Income Tax Act 2007 (c. 3)

(The document as of February, 2008)

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(b) for "the deduction" substitute "the allowance".

(5) In subsection (5) for "total income" substitute "adjusted net income".

(6) After subsection (5) insert--

" (6) An allowance under this section is given effect at Step 3 of the calculation in section 23 of ITA 2007. "

30 (1) Amend section 257A (married couple's allowance: pre-5 December 2005 marriages) as follows.

(2) In subsections (2) and (3) for "an income tax reduction" substitute "a tax reduction".

(3) In subsection (5) for "total income" substitute "adjusted net income".

(4) In subsection (5A) for "£2,350" substitute "the minimum amount".

(5) In subsection (6) for "income tax reduction" substitute "tax reduction".

(6) After subsection (6) insert--

" (6A) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007. "

31 (1) Amend section 257AB (married couple's allowance: post-5 December 2005 marriages and civil partnerships etc) as follows.

(2) In subsection (1)(d) for "total income" (in both places it occurs) substitute "net income".

(3) In subsection (2) for "an income tax reduction" substitute "a tax reduction".

(4) In subsection (4) for "total income" substitute "adjusted net income".

(5) In subsection (5) for "£2,350" substitute "the minimum amount".

(6) In subsection (6) for "income tax reduction" substitute "tax reduction".

(7) After subsection (9) insert--

" (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007. "

32 (1) Amend section 257BA (elections as to transfer of relief under section 257A or 257AB) as follows.

(2) For subsections (1) to (3) substitute--

" (1) An individual may elect that for any year of assessment for which the individual's spouse or civil partner is entitled to a tax reduction under section 257A or 257AB--

(a) the individual shall be entitled (on making a claim) to a tax reduction calculated by reference to half the minimum amount, and

(b) the spouse or civil partner's appropriate amount shall be reduced by half the minimum amount.

(2) An individual and the individual's spouse or civil partner may jointly elect that for any year of assessment for which the individual is entitled to a tax reduction under section 257A or 257AB--

(a) the individual's spouse or civil partner shall be entitled (on making a claim) to a tax reduction calculated by reference to the minimum amount, and

(b) the individual's appropriate amount shall be reduced by the minimum amount.

(3) An individual may elect that for any year of assessment for which the individual's spouse or civil partner is entitled to a tax reduction by virtue of an election under subsection (2) above--

(a) the individual shall be entitled (on making a claim) to a tax reduction calculated by reference to half the minimum amount (in addition to any tax reduction to which the individual is already entitled under section 257A or 257AB), and

(b) the tax reduction to which the spouse or civil partner is entitled by virtue of that election shall be calculated by reference to half the minimum amount (instead of by reference to the minimum amount). "

(3) After subsection (3) insert--

" (3A) In this section "the appropriate amount" means the amount by reference to which the calculation of the tax reduction is to be made. "

(4) Omit subsection (6).

(5) In subsection (9) for "income tax reduction" substitute "tax reduction".

(6) After subsection (9) insert--

" (10) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007. "

33 (1) Amend section 257BB (transfer of relief under section 257A or 257AB where relief exceeds income) as follows.

(2) For subsection (1) substitute--

" (1) Where--

(a) an individual is entitled to a tax reduction under section 257A or 257AB, but

(b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,

the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of an election under section 257BA) to a tax reduction equal to the unused part of the individual's MCA tax reductions. "

(3) After subsection (1) insert--

" (1A) The individual's MCA tax reductions are the sum of--

(a) the tax reduction to which the individual is entitled under section 257A or 257AB, and

(b) any tax reduction to which the individual is entitled by virtue of an election under section 257BA(3).

(1B) The unused part of the individual's MCA tax reductions is equal to--

(a) the individual's MCA tax reductions, less

(b) the individual's comparable tax liability. "

(4) For subsection (3) substitute--

" (3) Where--

(a) an individual is entitled to a tax reduction by virtue of an election under section 257BA, but

(b) the amount of the tax reduction to which the individual is entitled is greater than the individual's comparable tax liability,

the individual's spouse or civil partner shall be entitled (in addition to any tax reduction to which that spouse or civil partner is entitled by virtue of section 257A or 257AB) to a tax reduction equal to the unused part of the individual's tax reduction. "

(5) After subsection (3) insert--

" (3AA) The unused part of the individual's tax reduction is equal to--

(a) the tax reduction to which the individual is entitled by virtue of the election under section 257BA, less

(b) the individual's comparable tax liability. "

(6) Omit subsection (3A).

(7) After subsection (5) insert--

" (5A) For the purposes of this section, the comparable tax liability of an individual is the amount of the individual's tax left after Step 6 of the calculation in section 23 of ITA 2007, making that calculation with the modifications set out in subsections (5B) and (5C).

(5B) In making that calculation, do not deduct any tax reduction under--

(a) section 788 (double taxation arrangements: relief by agreement), or

(b) section 790(1) (relief for foreign tax where there are no double taxation arrangements).

(5C) If the individual's entitlement to a tax reduction under section 257A, 257AB, 257BA or this section is extinguished under section 423(4) of ITA 2007 (gift aid: restriction of reliefs) to any extent, deduct from the amount calculated in accordance with subsections (5A) and (5B) the amount by which the tax reduction is reduced.

(5D) For the purposes of this section a person is treated as being entitled to a tax reduction under section 788 if the person is entitled to credit against income tax under arrangements which have effect under that section.

(5E) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007. "

34 (1) Amend section 257C (indexation of amounts) as follows.

(2) In subsections (1) and (3) for "sections 257" substitute "sections 256B, 257".

(3) In the sidenote for "sections 257" substitute "sections 256B, 257".

35 (1) Amend section 265 (blind person's allowance) as follows.

(2) In subsection (1)--

(a) for "deduction" substitute "blind person's allowance", and

(b) omit "from his total income".

(3) In subsection (2)--

(a) in paragraph (a) for "relief under subsection (1) above" substitute "an allowance under subsection (1) above",

(b) for paragraph (b) substitute--

" (b) the amount to which the person is entitled exceeds the person's remaining relievable income, " , and

(4) After subsection (2) insert--

" (2A) The person's remaining relievable income is the amount found by--

(a) taking the amount of the individual's net income, and

(b) subtracting any personal allowance to which the person is entitled. "

(5) Omit subsection (3).

(6) In subsection (5)--

(a) for "Subsections (2) and (3)" substitute "Subsection (2)",

(b) for "relief" substitute "an allowance", and

(7) After subsection (7) insert--

" (8) An allowance under this section is given effect at Step 3 of the calculation in section 23 of ITA 2007. "

36 (1) Amend section 266 (life assurance premiums) as follows.

(2) In subsection (3)(c) omit the words from ", except" to "subsection (6) below".

(3) In subsection (4) for "subsections (6) to (8)" substitute "subsections (7) and (8)".

(4) Omit subsections (6) and (6A).

(5) In subsection (7)(b) for "there shall be deducted from his total income" substitute "in calculating his net income there shall be deducted".

(6) In subsection (8)--

(a) for "but is entitled" substitute "and is entitled",

(b) after "section 278(2)" insert "or (2ZA)", and

(7) In subsection (13) omit "this section and".

37 (1) Amend section 273 (payments securing annuities) as follows.

(2) In subsection (1) for "deduction from the amount of income tax on which he or she is chargeable" substitute "tax reduction".

(3) In subsection (2) for "No deduction may be made" substitute "There is no entitlement to a tax reduction".

(4) After subsection (2) insert--

" (3) A tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007. "

38 Omit section 276 (effect on relief of charges on income).

39 Omit section 277 (partners).

40 (1) Amend section 278 (non-residents) as follows.

(2) Omit subsection (1).

(3) In subsection (2)--

(a) for the words from the beginning to "individual" substitute "Subject to subsection (2ZA) below, relief under this Chapter shall be given only to an individual",

(b) before paragraph (a) insert--

" (za) is not resident in the United Kingdom,

(zb) does not meet the condition in section 56(3) of ITA 2007, and " , and

(4) After subsection (2) insert--

" (2ZA) Relief under section 266 above (except relief given by virtue of subsection (7) of that section) may also be given to an individual who--

(a) is resident in the United Kingdom, or

(b) meets the condition in section 56(3) of ITA 2007. "

41 Omit section 282 (construction of references to spouses or civil partners living together).

42 Omit sections 282A and 282B (jointly held property).

43 Omit section 305A (relief for loss on disposal of shares).

44 In section 312(2A) (interpretation of Chapter 3), as it applies in relation to shares issued before 6 April 2007, for paragraph (a) substitute--

" (a) references to a company being "in administration" are to--

(i) it being in administration within the meaning of Schedule B1 to the Insolvency Act 1986 (c. 45) or Schedule B1 to the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), or

(ii) there being in force in relation to it, under the law of a country or territory outside the United Kingdom, any appointment corresponding to an appointment of an administrator under either of those Schedules; " .

45 Omit section 320 (Commonwealth Agents-General and official agents etc).

46 Omit section 323 (visiting forces).

47 Omit section 332A (venture capital trusts: relief).

48 Omit section 334 (Commonwealth and Irish citizens temporarily abroad).

49 Omit section 335 (residence of persons working abroad).

50 Omit section 336 (temporary residents in the United Kingdom).

51 (1) Amend section 339 (charges on income: donations to charity) as follows.

(2) For subsection (4) substitute--

" (4) Where a company gives a sum of money to a charity--

(a) if the charity is a charitable company, a body mentioned in section 507 or an Association of a description specified in section 508, the gift shall in the hands of the charitable company be treated for the purposes of this Act as if it were an annual payment, and

(b) if the charity is a trust established for charitable purposes only, see section 522 of ITA 2007 (gifts of money from companies). "

(3) After subsection (9) insert--

" (10) In this section "charitable company" has the same meaning as in section 506. "

52 (1) Amend section 347A (annual payments: general rule) as follows.

(2) For subsection (1) substitute--

" (1) A payment to which this section applies shall not, for the purposes of corporation tax, form part of the income of--

(a) any company to which it is made, or

(b) any other company. "

(3) Omit subsection (2A).

(4) In subsection (6) omit "or (2A)".

53 Omit section 347B (qualifying maintenance payments).

54 Omit section 348 (payments out of profits or gains brought into charge to income tax: deduction of tax).

55 Omit section 349 (payments not out of profits or gains brought into charge to income tax, and annual interest).

56 Omit section 349ZA (extension of section 349: proceeds of sale of UK patent rights).

57 Omit sections 349A to 349D (exceptions to section 349 for payments between companies).

58 Omit section 349E (deductions under section 349(1): payment of royalties overseas).

59 Omit section 350 (charge to tax where payments made under section 349).

60 Omit section 350A (UK public revenue dividends: deduction of tax).

61 Omit section 352 (certificates of deduction of tax).

62 (1) Amend section 353 (relief for payments of interest: general) as follows.

(2) In subsection (1)--

(a) omit "sections 359 to 368 of this Act and", and

(b) for "sections 359 to 365" substitute "section 365".

(3) For subsection (1A) substitute--

" (1A) Where a person is entitled for a year of assessment to relief under this section in respect of an amount of interest which is eligible for relief by virtue of section 365, the relief is given as a tax reduction for that tax year.

(1AA) The amount of the tax reduction is 23% of the amount of the interest.

(1AB) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007. "

(4) Omit subsection (1B).

(5) In subsection (1E)--

(a) omit "under this section",

(b) for "subsection (1B) above" substitute "section 383 of ITA 2007 (relief for interest payments)",

(d) for the words from "and subsection (1A) or (1B)" to the end substitute "and subsection (1A) above or section 383 of ITA 2007 shall apply accordingly to the case in which that subsection or section applies".

(6) Omit subsections (1F) to (1H).

63 Omit section 359 (loan to buy machinery or plant).

64 Omit section 360 (loan to buy interest in close company).

65 Omit section 360A (meaning of "material interest" in section 360).

66 Omit section 361 (loan to buy interest in co-operative or employee-controlled company).

67 Omit section 362 (loan to buy into partnership).

68 Omit section 363 (provisions supplementary to sections 360 to 362).

69 Omit section 364 (loan to pay inheritance tax).

70 In section 366(1)(c) (information) omit the words from "(or" to "income)".

71 In section 367 (provisions supplementary to sections 354 to 366) omit subsections (2) to (4).

72 Omit section 368 (exclusion of double relief etc).

73 Omit Chapter 1 of Part 10 (loss relief: income tax).

74 (1) Amend section 397 (restriction of relief in case of farming and market gardening) as follows.

(2) Omit subsection (1).

(3) In subsection (3)--

(a) for "Subsections (1) and (2) above" substitute "This section", and

(b) for "he" substitute "that farmer or market gardener".

(4) In subsection (4) for "Subsections (1) and (2) above" substitute "This section".

(5) In subsection (5)--

(a) omit the definition of "chargeable period",

(b) for the definition of "prior five years" substitute--

" "prior five years" means, in relation to a loss incurred in a company's accounting period, the last five years before the beginning of that period; " ,

(i) omit "years of assessment or", and

(ii) for "in applying this definition to a chargeable period of a company" substitute "for this purpose", and

(d) for the definitions of "farming" and "market gardening" substitute--

" "farming" and "market gardening" shall be construed in accordance with the definitions in section 832, but as if those definitions were not restricted to activities in the United Kingdom. "

(6) In subsection (7)--

(a) omit "the calculation of the profits of a trade in Part 2 of ITTOIA 2005 or to",

(b) after "Schedule D" insert "(or to the calculation of the profits of a trade in Part 2 of ITTOIA 2005)", and

(7) In subsection (8)--

(a) for "Subsections (1) and (2) above" substitute "This section", and

(b) for "Tax Acts" substitute "Corporation Tax Acts".

(8) In subsection (10)--

(a) omit "from income tax or from corporation tax", and

(b) for the words from "some of which are incurred" to "chargeable periods" substitute "(computed without regard to capital allowances) some of which are incurred in an accounting period wholly or partly comprised in the prior five years and some of which are incurred in a year of assessment wholly or partly comprised in the prior five years".

75 (1) Amend section 398 (transactions in deposits with and without certificates or in debts) as follows.

(2) For "a person" substitute "a company".

(3) Omit "above or Chapter 11 of Part 4 of ITTOIA 2005 (transactions in deposits)".

(4) In paragraph (a)--

(a) after "chargeable to" insert "corporation", and

(b) omit "above or that Chapter".

(5) In paragraph (b) for the words from "he is chargeable" to "that Act" substitute "the company is chargeable to corporation tax under Schedule D".

(6) For the words from "the amount of his loss may be set off in pursuance" to the end substitute "the amount of its loss may be set off under section 396."

76 (1) Amend section 399 (dealings in commodity futures etc: withdrawal of loss relief) as follows.

(2) In subsection (2)--

(a) for "any person under section 380, 381 or" substitute "any company under section",

(b) in paragraph (a) omit "and that person or one or more of the other partners was a company",

(d) for "tax liability" substitute "corporation tax liability".

(3) In subsection (3) for the words after "assessment" substitute "to corporation tax under Case VI of Schedule D."

77 In section 414(1) (close companies) for "Tax Acts" substitute "Corporation Tax Acts".

78 (1) Amend section 458 (capital redemption business) as follows.

(2) In subsection (1) omit "and the Income Tax Acts".

(3) In subsection (2) omit "section 380 or".

(4) Omit subsection (2)(b) and the "and" immediately before it.

79 In section 459 (exemption for unregistered friendly societies) omit "income tax and".

80 In section 460(1) (exemption for registered friendly societies: life or endowment business) omit "income tax and".

81 (1) Section 461 (exemption for registered friendly societies: other business) is amended as follows.

(2) In subsection (1) omit "income tax and".

(3) In subsection (4)(b) omit "income tax or".

82 (1) Amend section 461B (exemption for qualifying incorporated friendly societies: other business) as follows.

(2) In subsection (1) omit "income tax and".

(3) In subsection (5) omit "income tax or".

83 In section 466 (interpretation of Chapter 2 of Part 12) after subsection (2) insert--

" (2ZA) In subsection (2) "industrial assurance business" means any industrial assurance business within the meaning given by--

(a) section 1(2) of the Industrial Assurance Act 1923, or

(b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979,

which was carried on before 1 December 2001. "

84 (1) Amend section 467(1) (exemption for trade unions and employers' associations) as follows.

(2) After "entitled" insert "to exemption from corporation tax".

(3) In paragraph (a) omit "to exemption from income tax and corporation tax".

(4) In paragraph (b) omit "to exemption from tax".

85 (1) Amend section 468 (authorised unit trusts) as follows.

(2) In subsection (1A) for "lower rate" substitute "savings rate".

(3) In subsection (6) omit the definition of "unit trust scheme" and the "and" immediately before it.

86 In section 468A(1) (open-ended investment companies) for "lower rate" substitute "savings rate".

87 (1) Amend section 469 (unauthorised unit trusts) as follows.

(2) In subsection (2)--

(a) for "Tax Acts" substitute "Corporation Tax Acts", and

(b) omit the words from "and, in the case of income" to the end.

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