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

(The document as of February, 2008)

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

(b) of the amount of that loss,

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

(4) If the loss from the deemed disposal equals or is less than--

(a) the amount of the consideration for the acquisition of any asset acquired by the person sustaining the loss by means of the future running to delivery or the exercise of the option, or

(b) the amount of the consideration for the acquisition by that person of any asset the person disposes of by the future running to delivery or the exercise of the option,

for the purposes of this Act the amount of that consideration is reduced by the amount of the loss.

(5) If the loss from the deemed disposal exceeds the amount of that consideration--

(a) that consideration is reduced to nil, and

(b) an amount equal to the excess is treated for the purposes of this Act as a chargeable gain accruing to the person sustaining the loss on the appropriate occasion.

(6) In a case where the consideration mentioned in subsection (4)(a) is reduced under subsection (5)(a), the appropriate occasion is the first occasion after the acquisition mentioned in subsection (4)(a) when there is a disposal of the asset in question.

(7) In a case where the consideration mentioned in subsection (4)(b) is so reduced, the appropriate occasion is the disposal the person sustaining the loss makes by the future running to delivery or the exercise of the option, as the case may be.

(8) In subsection (6) the reference to a disposal of the asset in question includes a reference to anything that would be such a disposal but for section 116(10) or 127.

(9) In subsections (6) and (7) the references to a disposal include references to a disposal which, in accordance with this Act, would (apart from subsection (5)(b)) be a disposal on which neither a gain nor a loss accrues.

(10) Section 565 of ITTOIA 2005 (interpretation of section 564) applies for the purposes of this section as it applies for the purposes of section 564. "

436 In section 151 (personal equity plans) for subsections (2) and (2A) substitute--

" (2) The provisions of Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans), except section 694(1) and (2), shall apply in relation to regulations made under subsection (1) as they apply to regulations made under section 694(1), but with the substitution for any reference to income tax of a reference to capital gains tax. "

437 In section 151A(6) (venture capital trusts: reliefs) for the words from "in accordance" to the end of the subsection substitute "as references to shares not acquired within the limit in section 709(4) of ITTOIA 2005; and the question whether shares are acquired within that limit shall be determined as it is for the purposes of Chapter 5 of Part 6 of that Act."

438 After section 151B insert--

" 151C Strips: manipulation of price: associated payment giving rise to loss

(1) This section applies if--

(a) as a result of any scheme or arrangement which has an unallowable purpose, the circumstances are, or might have been, as mentioned in paragraph (a), (b) or (c) of section 449(2) of ITTOIA 2005,

(b) under the scheme or arrangement, a payment falls to be made otherwise than in respect of the acquisition or disposal of a strip, and

(2) The loss shall not be an allowable loss.

(3) For the purposes of this section a scheme or arrangement has an unallowable purpose if the main benefit, or one of the main benefits that might have been expected to result from, or from any provision of, the scheme or arrangement (apart from section 449 of ITTOIA 2005 and this section) is--

(a) the obtaining of a tax advantage by any person, or

(b) the accrual to any person of an allowable loss.

(4) The reference in subsection (1)(b) to the acquisition or disposal of a strip shall be construed as if it were in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see, in particular, sections 437 and 445 of that Act for the meaning of "disposal" and "acquisition" and section 444 of that Act for the meaning of "strip").

(5) In subsection (3)(a) "tax advantage" has the meaning given by section 709(1) of the Taxes Act.

(6) This section applies to losses accruing on or after 17th March 2004. "

439 In section 156(4) (assets of Class 1) after "Taxes Act" insert "or section 19 of ITTOIA 2005".

440 In section 198(5)(b) (replacement of business assets used in connection with oil fields) after "the Taxes Act" insert "or defined as "oil-related activities" in section 16(2) of ITTOIA 2005".

441 (1) Amend section 241 (furnished holiday lettings) as follows.

(2) For subsection (2) substitute--

" (2) For the purposes of this section as it applies to capital gains tax the "commercial letting of furnished holiday accommodation" has the same meaning as it has for the purposes of Chapter 6 of Part 3 of ITTOIA 2005.

For the purposes of this section as it applies to corporation tax in respect of chargeable gains the "commercial letting of furnished holiday accommodation" has the meaning given by section 504 of the Taxes Act. "

(3) In subsection (3)(a) for the words from "Schedule A business" to "Kingdom" substitute "UK property business (within the meaning of the Taxes Act), or any Schedule A business (within the meaning of that Act), which consists of, or so far as it consists of, the commercial letting of furnished holiday accommodation".

442 In section 251(8)(b) (general provisions concerning debts) for "relevant discounted security for the purposes of Schedule 13 to that Act if paragraph 3(2)(c) of that Schedule" substitute "deeply discounted security for the purposes of Chapter 8 of Part 4 of ITTOIA 2005 if section 432(2) of that Act".

443 In section 254(1)(c) (definition of "a qualifying loan" for relief for debts on qualifying corporate bonds) for "relevant" and "Schedule 13 to the Finance Act 1996" substitute respectively "deeply" and "Chapter 8 of Part 4 of ITTOIA 2005".

444 After section 261 insert--

" Know-how

261A Disposal of know-how as part of disposal of all or part of a trade

(1) This section applies if--

(a) a person carrying on a trade receives consideration for the disposal of know-how which has been used in the trade, and

(b) the know-how is disposed of as part of the disposal of all or part of the trade.

(2) If, as a result of section 194 of ITTOIA 2005, the consideration is treated for income tax purposes as--

(a) a capital receipt for goodwill (in relation to the person disposing of the know-how), or

(b) a capital payment for goodwill (in relation to the person acquiring the know-how),

the consideration is treated for capital gains tax purposes in the same way.

(3) This section has effect as if it were contained in Chapter 14 of Part 2 of ITTOIA 2005. "

445 (1) Amend section 271 (miscellaneous exemptions) as follows.

(2) In subsection (1)(f) for "section 322 of the Taxes Act" substitute "section 771 of ITTOIA 2005".

(3) In subsection (4)--

(a) for "bonus", in both places, substitute "interest",

(b) for "section 326 or 326A of the Taxes Act (certified contractual savings schemes and tax-exempt special savings accounts)" substitute "section 702 of ITTOIA 2005 (certified SAYE savings arrangements)",

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

(e) for "scheme", in the last place where it occurs, substitute "arrangement", and

(f) at end insert--

" In this subsection "certified SAYE savings arrangement" has the meaning given by section 703 of ITTOIA 2005. "

446 In section 286(3) (connected persons: interpretation) for "Chapter 1A of Part XV of the Taxes Act (see section 660G(1) and (2) of that Act)" substitute "Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)".

447 (1) Amend section 288 (interpretation) as follows.

(2) In subsection (1) after the definition of "ITEPA 2003" insert--

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

(3) After subsection (7) insert--

" (7A) In the application of this Act to Scotland "surrender" includes renunciation. "

448 In Schedule A1 (application of taper relief), in paragraph 17(6), for "section 660G(1) and (2) of the Taxes Act" substitute "section 620 of ITTOIA 2005".

449 In Schedule 1 (application of exempt amount and reporting limits in cases involving settled property), in paragraph 2(7), for "section 660G(1) and (2) of the Taxes Act" substitute "section 620 of ITTOIA 2005".

450 In paragraph 13(7)(h) of Schedule 5B (enterprise investment scheme: re-investment)--

(a) in sub-paragraph (i) after "trade or profession" insert "carried on wholly or partly in the United Kingdom", and

(b) in sub-paragraph (ii) for the words from "in computing" to the end substitute "in calculating for tax purposes the profits of that trade or profession".

451 (1) Amend Schedule 8 (leases) as follows.

(2) In paragraph 5--

(a) in sub-paragraph (1) after "that Act)" insert "or by virtue of any of sections 277 to 281 of ITTOIA 2005 as a receipt of a UK property business (within the meaning of that Act)",

(b) in sub-paragraph (2) after "that Act)" insert "or by virtue of any of sections 277 to 281 of ITTOIA 2005 as a receipt of a UK property business (within the meaning of that Act)",

(c) in sub-paragraph (3) after "that Act)" insert "or by virtue of section 284 or 285 of ITTOIA 2005 (sale of land with right to reconveyance or leaseback) as a receipt of a UK property business (within the meaning of that Act)," and

(d) for sub-paragraph (5) substitute--

" (5) References in sub-paragraphs (1) and (2) above to a premium include references to--

(a) a premium deemed to have been received under subsection (4) or (5) of section 34 of the Taxes Act (which correspond to paragraph 3(2) and (3) of this Schedule),

(b) a sum that becomes payable by the tenant under the terms subject to which a lease is granted in lieu of the whole or a part of the rent for any period,

(c) a sum that becomes payable by the tenant under the terms subject to which a lease is granted as consideration for the surrender of the lease, and

(d) a sum that becomes payable by the tenant (otherwise than by way of rent) as consideration for the variation or waiver of any of the terms of a lease. "

(3) In paragraph 6--

(a) for sub-paragraph (1) substitute--

" (1) If--

(a) under section 37(4) of the Taxes Act (allowance where, by the grant of a sublease, a lessee has converted a capital amount into a right to income) a person is to be treated as paying additional rent in consequence of having granted a sublease, or

(b) under section 292 of ITTOIA 2005 a person is to be treated as incurring expenses in consequence of having granted a sublease,

the amount of any loss accruing to the person on the disposal by way of the grant of the sublease shall be reduced by the total amount of rent which the person is thereby treated as paying, or the total amount of expenses which the person is thereby treated as incurring, over the term of the sublease (and without regard to whether relief is thereby effectively given over the term of the sublease), but not so as to convert the loss into a gain, or to increase any gain. " ,

(b) in sub-paragraph (2) at the end insert "or by virtue of section 282 of ITTOIA 2005 (assignments for profit of lease granted at undervalue) as a receipt of a UK property business (within the meaning of that Act)", and

(c) in sub-paragraph (3) after "that paragraph" insert "or under section 301 or 302 of ITTOIA 2005 on a claim under that section,".

(4) For paragraph 7 substitute--

" 7 If--

(a) under section 34(2) and (3) of the Taxes Act any amount is brought into account by virtue of section 34(2) and (3) of the Taxes Act as a receipt of a Schedule A business (within the meaning of that Act) which is or is treated as carried on by any person, or

(b) under section 277 of ITTOIA 2005 any amount is brought into account by virtue of section 278 of that Act as a receipt of a UK property business (within the meaning of that Act) which is carried on by any person,

that person shall be treated for the purposes of the computation of any gain accruing to him as having incurred at the time the lease was granted expenditure of that amount (in addition to any other expenditure) attributable to the asset under section 38(1)(b). "

(5) In paragraph 7A after "Schedule A business" insert "or UK property business".

Finance (No. 2) Act 1992 (c. 48)

452 The Finance (No. 2) Act 1992 is amended as follows.

453 (1) Amend section 40A (revenue nature of expenditure on master versions of films) as follows.

(2) In subsection (1)--

(a) for "the purposes of the Tax Acts" substitute "corporation tax purposes", and

(b) after "section 40D below" insert "or section 143 of ITTOIA 2005 (corresponding income tax provision)".

(3) In subsection (2) for "the purposes of the Tax Acts" substitute "corporation tax purposes".

(4) In the definition of "expenditure of a revenue nature" in subsection (4)(a) after "chargeable to" insert "corporation".

454 (1) Amend section 40B (allocation of expenditure to periods) as follows.

(2) In subsection (1) for "person" substitute "company within the charge to corporation tax".

(3) In subsection (2) after "section 40D below" insert "or section 143 of ITTOIA 2005".

(4) In subsection (3)(b) for "up for a period--" to the end substitute "up for a period, the accounting period of the company."

(5) In subsection (6) for "made--" to the end substitute "made not later than two years after the end of the relevant period to which the claim relates."

(6) In subsection (7)(b) at the end insert "or section 135 of ITTOIA 2005 (income tax provision corresponding to this section)".

455 In section 40C(1) (cases where section 40B does not apply) after "section 42 below" insert "or under any of sections 138 to 140 of ITTOIA 2005 (corresponding income tax provisions)".

456 (1) Amend section 40D (election for sections 40A and 40B not to apply) as follows.

(2) In subsection (1)(a) after "this section" insert "or under section 143 of ITTOIA 2005".

(3) In subsection (2)(a)(i) for "a person who carries" substitute "a company within the charge to corporation tax carrying".

(4) In subsection (4) for "given--" to the end substitute "given not later than two years after the end of the relevant period in which the master version of the film is completed."

(5) In subsection (7) at the end insert "or any of that expenditure is deducted under any of sections 137 to 140 of ITTOIA 2005 (corresponding income tax provisions)".

457 (1) Amend section 41 (relief for preliminary expenditure) as follows.

(2) In subsection (1)--

(a) for "tax purposes", in the first place where it occurs, substitute "the purposes of corporation tax",

(b) for "a person" substitute "a company within the charge to corporation tax",

(d) for "him" substitute "it", and

(e) after "section 40D above" insert "or section 143 of ITTOIA 2005".

(3) In subsection (6) for "made--" to the end substitute "made not later than two years after the end of the relevant period in which the expenditure to which it relates becomes payable."

(4) In subsection (7)--

(a) after "this section" insert "or section 137 of ITTOIA 2005 (corresponding income tax provision)", and

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

458 (1) Amend section 42 (relief for production or acquisition expenditure) as follows.

(2) In subsection (1)--

(a) for "tax purposes" substitute "the purposes of corporation tax",

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

(d) after "section 40B above" insert "or section 135 of ITTOIA 2005", and

(e) after "section 40D above" insert "or section 143 of ITTOIA 2005".

(3) In subsection (4)--

(a) in paragraph (b) after "section 41 above" insert "or section 137 of ITTOIA 2005",

(b) in paragraph (c) after "this section" insert "or any provision of Chapter 9 of Part 2 of ITTOIA 2005".

(4) In subsection (6) for "shall be made--" to the end substitute " --

(a) shall be made not later than two years after the end of the relevant period to which the claim relates, and

(b) shall be irrevocable. "

(5) In subsection (7) after "section 40B above" insert "or section 135 of ITTOIA 2005".

459 In section 43(1) after the definition of "expenditure of a revenue nature" insert--

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

460 Omit section 59 (furnished accommodation).

461 Omit Schedule 10 (furnished accommodation).

Finance Act 1993 (c. 34)

462 The Finance Act 1993 is amended as follows.

463 In section 112(7) (employers' pension contributions) in the definition of "basis period" after "Schedule D" insert "or under Part 2 of the Income Tax (Trading and Other Income) Act 2005".

464 (1) Amend section 171 (Lloyd's underwriters etc: taxation of income tax profits) as follows.

(2) In subsection (2) for paragraphs (a) and (b) substitute--

" (a) the aggregate of those profits shall be chargeable to tax under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005 as the profits of a trade carried on in the United Kingdom; and

(b) accordingly, no part of those profits shall be treated as relevant foreign income, or be charged to tax under any other Part of that Act or any Part of the Income Tax (Earnings and Pensions) Act 2003; " .

(3) In subsection (2B) for "section 231(1) of the Taxes Act 1988" substitute "section 397(1) of the Income Tax (Trading and Other Income) Act 2005".

465 In paragraph 13(4) of Schedule 19 (Lloyd's underwriters etc: repayment of tax deducted etc. from investment income) after "others)" insert "and section 749 of the Income Tax (Trading and Other Income) Act 2005 (exemption of interest paid under repayment supplements) so far as it relates to interest paid under section 824 of the Taxes Act 1988".

466 (1) Amend Schedule 20A (Lloyd's underwriters: conversion to limited liability underwriting) as follows.

(2) In paragraph 2(2) for "Schedule D" substitute "Part 2 of the Income Tax (Trading and Other Income) Act 2005".

(3) In paragraph 7(2) for "Schedule D" substitute "Part 2 of the Income Tax (Trading and Other Income) Act 2005".

Pension Schemes Act 1993 (c. 48)

467 The Pension Schemes Act 1993 is amended as follows.

468 In section 158(4) (disclosure of information between government departments etc.)--

(a) after "carrying on or have carried on" insert "wholly or partly in the United Kingdom", and

(b) after "chargeable to tax under" insert "Part 2 of the Income Tax (Trading and Other Income) Act 2005 or".

Pension Schemes (Northern Ireland) Act 1993 (c. 49)

469 The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.

470 In section 154(4) (disclosure of information between government departments etc.)--

(a) after "carrying on or have carried on" insert "wholly or partly in the United Kingdom", and

(b) after "chargeable to tax under" insert "Part 2 of the Income Tax (Trading and Other Income) Act 2005 or".

Finance Act 1994 (c. 9)

471 The Finance Act 1994 is amended as follows.

472 (1) Amend Schedule 20 (changes for facilitating self-assessment: transitional provisions and savings) as follows.

(2) Omit paragraphs 1 to 10.

(3) In paragraph 11--

(a) in sub-paragraph (1) omit "Subject to paragraph 12(2) below,",

(b) in sub-paragraph (3) for "under Case VI of Schedule D" substitute "to income tax", and

(4) Omit paragraphs 12 and 13.

473 In paragraph 26 of Schedule 24 (vesting in successor company of the British Railways Board of liability for loans to that Board not to affect directions by the Treasury under section 581 of ICTA) for "section 581 of the Taxes Act 1988" substitute "section 755 of the Income Tax (Trading and Other Income) Act 2005".

Coal Industry Act 1994 (c. 21)

474 In paragraph 17(1) of Schedule 4 to the Coal Industry Act 1994 (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 1995 (c. 4)

475 The Finance Act 1995 is amended as follows.

476 Omit section 56 (foreign life policies etc).

477 In section 73(1)(a) (venture capital trusts: regulations) after "1992" insert "or Chapter 5 of Part 6 of the Income Tax (Trading and Other Income) Act 2005".

478 In section 123 (prevention of exploitation of transitional provisions) for "2(2) and (4), 4(2) and 6(2)(a) and (4) of Schedule 20 to the Finance Act 1994" substitute "52 and 53 of Schedule 2 to the Income Tax (Trading and Other Income) Act 2005".

479 (1) Amend section 126 (UK representatives of non-residents) as follows.

(2) In subsections (6) and (7) for "the deemed trade or profession from which the non-resident's share in the partnership's profits or losses is treated for the purposes of section 111 or 114 of the Taxes Act 1988 as deriving" substitute "the notional or deemed trade or profession".

(3) After subsection (7) insert--

" (7A) In subsections (6) and (7) "the notional or deemed trade or profession" means--

(a) the notional trade from which the non-resident's share in the partnership's profits or losses is treated for the purposes of section 852 of the Income Tax (Trading and Other Income) Act 2005 as deriving, or

(b) the deemed trade or profession from which that share is treated for the purposes of section 114 of the Taxes Act as deriving. "

480 In section 128(3) (limit on income chargeable on non-residents: income tax) for paragraphs (a) and (b) substitute--

" (a) it--

(i) is chargeable to income tax under Chapter 2, 7, 8, 10 or 11 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (interest, purchased life annuity payments, profits from deeply discounted securities, distributions from unauthorised unit trusts and transactions in deposits), section 579 of that Act so far as it relates to annual payments (royalties etc. from intellectual property), Chapter 4 of Part 5 of that Act so far as it relates to annual payments (certain telecommunication rights: non-trading income) or Chapter 7 of Part 5 of that Act (annual payments not otherwise charged); and

(ii) is not relevant foreign income;

(aa) it is chargeable to tax under Chapter 3 of Part 4 of that Act (dividends etc. from UK resident companies etc.); " .

481 (1) Amend section 154 (short rotation coppice) as follows.

(2) In subsection (1) at the beginning insert "Subject to subsection (1A),".

(3) After subsection (1) insert--

" (1A) Subsection (1) does not apply for the purposes of the Income Tax (Trading and Other Income) Act 2005 (in relation to which section 876(3) and (4) makes corresponding provision). "

482 In section 157(7) (certificates of tax deposit) for "Case III of Schedule D" substitute "Chapter 2 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (interest)".

483 In paragraph 3(4) of Schedule 18 (deceased persons' estates) after "Schedule)" insert "and sections 652, 660 and 665 of the Income Tax (Trading and Other Income) Act 2005".

484 (1) Amend Schedule 22 (prevention of exploitation of transitional provisions to facilitate self-assessment) as follows.

(2) Omit paragraph 2.

(3) In paragraph 3--

(a) in sub-paragraph (1)(a) for "paragraph 2(4) of Schedule 20 to the Finance Act 1994" substitute "paragraph 52 of Schedule 2 to the Income Tax (Trading and Other Income) Act 2005 ("ITTOIA 2005")",

(b) in sub-paragraph (2) for "the said paragraph 2(4)" substitute "paragraph 52 of that Schedule",

(c) in sub-paragraph (4), in the definition of "the transitional overlap period", after "1996-97" insert "(determined in accordance with paragraph 1 of Schedule 20 to the Finance Act 1994 despite the repeal by ITTOIA 2005 of that paragraph)" and after "that year" insert "(as so determined)", and

(d) in sub-paragraph (4), in the definition of "the transitional overlap profit", for "the said paragraph 2(4)" substitute "paragraph 52(2) of Schedule 2 to ITTOIA 2005".

(4) Omit paragraph 4.

(5) In paragraph 5--

(a) in sub-paragraph (1) for "paragraph 2(4) of Schedule 20 to the Finance Act 1994" substitute "paragraph 52 of Schedule 2 to ITTOIA 2005",

(b) in sub-paragraph (3) for "the said paragraph 2(4)" substitute "paragraph 52 of Schedule 2 to ITTOIA 2005", and

(c) in sub-paragraph (5), in the definition of "the transitional overlap profit", for "the said paragraph 2(4)" substitute "paragraph 52(2) of Schedule 2 to ITTOIA 2005".

(6) Omit paragraph 6.

(7) In paragraph 7--

(a) in sub-paragraph (1) for "paragraph 6(4) of Schedule 20 to the Finance Act 1994" substitute "paragraph 53 of Schedule 2 to ITTOIA 2005",

(b) in sub-paragraph (2) for "the said paragraph 6(4)" substitute "paragraph 53 of that Schedule",

(d) in sub-paragraph (4), in the definition of "the transitional overlap profit", for "the said paragraph 6(4)" substitute "paragraph 53(3) of Schedule 2 to ITTOIA 2005".

(8) Omit paragraphs 8 to 10.

(9) In paragraph 14(1) for "paragraphs 1, 3, 6 and 7" substitute "paragraphs 1, 3 and 7".

(10) In paragraph 15(1) for "paragraphs 1, 3, 6 and 7" substitute "paragraphs 1, 3 and 7".

(11) Omit paragraphs 18 to 20.

(12) In the heading for "SCHEDULE 20 TO FINANCE ACT 1994" substitute "SCHEDULE 2 TO ITTOIA 2005 (SO FAR AS RELATING TO OVERLAP PROFIT)".

Finance Act 1996 (c. 8)

485 The Finance Act 1996 is amended as follows.

486 In section 92(1) (convertible securities etc: creditor relationships) for paragraph (d) substitute--

" (d) the asset is not a deeply discounted security for the purposes of Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (see section 430) or an excluded indexed security within the meaning of section 433 of that Act; " .

487 Omit section 102 (discounted securities: income tax provisions).

488 (1) Amend section 154 (FOTRA securities) as follows.

(2) In subsection (2)--

(a) for "(3) to" substitute "(3) and", and

(b) at the end insert--

" This does not apply to any charge to income tax (but see sections 714 and 715 of the Income Tax (Trading and Other Income) Act 2005 for exemptions from income tax charges). "

(3) Omit subsection (4).

(4) In subsection (6) omit "income tax or".

489 (1) Amend Schedule 9 (loan provisions: special computational provisions) as follows.

(2) In the italic cross-heading before paragraph 17 for "Discounted" substitute "Deeply discounted".

(3) In paragraph 17(1)(a) for "relevant" substitute "deeply".

(4) For paragraph 17(4) substitute--

" (4) In this paragraph "deeply discounted security" has the same meaning as in Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (see section 430); and the provisions of that Chapter shall apply for the purposes of this paragraph for determining the difference between the issue price of a security and the amount payable on redemption as they apply for the purposes of section 430 of that Act. "

(5) In paragraph 17(8) and (8A) for "relevant" substitute "deeply".

(6) In the italic cross-heading before paragraph 18 for "Discounted" substitute "Deeply discounted".

(7) In paragraph 18(1)(a), (2C) and (2D) for "relevant" substitute "deeply".

(8) For paragraph 18(3) substitute--

" (3) In this paragraph "deeply discounted security" has the same meaning as in Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (see section 430); and the provisions of that Chapter shall apply for the purposes of this paragraph for determining the difference between the issue price of a security and the amount payable on redemption as they apply for the purposes of section 430 of that Act. "

(9) In paragraph 19(13) for "relevant" substitute "deeply".

490 Omit Schedule 13 (discounted securities: income tax provisions).

491 (1) Amend Schedule 15 (loan relationships: savings and transitional provisions) as follows.

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