".

433 (1) Amend section 117 (meaning of qualifying corporate bond) as follows.

(2) In subsection (2AA) for "relevant discounted security for the purposes of Schedule 13 to the Finance Act 1996" substitute "deeply discounted security for the purposes of Chapter 8 of Part 4 of ITTOIA 2005 (see section 430)".

(3) In subsection (6C) for "Schedule 13 to the Finance Act 1996 (relevant discounted securities)" substitute "Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see section 433)".

434 (1) Amend section 142 (capital gains on stock dividends) as follows.

(2) In subsection (1) for the words from "section 249" to "that section" substitute "section 410(2), (3) or (4) of ITTOIA 2005 applies".

(3) In subsection (3) for "the appropriate amount in cash (within the meaning of section 251(2) to (4) of the Taxes Act)" substitute "the cash equivalent of the share capital in accordance with section 412 of ITTOIA 2005".

435 After section 148 insert--

" 148A Futures and options involving guaranteed returns

(1) Profits and gains that are chargeable under Chapter 12 of Part 4 of ITTOIA 2005 are not to be brought into account for the purposes of capital gains tax, except where section 148B applies.

(2) Where--

(a) losses are sustained by a person from a disposal, and

(b) had profits or gains arisen to the person from the disposal, they would be chargeable under that Chapter,

the losses are not to be brought into account for the purposes of capital gains tax, except where section 148C applies.

148B Deemed disposals at a gain under section 564(4) of ITTOIA 2005

(1) This section deals with how this Act applies where profits or gains arising to a person from such a disposal as is referred to in section 564(4) of ITTOIA 2005 ("the deemed disposal") are chargeable to tax under Chapter 12 of Part 4 of that Act.

(2) Amounts taken into account or allowable as deductions in calculating the profits or gains are not to be excluded from any calculation made for the purposes of this Act as a result of section 37 or 39.

(3) For the purposes of this Act the amount of the consideration for the acquisition by the person of any asset the person disposes of by the future running to delivery or the exercise of the option is increased by the amount of the profits or gains chargeable under Chapter 12 of Part 4 of ITTOIA 2005.

(4) Any increase made as a result of subsection (3) is to be disregarded in calculating any indexation allowance.

(5) For the purposes of this Act the amount of the consideration for the acquisition of any asset acquired by the person by means of the future running to delivery or the exercise of the option is increased by the amount of the profits or gains chargeable under Chapter 12 of Part 4 of ITTOIA 2005.

(6) If the deemed disposal is a disposal of an option by the grantor, for the purposes of subsections (3) to (5) any determination--

(a) whether profits or gains arose to the grantor from that disposal, and

(b) of the amount of those profits or gains,

is to be made as if the deemed disposal and the disposal by which the option was granted were a single transaction.

(7) Section 565 of ITTOIA 2005 (interpretation of section 564 of that Act) applies for the purposes of this section as it applies for the purposes of section 564 of that Act.

148C Deemed disposals at a loss under section 564(4) of ITTOIA 2005

(1) This section deals with how this Act applies where a loss sustained by a person from such a disposal as is referred to in section 564(4) of ITTOIA 2005 ("the deemed disposal") is brought into account for the purposes of section 392 of ICTA (losses).

(2) Amounts taken into account or allowable as deductions in calculating that loss are not to be excluded from any calculation made for the purposes of this Act as a result of section 37 or 39.

(3) If the deemed disposal is a disposal of an option by the grantor, for the purposes of subsections (4) and (5) any determination--

(a) whether the grantor sustained a loss from that disposal, and

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