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

(The document as of February, 2008)

-- Back --

Page 48

Pages: P.1 | P.2 | P.3 | P.4 | P.5 | P.6 | P.7 | P.8 | P.9 | P.10 | P.11 | P.12 | P.13 | P.14 | P.15 | P.16 | P.17 | P.18 | P.19 | P.20 | P.21 | P.22 | P.23 | P.24 | P.25 | P.26 | P.27 | P.28 | P.29 | P.30 | P.31 | P.32 | P.33 | P.34 | P.35 | P.36 | P.37 | P.38 | P.39 | P.40 | P.41 | P.42 | P.43 | P.44 | P.45 | P.46 | P.47 | P.48 | P.49 | P.50 | P.51 | P.52 | P.53 | P.54 | P.55 | P.56 | P.57

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

(2) In paragraph 26(2) for the definition of "relevant discounted security" substitute--

" "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) " .

(3) In paragraph 28(b) for "Schedule 13 to this Act" and "relevant" substitute respectively "Chapter 8 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (profits from deeply discounted securities)" and "deeply".

(4) In paragraph 30(1)(c) for "relevant" substitute "deeply".

Finance Act 1997 (c. 16)

492 The Finance Act 1997 is amended as follows.

493 In section 79 (payments under certain life insurance policies)--

(a) in subsection (1)(a) for "the purposes of the Tax Acts" substitute "corporation tax purposes", and

(b) in subsection (3) after "Tax Acts" insert "other than the Income Tax (Trading and Other Income) Act 2005".

494 (1) Amend Schedule 12 (leasing arrangements: finance leases and loans) as follows.

(2) In paragraph 11--

(a) in sub-paragraph (9) after "1992" insert "or section 135, 138, 139 or 140 of ITTOIA 2005",

(b) in sub-paragraph (10)(b) after "1992" insert "or section 134(2) of ITTOIA 2005",

(d) in sub-paragraph (11)(b) for "of that Act" substitute "of the Taxes Act 1988 or section 165 or 168 of ITTOIA 2005".

(3) In paragraph 30--

(a) in sub-paragraph (1) before the definition of "lease" insert--

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

(b) in sub-paragraph (2)(b) for "Case I or II of Schedule D" substitute "Part 2 of ITTOIA 2005".

Finance Act (No.2) 1997 (c. 58)

495 The Finance (No.2) Act 1997 is amended as follows.

496 In section 30 (tax credits)--

(a) in subsection (9) after "above" insert "and rewritten in section 397(3) of the Income Tax (Trading and Other Income) Act 2005", and

(b) in subsection (10)(a) for "section 231 of the Taxes Act 1988" substitute "section 397 of the Income Tax (Trading and Other Income) Act 2005".

497 In section 37(7) (interest to be paid gross) for "sections 722A(5) and 730C(9), and in paragraph 3A(2)(a) of Schedule 23A, (which all" substitute "section 722A(5), and in paragraph 3A(2)(a) of Schedule 23A, (which".

498 In section 48(1) (relief for expenditure on production or acquisition of films) after ", section 41 above or this section" insert "or by virtue of any provision of Chapter 9 of Part 2 of ITTOIA 2005".

Finance Act 1998 (c. 39)

499 The Finance Act 1998 is amended as follows.

500 In section 42 (computation of profits of trade, profession or vocation)--

(a) omit subsection (4), and

(b) in subsection (5) for "Tax Acts" substitute "Corporation Tax Acts".

501 Omit section 43 (barristers and advocates in early years of practice).

502 (1) Amend section 46 (minor and consequential provisions about computations) as follows.

(2) In subsection (1) for "Tax Acts" substitute "Corporation Tax Acts".

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

503 In section 76(3) (power to make regulations for non-UK residents who have made investments under individual investment plans to be treated as UK resident for the purpose of tax credits) for "section 333 of the Taxes Act 1988" substitute "Chapter 3 of Part 6 of the Income Tax (Trading and Other Income) Act 2005".

504 In section 123(7)--

(a) for "both" substitute "more",

(b) in paragraph (a) for the words from "(regulations" onwards substitute "(investment plan regulations)", and

(c) Chapter 3 of Part 6 of the Income Tax (Trading and Other Income) Act 2005 (income from individual investment plans), " .

Finance Act 1999 (c. 16)

505 The Finance Act 1999 is amended as follows.

506 In section 63(1) (treatment of transfer fees under existing contracts) at the end insert "or, as the case may be, under Chapter 2 of Part 2 of the Income Tax (Trading and Other Income) Act 2005".

507 (1) Amend section 65 (relevant discounted securities) as follows.

(2) Omit subsections (1) to (6).

(3) In subsection (8) for "subsections (1) to (7) above have" substitute "subsection (7) above has".

(4) In subsections (9) and (10) for "subsections (1) to (7)", "have effect" and "do not affect" substitute "subsection (7)", "has effect" and "does not affect" respectively.

(5) In subsections (11) and (12) for "subsections (1) to (7) above have" substitute "subsection (7) above has".

508 In section 85(7)(b) (advance pricing agreements etc.) after "Taxes Act 1988" insert "or section 16(1) of the Income Tax (Trading and Other Income) Act 2005".

509 (1) Amend Schedule 6 (tax treatment of receipts by way of reverse premium) as follows.

(2) In paragraph 1(1) (application of Schedule)--

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

(b) for "him or a person connected with him" substitute "the company or a person connected with the company", and

(c) for "the person receiving the payment or other benefit, or as the case may be the person connected with him" substitute "the company receiving the payment or other benefit, or as the case may be the person connected with the company".

(3) In paragraph 2 (tax treatment of receipts by way of reverse premium)--

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

(b) for "the person receiving the reverse premium", in both places where it occurs, substitute "the company receiving the reverse premium",

(d) for "tax" substitute "corporation tax", and

(e) for "him" substitute "the company".

(4) In paragraph 3(3) (arrangements not at arm's length)--

(a) for "the person receiving" substitute "the company receiving",

(b) for "by him but which he" substitute "by the company but which it", and

(5) Omit paragraph 6 (exclusion of transaction relating to individual's only or main residence) and the italic cross-heading before it.

Commonwealth Development Corporation Act 1999 (c. 20)

510 (1) Amend paragraph 6 of Schedule 3 to the Commonwealth Development Corporation Act 1999 (distributions by the Commonwealth Development Corporation) as follows.

(2) In sub-paragraph (2)(b) after "section 231 of that Act" insert "or section 397 of the Income Tax (Trading and Other Income) Act 2005 (tax credits for qualifying distributions: UK residents and eligible non-UK residents)".

(3) In sub-paragraph (3) for "corporation tax and income tax" substitute "income tax as dividends of a non-UK resident company chargeable under Chapter 4 of Part 4 of the Income Tax (Trading and Other Income) Act 2005 (and accordingly as relevant foreign income for the purposes of that Act), and for the purposes of corporation tax".

(4) Omit sub-paragraph (4).

Finance Act 2000 (c. 17)

511 The Finance Act 2000 is amended as follows.

512 (1) Amend section 44 (gifts to charity from certain trusts) as follows.

(2) Omit subsections (1) to (3).

(3) In subsection (4)--

(a) for "UK trust" substitute "trust the trustees of which are resident in the United Kingdom (a "UK trust")", and

(b) for "subsection (1) above" substitute "section 628(1) or 630(1) of ITTOIA 2005".

(4) For subsection (5) substitute--

" (5) In this section--

"qualifying income" has the same meaning as in section 628 of ITTOIA 2005; and
"resident", in relation to the trustees of a trust, shall be construed in accordance with section 110 of the Finance Act 1989. "

513 Omit section 45 (loans to charities).

514 (1) Amend section 46 (exemption for small trades etc.) as follows.

(2) In subsection (1) for the words from the beginning to "shall be granted," substitute--

" (1) Subject to subsections (2) and (2A) below, exemption--

(a) from income tax--

(i) under Part 2 of ITTOIA 2005 in respect of a trade carried on wholly or partly in the United Kingdom, or

(ii) under or by virtue of any provision to which section 836B of the Taxes Act 1988 applies, or

(b) from corporation tax under Case I or VI of Schedule D,

shall be granted " .

(3) For subsection (2) substitute--

" (2) Exemption shall not be granted under subsection (1) above in respect of income which is chargeable to--

(a) income tax under or by virtue of any provision to which section 836B of the Taxes Act 1988 applies, or

(b) corporation tax under Case VI of Schedule D,

by virtue of any of the provisions mentioned in subsection (2A).

(2A) The provisions are--

(a) sections 214, 547(1)(b), 703, 776, 788, 790 or 804 of the Taxes Act 1988;

(b) paragraph 52(4) of Schedule 18 to the Finance Act 1998;

(d) any other enactment specified in an order made by the Treasury. "

(4) In subsection (6), in the definition of "income"--

(a) after "means" insert " --

(a) any profits or other income or gains --

(i) which are chargeable to income tax under Part 2 of ITTOIA 2005 in respect of a trade carried on wholly or partly in the United Kingdom, or

(ii) which are chargeable to income tax under or by virtue of any provision to which section 836B of the Taxes Act 1988 applies,

and which (in either case) are not, apart from this section, exempted from income tax chargeable under or by virtue of that Part or provision, or

(b) " ,

(b) after "chargeable to" insert "corporation".

515 Omit section 84 (exemption of payments under New Deal 50plus).

516 Omit section 85 (exemption of payments under Employment Zones programmes).

517 Omit section 87 (treatment of certain telecommunication rights).

518 In section 143(2) (power to provide incentives to use electronic communications) for "purposes of the Tax Acts" substitute "corporation tax purposes".

519 In section 155 (interpretation) at the end insert "and "ITTOIA 2005" means the Income Tax (Trading and Other Income) Act 2005".

520 In Schedule 12 (provision of services through an intermediary), in paragraphs 17(1) and 18(1), for "tax purposes" substitute "corporation tax purposes".

521 In Schedule 15 (the corporate venturing scheme), in paragraph 99(3), for "Chapter 1A of Part XV of the Taxes Act 1988 (see section 660G(1) and (2))" substitute "Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)".

522 In Schedule 22 (tonnage tax), in paragraph 144(3), for "Chapter 1A of Part XV of the Taxes Act 1988 (see section 660G(1) and (2) of that Act)" substitute "Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)".

523 Omit Schedule 23 (treatment of certain telecommunication rights).

Capital Allowances Act 2001 (c. 2)

524 The Capital Allowances Act 2001 is amended as follows.

525 In section 4 (capital expenditure) for subsection (5) substitute--

" (5) Subsection (4) does not apply to any expenditure or sum in the case of which a deduction of income tax falls or may fall to be so made as a result of section 595(2) of ITTOIA 2005 or section 524(3)(b) of ICTA (receipts from sale of patent rights by person not resident in the UK: income and corporation tax). "

526 (1) Amend section 15 (qualifying activities) as follows.

(2) In subsection (1)--

(a) in paragraph (b) for "Schedule A" substitute "property",

(b) in paragraph (f) after "listed in" insert "section 12(4) of ITTOIA 2005 or".

(3) In subsection (3)(a) for "Schedule A" substitute "property".

527 (1) Amend section 16 (ordinary Schedule A businesses) as follows.

(2) For ""ordinary Schedule A" substitute ""ordinary property".

(3) For "means a Schedule A business" substitute "means a UK property business, or a Schedule A business,".

(4) In the side-note for "Schedule A" substitute "property".

528 (1) Amend section 17 (furnished holiday lettings businesses) as follows.

(2) In subsection (1) for "a Schedule A business in so far" to the end substitute "a UK property business, or a Schedule A business, which consists in, or so far as it consists in, the commercial letting of furnished holiday accommodation".

(3) For subsection (3) substitute--

" (3) For the purposes of income 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 corporation tax the "commercial letting of furnished holiday accommodation" has the meaning given by section 504 of ICTA. "

529 In section 20(1) (employments and offices) for "section 314 of ICTA" substitute "section 15 of ITTOIA 2005".

530 In section 23(2) (expenditure unaffected by sections 21 and 22) before "40D" insert "143 of ITTOIA 2005 or section".

531 In section 28(2) (thermal insulation of industrial buildings) for "Schedule A" substitute "property".

532 In section 33(8)(b) (personal security) for "Schedule A" substitute "property".

533 In section 35(1)(a) (expenditure on plant or machinery for use in dwelling-house not qualifying expenditure in certain cases) for "Schedule A" substitute "property".

534 In section 38(a) (production of animals etc)--

(a) after "to which" insert "section 30 or Chapter 8 of Part 2 of ITTOIA 2005 or", and

(b) after "purposes of" insert "Part 2 of ITTOIA 2005 or",

535 (1) Amend section 63 (cases in which disposal value is nil) as follows.

(2) In subsection (2)(c) after "within the meaning of" insert "section 110 of ITTOIA 2005 or".

(3) In subsection (3)(b) for "Schedule A" substitute "property".

(4) In subsection (4) after "to be read with" insert "section 109 of ITTOIA 2005 and".

536 (1) Amend section 106 (the designated period) as follows.

(2) In subsection (3)(b) for the words from "the qualifying activity" to the end substitute " --

(i) there was a change in the persons carrying on the qualifying activity which did not involve all of the persons carrying on that activity before the change permanently ceasing to carry it on, or

(ii) the qualifying activity carried on by the person making the disposal was treated as continuing under section 114(1) of ICTA (effect of partnership changes involving companies). "

(3) Omit subsection (4).

537 (1) Amend section 108 (effect of disposal to connected person on overseas leasing pool) as follows.

(2) In subsection (1) for paragraph (b) and the word "and" at the end of that paragraph substitute--

" (b) the disposal is one on the occasion of which--

(i) there was a change in the persons carrying on the qualifying activity which involved all of the persons carrying on that activity before the change permanently ceasing to carry it on, or

(ii) the qualifying activity carried on by the person making the disposal was not treated as continuing under section 114(1) or 343(2) of ICTA (effect of partnership changes involving companies or of company reconstructions), and " .

(3) Omit subsection (4).

538 (1) Amend section 112 (excess allowances: connected persons) as follows.

(2) In subsection (1) for paragraph (b) and the word "and" at the end of that paragraph substitute--

" (b) the transaction (or each of the transactions) is one--

(i) which involved all of the persons carrying on the qualifying activity before the transaction permanently ceasing to carry it on, or

(ii) in respect of which the qualifying activity carried on by the person making the disposal was not treated as continuing under section 114(1) or 343(2) of ICTA (effect of partnership changes involving companies or of company reconstructions), and " .

(3) Omit subsection (5).

539 (1) Amend section 115 (prohibited allowances: connected persons) as follows.

(2) In subsection (1) for paragraph (c) and the word "and" at the end of that paragraph substitute--

" (c) the transaction (or each of the transactions) is one--

(i) which involved all of the persons carrying on the qualifying activity before the transaction permanently ceasing to carry it on, or

(3) Omit subsection (3).

540 (1) Amend section 122 (short-term leasing by buyer, lessee etc) as follows.

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

" (c) a person who acquired the plant or machinery from X as a result of a disposal on the occasion of which, or two or more disposals on the occasion of each of which--

(i) there was a change in the persons carrying on the qualifying activity which did not involve all of the persons carrying on that activity before the change permanently ceasing to carry it on, or

(ii) the qualifying activity carried on by the person making the disposal was treated as continuing under section 114(1) of ICTA (effect of partnership changes involving companies); " .

(3) Omit subsection (3).

541 (1) Amend section 125 (other qualifying purposes) as follows.

(2) In subsection (3) for paragraph (c) substitute--

" (c) a person who acquired the plant or machinery from X as a result of a disposal on the occasion of which, or two or more disposals on the occasion of each of which--

(i) there was a change in the persons carrying on the qualifying activity which did not involve all of the persons carrying on that activity before the change permanently ceasing to carry it on, or

(ii) the qualifying activity carried on by the person making the disposal was treated as continuing under section 114(1) of ICTA (effect of partnership changes involving companies). "

(3) Omit subsection (5).

542 In section 154(3) (further registration requirement) for paragraph (b) substitute--

" (b) the only changes in the persons carrying it on between the time that B does so and the time that A or a person connected with A does so are changes--

(i) which do not involve all of the persons carrying it on before the changes permanently ceasing to carry it on, or

(ii) in respect of which the qualifying activity is treated as continuing under section 343(2) of ICTA. "

543 In section 155(1) (changes in the persons carrying on qualifying activity) for paragraph (b) substitute--

" (b) the only changes in the persons carrying on the qualifying activity since the shipowner carried it on are changes--

(i) which do not involve all of the persons carrying it on before the changes permanently ceasing to carry it on, or

(ii) in respect of which the qualifying activity is treated as continuing under section 343(2) of ICTA. "

544 In section 156 (connected persons) for subsection (2) substitute--

" (2) The condition is that the only changes in the persons carrying on the qualifying activity since A carried it on are changes--

(a) which do not involve all of the persons carrying it on before the changes permanently ceasing to carry it on, or

(b) in respect of which the qualifying activity is treated as continuing under section 343(2) of ICTA. "

545 In section 162(2) (ring fence trade a separate qualifying activity)--

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

(b) in paragraph (b), after "as a result of" insert "section 16(1) of ITTOIA 2005 or".

546 In section 248 (ordinary Schedule A businesses)--

(a) for "Schedule A" substitute "property", and

(b) in the side-note for "Schedule A" substitute "property".

547 In section 252 (mines, transport undertakings etc)--

(a) after "is a concern listed in" insert "section 12(4) of ITTOIA 2005 or", and

(b) after "the profits of the concern under" insert "Chapter 2 of Part 2 of ITTOIA 2005 or, as the case may be, under".

548 In section 258(4) (special leasing: income tax) for "taxed under Case VI of Schedule D" substitute "assessed to income tax".

549 (1) Amend section 263 (qualifying activities carried on in partnership) as follows.

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

" (c) the following condition is met. "

(3) After that subsection insert--

" (1A) The condition is that--

(a) the change does not involve all of the partners permanently ceasing to carry on the qualifying activity, or

(b) the change does not result in the qualifying activity being treated under section 18 or 362 of ITTOIA 2005 as permanently ceasing to be carried on by a company or treated as discontinued under section 337(1) of ICTA (companies beginning or ceasing to carry on trade etc.). "

550 (1) Amend section 265 (successions: general) as follows.

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

" (b) the following condition is met. "

(3) After that subsection insert--

" (1A) The condition is that--

(a) all of the persons carrying on the qualifying activity before the succession permanently cease to carry it on, or

(b) the qualifying activity is treated under section 18 or 362 of ITTOIA 2005 as permanently ceasing to be carried on by a company or treated as discontinued under section 337(1) of ICTA (companies beginning or ceasing to carry on trade etc.). "

551 In 268(1) (successions by beneficiaries) for paragraph (b) and the word "and" at the end of that paragraph substitute--

" (b) all of the persons carrying on the qualifying activity before the succession permanently cease to carry it on, and " .

552 In section 282 (buildings outside the United Kingdom) for "applicable to Case I of Schedule D" substitute "that apply in calculating trade profits for income tax purposes or that apply to Case I of Schedule D for corporation tax purposes".

553 In section 326(1) (interpretation of section 325) in the definition of "premium"--

(a) after "corresponds to" insert " --

(a) " , and

(b) at end insert " , or

(b) an amount brought into account as a receipt in calculating the profits of a UK property business under sections 277 to 281 of ITTOIA 2005 that is calculated by reference to the sum; " .

554 In section 331(1)(b) (capital value provisions: interpretation)--

(a) after "corresponds to" insert " --

(i) " , and

(b) at end insert " , or

(ii) an amount brought into account as a receipt in calculating the profits of a UK property business under sections 277 to 281 of ITTOIA 2005 that is calculated by reference to the sum. "

555 (1) Amend section 353 (lessors and licensors) as follows.

(2) In subsection (2) for "a Schedule A business" substitute "a UK property business, or a Schedule A business,".

(3) After subsection (3) insert--

" (3A) If the person is within the charge to income tax in respect of the allowance or charge and his interest in the building is not an asset of any property business carried on by him at any time in the relevant period, the allowance or charge is to be given effect by treating him as if he had been carrying on a UK property business in that period and as if--

(a) the allowance were an expense of that business, and

(b) the charge were a receipt of that business. "

(4) In subsection (4)--

(a) for "the person's" substitute "the person is a company within the charge to corporation tax in respect of the allowance or charge and its",

(b) for "him", in the first place where it occurs, substitute "it",

(d) for "he" substitute "it".

556 (1) Amend section 354 (buildings temporarily out of use) as follows.

(2) In subsection (3)--

(a) after "as may be made under" insert "section 254 of ITTOIA 2005 or", and

(b) after "chargeable to tax under" insert "Chapter 18 of Part 2 of ITTOIA 2005 or, as the case may be, under".

(3) In subsection (5) for "section 113(1)" to the end substitute "section 18 of ITTOIA 2005 or section 337(1) of ICTA (effect of company ceasing to trade etc)."

557 In section 390(1) (interpretation of section 389) in the definition of "premium"--

(a) after "corresponds to" insert " --

(a) " , and

-- Back --

Stat