Income Tax (Trading and Other Income) Act 2005

Part 1U.K.Income and Corporation Taxes Act 1988

1U.K.The Income and Corporation Taxes Act 1988 (c. 1) is amended as follows.

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4U.K.F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5U.K.In section 4 (construction of references in Income Tax Acts to deduction of tax), omit subsection (1B).

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8(1)Amend section 15 (Schedule A) as follows.U.K.

(2)In subsection (1A)—

(a)in paragraph (b) for “within the charge to income tax under Schedule A” substitute “ the profits of a UK property business within the charge to income tax under Chapter 3 of Part 3 of ITTOIA 2005 ”, and

(b)for “as separate Schedule A businesses” substitute “ for the purposes of those charges as separate businesses ”.

(3)Before subsection (4) insert—

“(3A)Subsection (1) applies for corporation tax purposes (and does not apply for income tax purposes except so far as necessary to ensure its application for corporation tax purposes by virtue of section 9).”

(4)In subsection (4) at the end insert “ and under Chapter 3 of Part 3 of ITTOIA 2005 (profits of a property business) ”.

9(1)Amend section 18 (Schedule D) as follows.U.K.

F6(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F6(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Omit subsection (6).

10U.K.Omit section 20 (Schedule F).

11U.K.Omit section 21 (persons chargeable and basis of assessment under Schedule A).

12(1)Amend section 21A (computation of amount chargeable under Schedule A) as follows.U.K.

(2)In subsection (2) omit “sections 112 and 113 of that Act (expenditure in connection with provision of security asset or service);”.

(3)In subsection (4)—

(a)omit “section 82 (interest paid to non-residents),”, and

(b)omit “section 96 (farming and market gardening: relief for fluctuating profits),”.

13U.K.In section 21B (application of other rules applicable to Case I of Schedule D)—

(a)omit “, 108, 109A”,

(b)after “(post-cessation receipts and expenses, etc)” insert “ , with any reference to a trade within the charge to income tax being read as a reference to a UK property business ”, and

(c)omit “section 113 (effect for income tax purposes of change in the persons engaged on trade);”.

14U.K.In section 21C (the Schedule A charge and mutual business)—

(a)in subsection (1) after “the charge to” insert “ corporation ”, and

(b)in subsection (4) from the beginning to “the person who would” substitute “ The company to which the profit arises is the company which would ”.

15(1)Amend section 30 (expenditure on making sea walls) as follows.U.K.

(2)In subsection (1) for “he shall be” substitute “ that person shall be ”.

(3)In subsection (2) for “he would be” substitute “ that person would be ”.

(4)After that subsection insert—

“(2A)If—

(a)the transferor is a company within the charge to corporation tax and the transferee is a person within the charge to income tax, or

(b)the transferor is a person within the charge to income tax and the transferee is a company within the charge to corporation tax,

subsection (2) above shall apply only for the purpose of determining the amount of the payment which the company is treated as making in any year of assessment.

For any entitlement of the person within the charge to income tax to a deduction for any of the expenditure, see sections 316 and 318 of ITTOIA 2005 (corresponding income tax provision).”

16U.K.Omit sections 31A and 31B (deductions for expenditure by landlords on energy-saving items).

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32(1)Amend section 53 (farming and other commercial occupation of land (except woodlands)) as follows.U.K.

(2)In subsection (1) after “charged to” insert “ corporation ”.

(3)In subsection (2)—

(a)for “person or partnership or body of persons” substitute “ company or partnership ”, and

(b)after “trade” insert “ for corporation tax purposes ”.

(4)In subsection (3) after “charged to” insert “ corporation ”.

33U.K.In section 55(1) (mines, quarries and other concerns) after “charged to” insert “ corporation ”.

34(1)Amend section 56 (transactions in deposits with and without certificates or in debts) as follows.U.K.

(2)In subsection (2)—

(a)for “person”, in the first place where it occurs, substitute “ company ”, and

F16(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In subsection (3)

(a)for “does” substitute “ and section 551 of ITTOIA 2005 (charge to income tax on profits from disposal of deposit rights) do ”, and

(b)in paragraph (a) for “person” substitute “ company ”.

35(1)Amend section 59 (persons chargeable: Schedule D) as follows.U.K.

(2)Omit subsections (1) and (2).

(3)In subsection (3)—

F17(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)omit “under Schedule D”.

F18(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

36U.K.Omit sections 60 to 63A (basis of assessment for income tax: Cases I and II of Schedule D).

37U.K.Omit section 64 (Case III assessments).

38U.K.Omit section 65 (Cases IV and V assessments: general).

39U.K.Omit section 65A (Case V income from land outside UK: income tax).

40U.K.Omit section 68 (special rules where property etc. situated in Republic of Ireland).

41U.K.Omit sections 68A to 68C (share incentive plans).

42U.K.Omit section 69 (Case VI assessments).

43U.K.Omit section 71 (computation of income tax where no profits in year of assessment).

F1944U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45U.K.In section 74(1) (general rules as to deductions not allowable)—

(a)for “the Tax Acts” substitute “ the Corporation Tax Acts ”,

(b)after “computing the amount of the profits to be charged” insert “ to corporation tax ”,

(c)for “, profession or vocation”, in each place where it occurs, substitute “ or profession ”,

(d)omit paragraph (b),

(e)in paragraph (j) for “his” substitute “ the creditor's ”, and

(f)omit paragraph (o).

F2046U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47U.K.Omit section 77 (incidental costs of obtaining loan finance).

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51U.K.Omit section 80 (expenses connected with foreign trades etc).

52U.K.Omit section 81 (travel between trades etc).

53U.K.Omit section 82 (interest paid to non-residents).

54U.K.In section 82A(1) (expenditure on research and development)—

(a)for “person” substitute “ company ”,

(b)for “by him or on his behalf” substitute “ by the company or on the company's behalf ”, and

(c)before “tax” insert “ corporation ”.

55U.K.In section 82B(1) (payments to research associations, universities etc.)—

(a)for “person” substitute “ company ”,

(b)F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)before “tax” insert “ corporation ”.

56U.K.In section 83 (patent fees etc. and expenses) after “the profits of a trade” insert “ for the purposes of corporation tax ”.

57(1)Amend section 83A (gifts in kind to charities etc.) as follows.U.K.

(2)In subsection (1) for “a person carrying on a trade, profession or vocation” substitute “ a company carrying on a trade or profession ”.

(3)In subsection (2) for “the donor in the course of his trade” substitute “ the company in the course of its trade ”.

(4)In subsection (3)—

(a)for “the donor's” substitute “ the company's ”,

(b)for “the purposes of the Tax Acts” substitute “ corporation tax purposes ”, and

(c)for “the donor” substitute “ the company ”.

(5)In subsection (4)—

(a)after “in respect of the gift of an article” insert “ made by a company ”,

(b)for “chargeable period”, in both places where it occurs, substitute “ accounting period ”,

(c)for “the donor or any person connected with him” substitute “ the company or any person connected with the company ”,

(d)for “the donor shall” substitute “ the company shall ”,

(e)before “tax”, in both places where it occurs, insert “ corporation ”, and

(f)for “he” substitute “ the company ”.

58(1)Amend section 84 (gifts to educational establishments) as follows.U.K.

(2)In subsection (1)—

(a)for “a person carrying on a trade, profession or vocation” substitute “ a company carrying on a trade or profession ”, and

(b)for “his trade” substitute “ its trade ”.

(3)In subsection (3)—

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

(b)for “his disposal” substitute “ its disposal ”.

(4)In subsection (3A) for “above is—” to the end substitute “ the period of two years beginning at the end of the accounting period in which the gift is made. ”

(5)Omit subsection (3B).

(6)In subsection (4)—

(a)after “in respect of the gift of an article” insert “ made by the donor ”,

(b)for “chargeable period”, in both places where it occurs, substitute “ accounting period ”,

(c)for “him” substitute “ the donor ”,

(d)before “tax”, in both places where it occurs, insert “ corporation ”, and

(e)for “he” substitute “ the donor ”.

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61U.K.In section 86A (charitable donations: contributions to agent's expenses) —

(a)in subsection (1) for “a person” substitute “ a company ”, and

(b)in subsection (2)(a) for “, profession or vocation” substitute “ or profession ”.

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75U.K.Omit section 95A (creative artists: relief for fluctuating profits).

76U.K.Omit section 96 (farming and market gardening: relief for fluctuating profits).

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86U.K.Omit section 107 (treatment of receipts as earned income).

87U.K.Omit section 108 (election for carry-back).

88U.K.Omit section 109 (charge under section 104: relief for individuals born before 6th April 1917).

89(1)Amend section 109A (relief for post-cessation expenditure) as follows.U.K.

(2)Omit subsection (3).

(3)In subsection (4) omit the unnumbered paragraph beginning with “If any sum”.

(4)In subsection (4A) omit the unnumbered paragraph beginning with “If any sum”.

(5)F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)F27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2890U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

91U.K.Omit section 110A (change of residence) and the italic cross-heading before it.

F2992U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93U.K.Omit section 112 (partnerships controlled abroad).

94U.K.Omit section 113 (effect for income tax of change in ownership of trade, profession or vocation).

F3095U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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98U.K.F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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100U.K.F35. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

101U.K.F36. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

102U.K.F37. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

103U.K.In section 119(1) (rent etc. payable in connection with mines, quarries and similar concerns) after “charged to” insert “ corporation ”.

104U.K.In section 120 (rent etc. payable in respect of electric line wayleaves)—

(a)in subsection (1) after “charged to” insert “ corporation ”,

(b)in subsection (1A) for “chargeable period” substitute “ accounting period ”, and

(c)in subsection (1A) after “charged to”, in both places where it occurs, insert “ corporation ”.

105U.K.In section 121 (management expenses of owner or mineral rights) omit subsection (1).

106(1)Amend section 122 (relief in respect of mineral royalties) as follows.U.K.

(2)In subsection (1)—

(a)for the words from “a person resident” to “year of assessment or” substitute “ a company resident in the United Kingdom which in any ”,

(b)omit “for the purposes of income tax, or as the case may be”,

(c)for “him” substitute “ it ”, and

(d)omit “year or” in both places where it occurs.

(3)In subsection (2)—

(a)omit the words from “brought into account” to “may be,”, and

(b)for “subsection (2)” substitute “ subsection (3) ”.

(4)Omit subsection (4).

F38107U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

108U.K.Omit section 127 (enterprise allowance).

109U.K.Omit section 127A (futures and options: transactions with guaranteed returns).

110U.K.In section 128 (commodity and financial futures etc: losses and gains) omit subsection (1).

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114U.K.F40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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117U.K.Omit section 232 (tax credits for non-UK residents).

118U.K.Omit section 233 (taxation of certain recipients of distributions and in respect of non-qualifying distributions).

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120(1)Amend section 250 (returns) as follows.U.K.

F44(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In subsection (7) at the end insert “ of this Act or Chapter 5 of Part 4 of ITTOIA 2005 ”.

121U.K.In section 251 (interpretation of sections 249 and 250), omit subsections (2) to (6).

122U.K.Omit sections 251A to 251D (approved share incentive plans).

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125U.K.F47. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126U.K.F48. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

127U.K.F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

128U.K.Omit section 314 (divers and diving supervisors).

129U.K.Omit section 322 (consular officers and employees).

130U.K.Omit section 324 (designated international organisations).

131U.K.Omit section 325 (interest on deposits with National Savings Bank).

132U.K.Omit section 326 (interest etc. under contractual savings schemes).

133U.K.Omit sections 326A to 326D (tax-exempt special savings accounts).

134U.K.Omit section 327 (disabled person's vehicle maintenance grant).

135U.K.Omit section 327A (payments to adopters).

136U.K.Omit sections 329 to 329AB (exemption of interest on damages for personal injury and personal injury damages in the form of periodical payments).

137U.K.Omit section 331 (scholarship income).

138U.K.Omit section 331A (student loans: certain interest to be disregarded).

139U.K.Omit section 332(3) (expenditure and houses of ministers of religion).

140U.K.In section 332A (venture capital trusts: reliefs) omit “and distributions by such trusts”.

141U.K.For section 333 substitute—

“333Investment plan regulations

Regulations under Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans) may include provision generally for the purpose of the administration of corporation tax in relation to plans.”

142U.K.Omit section 333A (personal equity plans: tax representatives).

143U.K.F50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

144U.K.F51. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

145(1)Amend section 337 (company beginning or ceasing to carry on trade) as follows.U.K.

(2)In subsection (1) after “shall be computed” insert “ for the purposes of corporation tax ”.

(3)In subsection (2) after “overseas property business” insert “ (within the meaning given by section 70A(4)) ”.

146(1)Amend section 347A (general rule: annual payments) as follows.U.K.

(2)F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Omit subsections (4) and (5).

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152U.K.In section 353(1) (relief for payments of interest) after “sections 359 to 368” insert “ of this Act and section 52 of ITTOIA 2005 ”.

153U.K.F58. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

154U.K.F59. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

155U.K.In section 370(2)(b) (relevant loan interest) for the words from “either” to the end substitute “ would be eligible for relief under section 353 ”.

156U.K.F60. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

157U.K.F61. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

158U.K.In section 382(3) (provisions supplementary to sections 380 and 381) omit “under the provisions of the Income Tax Acts applicable to Case I or II of Schedule D”.

159U.K.F62. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

160U.K.F63. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

161U.K.In section 385(4) (carry-forward against subsequent profits) omit “under Case I of Schedule D” and, in both places where it occurs, “under that Case”.

162U.K.In section 386(1) (carry-forward where business transferred to a company) omit “under Schedule D”.

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167U.K.F68. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

168U.K.F69. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F70169U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

170U.K.In section 398 (loss relief for transactions in deposits with and without certificates or in debts)—

(a)F71. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)F71. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)for “tax under Schedule D” substitute “ corporation tax under Schedule D or income tax under that Act ”.

F72171U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F73172U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F74173U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F75174U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

175U.K.F76. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F77176U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

177U.K.In section 434 (franked investment income etc.) omit subsection (1A).

F78178U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

179(1)Section 468J (dividend distributions of authorised unit trusts) is amended as follows.U.K.

(2)In subsection (2) for “Tax Acts” substitute “ Corporation Tax Acts ”.

(3)At the end of subsection (4) insert “(including a dividend treated as paid to a unit holder who is not liable to corporation tax)”.

180(1)Section 468L (interest distributions of authorised unit trusts) is amended as follows.U.K.

(2)In subsection (1A) after “this Chapter” insert “ and Chapter 2 of Part 4 of ITTOIA 2005 (interest) ”.

(3)In subsection (2) for “Tax Acts” substitute “ Corporation Tax Acts ”.

(4)At the end of subsection (3) insert “(including a payment of interest treated as made to a unit holder who is not liable to corporation tax)”.

181U.K.F79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F80182U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F81183U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

184(1)Amend section 477A (building societies: regulations for deduction of tax) as follows.U.K.

(2)In subsection (4)—

(a)for “terminal bonus” substitute “ interest ”, and

(b)for “contractual savings scheme” substitute “ SAYE savings arrangement ”.

(3)Omit subsections (5) and (6).

(4)In subsection (9) omit the words from “but” to the end of the subsection.

(5)In subsection (10) after “this section—” insert—

““certified SAYE savings arrangement” has the meaning given by section 703 of ITTOIA 2005”.

185U.K.Omit section 480C (relevant deposits: computation of tax on interest).

186U.K.F82. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

187U.K.F83. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

188(1)Section 486 (industrial and provident societies and co-operative associations) is amended as follows.U.K.

(2)In subsection (1)—

F84(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)for “the purposes of corporation tax” substitute “ those purposes ”.

(3)In subsection (4) at the end insert “for the purposes of corporation tax”.

(4)Omit subsection (5).

F85189U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F86190U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F87191U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F88F89192U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F88F89193U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F88F89194U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F90195U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

196(1)Amend section 504 (meaning of the “commercial letting of furnished accommodation”) as follows.U.K.

(2)Omit subsection (4).

(3)In subsection (6)—

(a)omit “year of assessment or”,

(b)for “person” substitute “ company ”,

(c)omit “year or” in each place where it occurs,

(d)for “he” substitute “ the company ”, and

(e)for “him” substitute “ the company ”.

(4)In subsection (6A) for “above is—” to the end substitute “ above is the period of two years beginning at the end of the accounting period in which the accommodation was let. ”

(5)In subsection (7)—

(a)omit “year of assessment or”, and

(b)omit “year or” in both places where it occurs.

(6)In subsection (8) omit “year of assessment or”.

(7)In subsection (9)—

(a)for “a person” substitute “ a company ”, and

(b)for “he” substitute “ it ”.

197U.K.F91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F92198U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

199U.K.F93. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

200U.K.Omit section 514 (funds for reducing the national debt).

F94201U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F94202U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F94203U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

204U.K.In section 527(4) (spreading of royalties over several years) at the end insert “ of this Act or by virtue of section 595 of ITTOIA 2005 ”.

F95205U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

206U.K.Omit section 529 (patent income to be earned income in certain cases).

F96207U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F96208U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F96209U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97210U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97211U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97212U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97213U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97214U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97215U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97216U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97217U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97218U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97219U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97220U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F97221U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

222(1)Amend section 552 (information: duty of insurers) as follows.U.K.

(2)In subsection (1) omit “within the meaning of this Chapter”.

(3)In subsection (5)—

(a)in paragraph (b)(ii) for “, the date” to the end of the sub-paragraph substitute “ of this Act and section 514(1) of ITTOIA 2005 (chargeable events where transaction-related calculations show gains), the date on which the year and the insurance year end; ”,

(b)in paragraph (c)—

(i)after “this Chapter” insert “ and Chapter 9 of Part 4 of ITTOIA 2005 ”,

(ii)after “relevant capital payments” insert “ and the amount or value of any capital sums of a kind referred to in section 492(1)(b) to (e) of ITTOIA 2005 ”,

(iii)in sub-paragraph (iii) after “annuity” insert “ determined in accordance with section 656 and the amount of so much of any payment previously made on account of an annuity as is exempt under section 717 of ITTOIA 2005 ”, and

(iv)in sub-paragraph (v) after “year” insert “ and the total of the amounts of gains treated as arising on previous chargeable events within section 509(1) or 514(1) of ITTOIA 2005 ”,

(c)for paragraph (e) substitute—

“(e)the number of years relevant for computing the annual equivalent of the amount of the gain for the purposes of subsection (1) of section 536 of ITTOIA 2005 (top slicing relieved liability: one chargeable event), apart from subsections (6) and (8) of that section;”, and

(d)for paragraph (f) substitute—

“(f)on the assumption that section 465 of ITTOIA 2005 (person liable: individuals) has effect in relation to the gain —

(i)whether an individual would fall to be treated as having paid income tax at the lower rate on the amount of the gain in accordance with section 530 of that Act; and

(ii)if so, except in a case where paragraph (c) above applies, the amount of such tax that would fall to be so treated as paid.”

(4)In subsection (6)—

(a)in paragraph (b)—

(i)after “section 546C(7)(a)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”, and

(ii)after “year” insert “ (and the insurance year) ”, and

(b)in paragraph (c) after “section 546C(7)(a)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”.

(5)In subsection (7)(b)—

(a)after “section 546C(7)(a)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”, and

(b)after “year” insert “ (and the insurance year) ”.

(6)In subsection (9)(a)—

(a)after “section 546C(7)(b)” insert “ of this Act (and section 514(1) of ITTOIA 2005) ”, and

(b)after “occurs” insert “ (and the end of the insurance year mentioned in section 514(3) and (4) of ITTOIA 2005) ”.

(7)In subsection (10)—

(a)in the definition of “amount” after “section 553(3)” insert “ of this Act and section 528 of ITTOIA 2005 ”, and

(b)insert in the appropriate place—

““chargeable event” means an event which is a chargeable event within the meaning of this Chapter and Chapter 9 of Part 4 of ITTOIA 2005;”.

223U.K.In section 552ZA(3) (information: supplementary provisions) after “section 546C(7)(a)” insert “ of this Act and section 514(1) of ITTOIA 2005 ”.

224(1)Amend section 552A (tax representatives) as follows.U.K.

(2)In subsection (5) omit “in relation to which this Chapter has effect and”.

(3)In subsection (12) insert in the appropriate place—

““capital redemption policy” means a capital redemption policy in relation to which this Chapter and Chapter 9 of Part 4 of ITTOIA 2005 have effect;”,

““contract for a life annuity” means a contract for a life annuity in relation to which this Chapter and Chapter 9 of Part 4 of ITTOIA 2005 have effect;”, and

““policy of life insurance” means a policy of life insurance in relation to which this Chapter and Chapter 9 of Part 4 of ITTOIA 2005 have effect;”.

225U.K.In section 552B (duties of overseas insurers' tax representatives) after subsection (5) insert—

“(5A)In subsection (5) “chargeable event” has the same meaning as in section 552 (see subsection (10) of that section).”

F98226U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F98227U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F98228U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

229U.K.Omit section 554 (borrowings on life policies to be treated as income in certain cases).

F99230U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

231U.K.Omit section 557 (charge on profits).

232U.K.In section 568(1) (deductions from profits of contributions paid under certified schemes)—

(a)after “section 74” insert “ of this Act or section 33 of ITTOIA 2005 ”, and

(b)after “Case I of Schedule D,” insert “ or under Part 2 of ITTOIA 2005, ”.

233U.K.In section 570(4) (payments under certified schemes which are not repayments of contributions) for “any of the provisions of section 113 or section 337(1)” substitute “ section 337(1) above or section 18 of ITTOIA 2005 (companies beginning or ceasing to carry on trade) ”.

F100234U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F100235U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F100236U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

237U.K.In section 578(1) (housing grants) for “any tax purpose” substitute “ corporation tax purposes ”.

F101238U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F102239U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

240U.K.Omit sections 580A to 580C (relief from tax on annual payments under certain insurance policies and immediate needs annuities).

241U.K.Omit section 581 (borrowing in foreign currency by local authorities and statutory corporations).

242U.K.F103. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F104243U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

244U.K.Omit section 583 (Inter-American Development Bank).

F105245U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

246U.K.Omit section 585 (relief from tax on delayed remittances).

F106247U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F107248U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

249U.K.F108. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F109250U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F110251U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

252(1)Amend section 591C (cessation of approval: tax on certain schemes) as follows.U.K.

(2)In subsection (1) for “tax shall be charged” substitute “ income tax shall be charged under and ”.

(3)In subsection (2) omit “under Case VI of Schedule D”.

(4)In subsection (6A)(c)(iii) for “Schedule D” substitute “ Part 2 of ITTOIA 2005 ”.

253(1)Amend section 592 (exempt approved schemes) as follows.U.K.

(2)In subsection (3)—

(a)after “the schemes” insert “ , are not relevant foreign income ”, and

(b)for “Case VI of Schedule D” substitute “ Chapter 8 of Part 5 of ITTOIA 2005 (income not otherwise charged) ”.

(3)In subsection (4)(a) after “for the purposes of” insert “ Part 2 of ITTOIA 2005 or ”.

254(1)Amend section 598 (charge to tax: repayment of employee's contributions) as follows.U.K.

(2)In subsection (1) after “this section,” insert “ income ”.

(3)In subsection (2) for the words from the beginning to “Schedule D” substitute “ The person liable for any tax chargeable under this section shall be the administrator of the scheme ”.

255(1)Amend section 599 (charge to tax: commutation of entire pension in special circumstances) as follows.U.K.

(2)In subsection (1) after “whether wholly or not, under the rule,” insert “ income ”.

(3)In subsection (1B) before “tax” insert “ income ”.

(4)In subsection (3) for the words from the beginning to “Schedule D on that amount,” substitute “ The person liable for any tax chargeable under this section shall be the administrator of the scheme ”.

256U.K.In section 599A (charge to tax: payments out of surplus funds) for subsection (2) substitute—

“(2)On the making of a payment to which subsection (1) above applies—

(a)income tax is charged at the relevant rate on such amount as, after deduction of tax at that rate, would equal the amount of the payment, and

(b)the person liable for the tax so charged is the administrator of the scheme.”

257U.K.In section 601(5)(b) (charge to tax: payments to employers) for “to tax on the amount of the payment under Case VI of Schedule D” substitute “—

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

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

258U.K.In section 602(1)(a) (regulations relating to pension fund surpluses) omit “under Case VI of Schedule D”.

259(1)Amend section 607 (pilots' benefit fund) as follows.U.K.

(2)In subsection (2)(c) for “the provisions of Case II of Schedule D” substitute “ such of the provisions of Part 2 of ITTOIA 2005 as apply in calculating the profits of a profession ”.

(3)In subsection (3)(a) for “in assessing tax under Schedule D” substitute “ in calculating the profits of the profession ”.

260U.K.In section 608(2) (superannuation funds approved before 6th April 1980)—

(a)in paragraph (b)—

(i)after “commissions” insert “ which are not relevant foreign income and ”, and

(ii)for “Case VI of Schedule D” substitute “ Chapter 8 of Part 5 of ITTOIA 2005 ”, and

(b)in paragraph (c) for the words from “under” onwards substitute “ under Chapter 11 of Part 4 of ITTOIA 2005 (transactions in deposits) by virtue of a disposal of deposit rights falling within section 552(1)(a) or (b) of that Act ”.

261U.K.In section 614(2A) (exemptions and reliefs in respect of income from investments etc. of certain pension schemes) for the words from “paragraph 1” to “(relevant” substitute “ Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply ”.

F111262U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

263(1)Amend section 623 (relevant earnings) as follows.U.K.

(2)In subsection (2)—

(a)in paragraph (c) for “Schedule D” substitute “ Part 2 of ITTOIA 2005 ”, and

(b)for paragraph (d) substitute—

“(d)income to which section 833(5B) (patent income) applies;”.

(3)In subsection (6)—

(a)in paragraph (a) for “section 74(m), (p) or (q)” substitute “ section 51 of ITTOIA 2005 ”, and

(b)after the “or” at the end of that paragraph insert—

“(aa)deductions in respect of any annuity or other annual payment (other than interest) payable out of his profits; or”.

264U.K.In section 644(2) (meaning of “relevant earnings”)—

(a)in paragraph (c) for “Schedule D” substitute “ Part 2 of ITTOIA 2005 ”, and

(b)for paragraph (d) substitute—

“(d)income to which section 833(5B) (patent income) applies.”

265U.K.In section 646(2) (meaning of “relevant net earnings”)—

(a)in paragraph (a) for “section 74(m), (p) or (q)” substitute “ section 51 of ITTOIA 2005 ”,

(b)after that paragraph insert—

“(aa)deductions in respect of any annuity or other annual payment (other than interest) payable out of his profits;”, and

(c)in paragraph (bb) for “section 332(3) of this Act” substitute “ section 159 of ITTOIA 2005 ”.

266(1)Amend section 648B (return of contributions after pension date) as follows.U.K.

(2)In subsection (1) for “Tax” substitute “ Income tax ”.

(3)In subsection (2) for the words from the beginning to “Schedule D” substitute “ The person liable for any tax chargeable under this section shall be the administrator of the scheme ”.

267(1)Amend section 650A (charge on withdrawal of approval from arrangements) as follows.U.K.

(2)In subsection (1) for “tax shall be charged” substitute “ income tax shall be charged under and ”.

(3)In subsection (2) omit “under Case VI of Schedule D”.

268F112(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F113(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)F114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F115269U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

270U.K.F116. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

271U.K.Omit sections 660A and 660B (income arising under settlement where settlor retains an interest and payments to unmarried minor children of settlor).

272(1)Amend section 660C (nature of charge on settlor) as follows.U.K.

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

(3)F117. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)F118. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

273U.K.Omit sections 660D to 660G (settlements: supplementary provisions etc.).

274U.K.Omit section 677 (sums paid to settlor otherwise than as income).

275U.K.Omit section 678 (capital sums paid by body connected with settlement).

276U.K.Omit sections 682 and 682A (ascertainment of undistributed income and supplementary provisions for Chapter 1B).

277U.K.F119. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

278F120U.K.

279U.K.Omit section 688 (schemes for employees and directors to acquire shares).

F121280U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

281F122U.K.

282U.K.F123. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

283U.K.F124. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F125284U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F125285U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F125286U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F125287U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

288U.K.F126. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

289U.K.Omit section 699 (relief from higher rate tax for inheritance tax on accrued income).

F127290U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F128291U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F129292U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

293U.K.F130. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

294U.K.F131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

295U.K.F132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

296U.K.F133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

297U.K.F134. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

298U.K.F135. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

299U.K.F136. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F137300U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

301U.K.Omit section 730C (exchanges of gilts: traders etc.).

F138302U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F139303U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

304U.K.F140. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

305U.K.F141. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

306U.K.F142. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

307U.K.F143. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F144308U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F144309U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F145310U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

311U.K.F146. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F147312U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F148313U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F149F150314U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F149F150315U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F149F150316U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F149F150317U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F149F150318U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F149F150319U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F151F149320U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F152321U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F152322U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F152323U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

324U.K.In section 806K(2) (application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere) after paragraph (b) insert—

“(bb)in relation to income tax, take any reference to a dividend chargeable under Case V of Schedule D as a reference to a dividend chargeable under Chapter 4 of Part 4 of ITTOIA 2005;”.

F153325U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F154326U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F155327U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

328U.K.F156. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

329U.K.F157. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

330U.K.In section 821(1) (under-deductions from payments made before passing of annual Act)—

(a)after “assessment” insert “ or accounting period ”,

(b)after “quarterly payments” insert “ (or half-periodic or quarterly payments) ”,

(c)after “income” insert “ or corporation ”,

(d)after “year”, in the second and third places where it occurs, insert “ or period ”,

(e)after “charged”, in the fourth place where it occurs, insert “ in respect of those payments to income tax under Chapter 2 of Part 4 of ITTOIA 2005 (interest) or shall be charged to corporation tax under ”, and

(f)omit “in respect of those payments”.

331(1)Section 824 (repayment supplements: individuals and others) is amended as follows.U.K.

F158(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Omit subsection (8).

(4)In subsection (9) for “to (8)” substitute “ to (7) ”.

F159332U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

333U.K.F160. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

334(1)Amend section 828 (orders and regulations made by the Treasury or the Board) as follows.U.K.

(2)In subsection (4) omit “324,”.

(3)In subsection (5)—

(a)F161. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)F161. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)for “that Act” substitute “ either of those Acts ”.

F162335U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

336U.K.In section 831(3) (interpretation of ICTA) after the entry relating to “ITEPA 2003” insert—

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

F163337U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

338U.K.F164. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

339U.K.F165. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

340U.K.F166. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F167341U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

342U.K.Omit Schedule 4A (creative artists: relief for fluctuating profits).

343(1)Amend Schedule 5 (treatment of farm animals etc for the purposes of Case I of Schedule D) as follows.U.K.

(2)In paragraph 1—

(a)after “profits” insert “ chargeable to corporation tax ”, and

(b)for “his” substitute “ its ”.

(3)In paragraph 2—

(a)in sub-paragraph (1) for “he” substitute “ the farmer ”,

(b)omit sub-paragraphs (3)(a), (4)(a) and (5), and

(c)in sub-paragraph (6), omit the definitions of “commencement year” and “qualifying year of assessment”.

(4)In paragraph 3—

(a)in sub-paragraph (1) after “profits” insert “ chargeable to corporation tax ”,

(b)in sub-paragraph (3)(b) for “him” substitute “ the farmer ”,

(c)in sub-paragraph (9)(a) for “his” substitute “ the seller's ”, and

(d)in sub-paragraph (10)(b) for “him” substitute “ the farmer ”.

(5)In paragraph 4—

(a)for “him” substitute “ the farmer ”, and

(b)for “he” substitute “ the farmer ”.

(6)In paragraph 5(1) after “profits” insert “ chargeable to corporation tax ”.

(7)In paragraph 6—

(a)in sub-paragraph (1)—

(i)for “his” substitute “ its ”, and

(ii)for “him” substitute “ the farmer ”,

(b)omit sub-paragraphs (2)(a), and (3)(a), and

(c)in sub-paragraph (4), omit the definition of “qualifying year of assessment”.

(8)In paragraph 8—

(a)for “him”, in each place it occurs, substitute “ the farmer ”,

(b)in sub-paragraph (7)—

(i)before “tax” insert “ corporation ”, and

(ii)for “chargeable period” substitute “ accounting period ”.

(9)In paragraph 11 for “chargeable period” substitute “ accounting period ”.

344U.K.Omit Schedule 5AA (guaranteed returns on transactions in futures and options).

345U.K.Omit Schedule 15A (contractual savings schemes).

346(1)Amend Schedule 15B (venture capital trusts: relief from income tax) as follows.U.K.

(2)In paragraph 4(1) and (2) omit “under Case VI of Schedule D”.

(3)Omit paragraphs 7 to 9.

F168347U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

348(1)Amend Schedule 22 (reduction of pension fund surpluses) as follows.U.K.

(2)In paragraph 7(3)(c) for the words from “section 56” to “that section” substitute “ section 551 of ITTOIA 2005 shall by virtue of section 56(3)(b) of this Act ”.

(3)After paragraph 7 insert—

“7A(1)This paragraph applies if a calculation falls to be made under paragraph 7 above in a case where—

(a)relief is to be given under section 454 of ITTOIA 2005 (listed deeply discounted securities held since 26th March 2003: relief for losses) in respect of a loss sustained on the disposal of securities, and

(b)had there been a profit on the disposal it would have been eligible for relief from tax for the year of assessment in which the loss is sustained by virtue of section 592(2).

(2)That relief is to be given before the calculation under paragraph 7 above is made.

(3)Then the amount of income to which the specified percentage is applied by virtue of sub-paragraph (3)(a) of that paragraph is reduced by the amount of that relief.

(4)In this paragraph “disposal” has the same meaning as in Chapter 8 of Part 4 of ITTOIA 2005.”

349U.K.In paragraph 11A(4) of Schedule 24 (assumptions for calculating chargeable profits etc. of foreign companies) after “the Capital Allowances Act” insert “ or section 48 of ITTOIA 2005 ”.

F169350U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F170351U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

352(1)Amend Schedule 30 (transitional provisions and savings) as follows.U.K.

F171(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)Omit paragraphs 18 and 18A.