Finance Act 2006 (c. 25)

(The document as of February, 2008)

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(b) any other cash balance arrangement or defined benefits arrangement related to the arrangement,

if the individual had died on 5th April 2006.

(5) Lump sum death benefits are "uncrystallised rights lump sum death benefits" if they are attributable to rights in respect of which the individual had not, on 5th April 2006, become entitled to the present payment of benefits.

(6) Paragraphs 11C and 11D apply in arriving at the aggregate mentioned in sub-paragraph (4) as in arriving at that mentioned in paragraph 11B(2) but as if--

(a) each of the references to paragraph 11B(2) were to sub-paragraph (4) of this paragraph, and

(b) in paragraph 11D(1), for "of a pension scheme" there were substituted "of any arrangement within paragraph 15A(4) under a pension scheme".

(7) In their operation for the purposes of this paragraph sub-paragraphs (6) to (11) of paragraph 15 have effect as if--

(a) for the references in sub-paragraphs (6)(a) and (7)(a) and (10) to the time of the first relevant event there were substituted a reference to the time immediately before the individual's death, and

(b) the words in parentheses in sub-paragraph (6)(a) were omitted. "

42 In section 256(1) (enhanced lifetime allowance regulations)--

(a) in paragraph (d), after "7(1)(b)" insert "or 11A(1)(c)", and

(b) in paragraph (e), after "12(1)" insert "or 15A(1)(b)".

Transitional protection: right to take benefits before normal pension age

43 (1) Paragraph 22 of Schedule 36 (right to take benefits before normal minimum pension age: schemes within paragraph 1(1)(a) to (e) of Schedule 36) is amended as follows.

(2) In sub-paragraph (7), for paragraph (b) substitute--

" (b) in a case where on 5th April 2006 the member had an actual or prospective right under the pension scheme to any benefit from an age of less than 50, Condition 1 is met or, in any other case, Condition 2 or 3 is met. "

(3) After that sub-paragraph insert--

" (7A) Condition 1 is met if--

(a) the member is not, after becoming entitled to the benefits mentioned in sub-paragraph (7)(a), employed by a person who is a sponsoring employer in relation to the pension scheme and with whom the member is connected, and

(b) the member's becoming entitled to those benefits is not part of an arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.

(7B) Condition 2 is met if--

(a) the member is not, after becoming entitled to the benefits mentioned in sub-paragraph (7)(a), employed by a person specified in sub-paragraph (7C), and

(b) the member's becoming entitled to those benefits is not part of an arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax or national insurance contributions.

(7C) The persons referred to in sub-paragraph (7B)(a) are--

(a) any person who was a sponsoring employer in relation to the pension scheme at any time during the period of six months ending with the day on which the member became entitled to the benefits mentioned in sub-paragraph (7)(a) and by whom the member was employed at any time during that period,

(b) any person who is connected with any such person, or

(7D) If the member has become entitled to the benefits payable under arrangements under the pension scheme by reason of service in the armed forces of the Crown, any employment on compulsory recall is to be disregarded for the purposes of sub-paragraph (7B)(a).

(7E) Condition 3 is met if --

(a) paragraph (a) of sub-paragraph (7B) is not satisfied but one of the re-employment conditions is met, and

(b) paragraph (b) of that sub-paragraph is satisfied.

(7F) The re-employment conditions are--

(a) that the member is not employed as mentioned in sub-paragraph (7B)(a) during the period of six months beginning with the day on which the member becomes entitled to the benefits mentioned in sub-paragraph (7)(a), and

(b) that the member is not employed as mentioned in sub-paragraph (7B)(a) during the period of one month beginning with that day, but is so employed during the period of five months beginning at the end of that period, and either the pension abatement condition or the materially different employment condition is met.

(7G) The pension abatement condition is met if--

(a) the pension scheme is a public service pension scheme, and

(b) the member's benefits under the scheme consist of or include a scheme pension which is liable to reduction by abatement while the member is employed as mentioned in sub-paragraph (7B)(a) and is under the age of 55.

(7H) The materially different employment condition is met--

(a) in a case where the member is employed as mentioned in sub-paragraph (7B)(a) in more than one employment during the period of five months mentioned in sub-paragraph (7F)(b), if each of those employments, and

(b) otherwise, if the employment in which the member is so employed during that period,

is materially different in nature from the employment in which the member was employed immediately before becoming entitled to the benefits mentioned in sub-paragraph (7)(a).

(7I) For the purposes of sub-paragraph (7D) "employment on compulsory recall" means permanent service--

(a) under Part 4 of the Reserve Forces Act 1996,

(b) under Part 5 of that Act,

(d) having been called out or recalled under the Reserve Forces Act 1980, or

(e) because of any other call-out or recall obligation of an officer.

(7J) Section 839 of ICTA (connected persons) applies for the purposes of this paragraph. "

Transitional provisions: minor corrections

44 Schedule 36 (transitional provisions) is amended as follows.

45 In paragraphs 9(4)(a) and 26(3)(a) (primary protection: maximum permitted pension and maximum permitted lump sum), for "611(1)(a)" substitute "611A(1)(a)".

46 In paragraph 54(1)(b) (benefits taxable under Chapter 2 of Part 6 of ITEPA 2003 where contributions taxed pre-commencement: old schemes), for "1st September 1993" substitute "1st December 1993".

Section 163

SCHEDULE 24 Stamp duty land tax: amendments of Schedule 15 to FA 2003

Introduction

1 Schedule 15 to FA 2003 (stamp duty land tax: partnerships) is amended as follows.

Transfer of chargeable interest to a partnership

2 (1) In paragraph 10 (transfer of chargeable interest to a partnership: general), for sub-paragraphs (2) to (4) substitute--

" (2) The chargeable consideration for the transaction shall (subject to paragraph 13) be taken to be equal to--

---

where--

MV is the market value of the interest transferred, and
SLP is the sum of the lower proportions. "

(2) In sub-paragraph (6) of that paragraph, omit "(instead of sub-paragraphs (2) to (5))".

3 In paragraph 11 (transfer of chargeable interest to a partnership: chargeable consideration including rent), for sub-paragraphs (2) to (7) substitute--

" (2) Schedule 5 (amount of tax chargeable: rent) has effect with the modifications set out in sub-paragraphs (2A) to (2C).

(2A) In paragraph 2--

(a) for "the net present value of the rent payable over the term of the lease" substitute "the relevant chargeable proportion of the net present value of the rent payable over the term of the lease", and

(b) for "the net present values of the rent payable over the terms of all the leases" substitute "the relevant chargeable proportions of the net present values of the rent payable over the terms of all the leases".

(2B) In paragraph 9(2A)--

(a) for "the annual rent" substitute "the relevant chargeable proportion of the annual rent", and

(b) for "the total of the annual rents" substitute "the relevant chargeable proportion of the total of the annual rents".

(2C) For paragraph 9(4) substitute--

" (4) Tax chargeable under this Schedule is in addition to any tax chargeable under section 55 as it has effect by virtue of paragraph 10 of Schedule 15. " .

(2D) For the purposes of sub-paragraphs (2A) and (2B) the relevant chargeable proportion is--

---

where SLP is the sum of the lower proportions. "

4 (1) In paragraph 13 (transfer of chargeable interest to a partnership consisting wholly of bodies corporate), in sub-paragraph (3), for "sub-paragraphs (2) to (5)" substitute "sub-paragraphs (2) and (5)".

(2) For sub-paragraphs (4) to (7) of that paragraph substitute--

" (4A) In paragraph 11(2), for "sub-paragraphs (2A) to (2C)" substitute "sub-paragraph (2C)".

(5) In paragraph 11, omit sub-paragraphs (2A), (2B), (2D) and (8). "

Transfer of chargeable interest from a partnership

5 (1) In paragraph 18 (transfer of chargeable interest from a partnership: general), for sub-paragraphs (2) to (4) substitute--

" (2) The chargeable consideration for the transaction shall (subject to paragraph 24) be taken to be equal to--

---

where--

MV is the market value of the interest transferred, and
SLP is the sum of the lower proportions. "

(2) In sub-paragraph (6) of that paragraph, omit "(instead of sub-paragraphs (2) to (5))".

6 In paragraph 19 (transfer of chargeable interest from a partnership: chargeable consideration including rent), for sub-paragraphs (2) to (7) substitute--

" (2) Schedule 5 (amount of tax chargeable: rent) has effect with the modifications set out in sub-paragraphs (2A) to (2C).

(2A) In paragraph 2--

(2B) In paragraph 9(2A)--

(a) for "the annual rent" substitute "the relevant chargeable proportion of the annual rent", and

(b) for "the total of the annual rents" substitute "the relevant chargeable proportion of the total of the annual rents".

(2C) For paragraph 9(4) substitute--

" (4) Tax chargeable under this Schedule is in addition to any tax chargeable under section 55 as it has effect by virtue of paragraph 18 of Schedule 15. " .

(2D) For the purposes of sub-paragraphs (2A) and (2B) the relevant chargeable proportion is--

---

where SLP is the sum of the lower proportions. "

7 (1) In paragraph 24 (transfer of chargeable interest from a partnership consisting wholly of bodies corporate), in sub-paragraph (3), for "sub-paragraphs (2) to (5)" substitute "sub-paragraphs (2) and (5)".

(2) For sub-paragraphs (4) to (8) of that paragraph substitute--

" (4A) In paragraph 19(2), for "sub-paragraphs (2A) to (2C)" substitute "sub-paragraph (2C)".

(5) In paragraph 19, omit sub-paragraphs (2A), (2B), (2D) and (8). "

Transfer of chargeable interest from a partnership to a partnership

8 In paragraph 23 (transfer of chargeable interest from a partnership to a partnership), for sub-paragraphs (2) and (3) substitute--

" (2) Paragraphs 10(2) and 18(2) do not apply.

(2A) The chargeable consideration for the transaction shall be taken to be what it would have been if paragraph 10(2) had applied or, if greater, what it would have been if paragraph 18(2) had applied.

(3) Where the whole or part of the chargeable consideration for the transaction is rent--

(a) paragraphs 11 and 19 do not apply;

(b) the tax chargeable in respect of so much of the chargeable consideration as consists of rent shall be taken to be what it would have been if paragraph 11 had applied or, if greater, what it would have been if paragraph 19 had applied;

(i) it would have had effect if paragraph 11(2B) of this Schedule had applied, or

(ii) it would have had effect if paragraph 19(2B) of this Schedule had applied. "

Transfer of partnership interest: restriction of charge to property-investment partnerships

9 (1) In paragraph 14 (transfer of partnership interest: consideration given and chargeable interest held), for the heading substitute--

" Transfer for consideration of interest in property-investment partnership " .

(2) In sub-paragraph (1)(a) of that paragraph, before "partnership" insert "property-investment".

(3) After sub-paragraph (7) of that paragraph insert--

" (8) In this paragraph--

"property-investment partnership" means a partnership whose sole or main activity is investing or dealing in chargeable interests (whether or not that activity involves the carrying out of construction operations on the land in question);
"construction operations" has the same meaning as in Chapter 3 of Part 3 of the Finance Act 2004 (see section 74 of that Act). "

Prevention of double charge where money etc withdrawn from partnership

10 In paragraph 17A (withdrawal of money etc from partnership after transfer of chargeable interest), after sub-paragraph (7) insert--

" (8) Where--

(a) a qualifying event gives rise to a charge under this paragraph, and

(b) the same event gives rise to a charge under paragraph 14 (transfer for consideration of interest in property-investment partnership),

the amount of the charge under this paragraph is reduced (but not below nil) by the amount of the charge under that paragraph. "

Commencement

11 (1) Paragraphs 2 to 8 have effect in relation to any transfer of which the effective date is on or after the day on which this Act is passed.

(2) Paragraph 9 has effect in relation to any transfer that has (or, but for the amendment made by that paragraph, would have) an effective date which is on or after that day.

(3) Paragraph 10 has effect in relation to any qualifying event of which the effective date is on or after that day.

(4) In this paragraph "effective date" has the same meaning as in Part 4 of FA 2003.

Section 164

SCHEDULE 25 Stamp duty land tax: amendments of Schedule 17A to FA 2003

Introduction

1 Schedule 17A (stamp duty land tax: further provisions relating to leases) is amended as follows.

Agricultural tenancies variable under statutory provisions

2 (1) In paragraph 7 (variable or uncertain rent), after sub-paragraph (4) insert--

" (4A) For the purposes of this paragraph and paragraph 8, the cases where the amount of rent payable under a lease is uncertain or unascertained include cases where there is a possibility of that amount being varied under--

(a) section 12, 13 or 33 of the Agricultural Holdings Act 1986,

(b) Part 2 of the Agricultural Tenancies Act 1995,

(d) section 9, 10 or 11 of the Agricultural Holdings (Scotland) Act 2003. "

(2) In paragraph 13(2), for the words after "increase of rent" substitute " in pursuance of--

(a) a provision contained in the lease, or

(b) a provision mentioned in any of paragraphs (a) to (d) of paragraph 7(4A). "

Backdated lease granted to tenant holding over

3 (1) After paragraph 9 insert--

" Backdated lease granted to tenant holding over

9A (1) This paragraph applies where--

(a) the tenant under a lease continues in occupation after the date on which, under its terms, the lease terminates ("the contractual termination date"),

(b) he is granted a new lease of the same or substantially the same premises, and

(2) The term of the new lease is treated for the purposes of this Part as beginning on the date on which it is expressed to begin.

(3) The rent payable under the new lease in respect of any period falling--

(a) after the contractual termination date, and

(b) before the date on which the new lease is granted,

is treated for the purposes of this Part as reduced by the amount of taxable rent that is payable in respect of that period otherwise than under the new lease.

(4) For the purposes of sub-paragraph (3) rent is "taxable" if or to the extent that it is taken into account in determining liability to stamp duty land tax.

(5) Sub-paragraph (3) does not have effect so as to require the rent payable under the new lease to be treated as a negative amount. "

(2) In paragraph 7(3), for the words after "but disregard" substitute "paragraphs 9(2) and 9A(3) (deemed reduction of rent, where further lease granted, for period during which rents overlap)".

Disapplication of "single lease" treatment where agreement for lease followed by grant

4 In paragraph 12A (agreement for lease), at the end of sub-paragraph (3) insert--

" Paragraph 5 does not apply so as to treat the notional lease and the lease itself as a single lease. "

5 (1) In paragraph 19 (provisions relating to leases in Scotland), at the end of sub-paragraph (2) insert--

" Paragraph 5 does not apply so as to treat the first lease and the second lease as a single lease. "

(2) At the end of sub-paragraph (4) of that paragraph insert--

" Paragraph 5 does not apply so as to treat the notional lease and the lease itself as a single lease. "

Disapplication of "new lease" treatment for certain rent increases after fifth year

6 (1) In paragraph 13 (increase in rent treated as grant of new lease: variation of lease), in the heading, after "variation of lease" insert "in first five years".

(2) In sub-paragraph (1) of that paragraph, after "to increase the amount of the rent" insert "as from a date before the end of the fifth year of the term of the lease".

Abnormal rent increase after fifth year

7 (1) In paragraph 14 (increase of rent treated as grant of new lease: abnormal increase after fifth year), in sub-paragraph (1)(a), for "in accordance with the provisions of the lease" substitute ", whether in accordance with the provisions of the lease or otherwise".

(2) For sub-paragraph (4) of that paragraph substitute--

" (4) Where the provisions of this paragraph have not previously applied to an increase in the rent payable under the lease, the rent previously taxed is--

(a) if paragraph (b) or (c) does not apply, the rent payable under the lease without the increase referred to in sub-paragraph (1);

(b) if the amount of rent payable under the lease is determined under paragraph 7 (variable or uncertain rent), the rent that is assumed to be payable after the fifth year of the term of the lease (in accordance with paragraph 7(3));

(c) if there has been a variation in the lease falling within paragraph 13 (increase of rent treated as grant of new lease: variation of lease in first five years), the rent payable as a result of the variation (or, if there has been more than one such variation, the most recent one).

(4A) Where the provisions of this paragraph have previously applied to an increase in the rent payable under the lease, the rent previously taxed is the rent payable as a result of the last increase in relation to which the provisions of this paragraph applied.

(4B) In determining the rent previously taxed, disregard paragraphs 9(2) and 9A(3) (deemed reduction of rent, where further lease granted, for period during which rents overlap). "

(3) At the end of that paragraph insert--

" (7) The reference to a lease in sub-paragraph (1) is to--

(a) a lease actually granted on or after the implementation date, or

(b) a lease that is treated as existing by reason of a deemed grant under paragraph 12A(2) or 19(3) of which the effective date is on or after the implementation date. "

8 (1) In paragraph 15 (increase of rent after fifth year: whether regarded as abnormal), for Steps One to Six substitute--

" Step One

Find the start date.

Where the provisions of paragraph 14 have not previously applied to an increase in the rent payable under the lease, the start date is--

(a) if paragraph (b) or (c) does not apply, the beginning of the term of the lease;

(b) if the amount of rent payable under the lease is determined under paragraph 7 (variable or uncertain rent), the beginning of the period by reference to which the rent assumed to be payable after the fifth year of the term of the lease is determined in accordance with paragraph 7(3);

(c) if there has been a variation in the lease falling within paragraph 13 (increase of rent treated as grant of new lease: variation of lease in first five years), the date of the variation (or, if there has been more than one such variation, the date of the most recent one).

Where the provisions of paragraph 14 have previously applied to an increase in the rent payable under the lease, the start date is the date of the last increase in relation to which the provisions of that paragraph applied.

Step Two

Find the number of whole years in the period between the start date and the date on which the new rent first becomes payable.

Step Three

The rent increase is regarded as abnormal if the excess rent (see paragraph 14(3)) is greater than:

---

where--

R is the rent previously taxed (see paragraph 14(4) or (4A)), and
Y is the number of whole years found under Step Two. "

Commencement

9 (1) Paragraph 2 has effect in relation to any lease granted or treated as granted on or after commencement day.

(2) Paragraph 3 has effect in relation to any case where--

(a) the grant of the old lease was chargeable to stamp duty land tax, and

(b) the new lease is granted on or after commencement day.

"The old lease" and "the new lease" mean the leases referred to in sub-paragraphs (1)(a) and (1)(b), respectively, of paragraph 9A of Schedule 17A to FA 2003 (inserted by paragraph 3).

(3) Paragraphs 4 and 5 have effect in relation to any agreement that is substantially performed on or after commencement day.

(4) Paragraph 6 has effect in relation to any variation of a lease made on or after commencement day.

(5) Paragraphs 7 and 8 have effect in relation to any increase of rent that takes effect on or after commencement day.

(6) In this paragraph "commencement day" means the day on which this Act is passed.

Section 178

SCHEDULE 26 Repeals

Part 1 Excise duties

(1) Provisions of ALDA 1979 of no practical utility etc

Short title and chapter	Extent of repeal
Alcoholic Liquor Duties Act 1979 (c. 4)	Section 12(4). Section 14. Section 15(4). Section 18(5). Section 21. Section 24. Section 26. Section 32. Section 35. Section 55A. Section 67. Section 69. Section 71. Section 74. Section 82.
Finance Act 1981 (c. 35)	In Schedule 8, paragraphs 13, 17 and 21.
Finance Act 1985 (c. 54)	In Schedule 3, paragraph 2.
Finance Act 1986 (c. 41)	In Schedule 5, paragraph 3(2).
Territorial Sea Act 1987 (c. 49)	In Schedule 1, paragraph 5(2).
Finance Act 1988 (c. 39)	In Schedule 1, paragraphs 6 and 10.
Finance Act 1994 (c. 9)	In Schedule 4, in paragraph 18(1), the words from "(offence" to the end, and paragraphs 23, 25, 28, 36, 42 to 44 and 48. In Schedule 5, paragraph 3(1)(i) and (n).
Finance Act 1995 (c. 4)	In Schedule 2, paragraph 4.
Licensing Act 2003 (c. 17)	In Schedule 6, paragraph 73.

(2) Amusement machine licence duty

Short title and chapter

Extent of repeal

Betting and Gaming Duties Act 1981 (c. 63).

Section 22(2)(b).

Section 25A.

In section 26(2)--

(a)

the definition of "video machine", and

(b)

in the definition of "two-penny machine", the words from "and "five-penny machine"" to the end.

In Schedule 3, paragraph 6.

In Schedule 4, paragraphs 2, 3 and 15.

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