SCHEDULES

Section 5

SCHEDULE 1U.K.Abolition of dividend tax credits etc

Main repealsU.K.

1(1)In ITTOIA 2005 omit sections 397 to 398, 400, 414 and 421 (distributions: tax credits, and tax treated as paid).U.K.

(2)In CTA 2010 omit section 1109 (tax credits for certain distributions).

Further amendments in ITTOIA 2005U.K.

2U.K.ITTOIA 2005 is further amended as follows.

3U.K.In the heading of Chapter 3 of Part 4, for “credits etc” substitute “ treated as paid ”.

4U.K.In section 382(2) (other contents of Chapter 3 of Part 4)—

(a)omit “tax credits,”, and

(b)for “397” substitute “ 399 ”.

5U.K.Omit section 384(3) (which refers to section 398).

6U.K.Omit section 393(5) (determining entitlement to tax credit).

7U.K.In section 394 (which deems a distribution to be made)—

(a)omit subsection (5) (determining entitlement to tax credit), and

(b)in subsection (6), for “But for” substitute “ For ”.

8U.K.In section 395(3) (interpretation of section 395(2)) omit the words from “after” to the end.

9U.K.For section 396A(2)(b) (alternative receipt treated as qualifying distribution for the purposes of sections 397 and 399 and for the purposes of section 1100 of CTA 2010) substitute—

“(b)for the purposes of sections 1100 to 1103 of CTA 2010 (statements and returns of details of distributions) it is treated as a distribution that—

(i)is so made, and

(ii)is one to which section 1100 of CTA 2010 applies.”

10U.K.In the italic heading before section 397, omit “Tax credits and”.

11(1)Section 399 (qualifying distribution received by person not entitled to tax credits) is amended as follows.U.K.

(2)For subsection (1) substitute—

“(1)This section applies if—

(a)a person's income for a tax year includes a distribution of a company, and

(b)the person is non-UK resident.”

(3)In subsection (2) omit “(but see subsection (7))”.

(4)Omit subsections (3) to (5) (amount of dividend received by non-UK resident to be treated as its grossed-up amount).

(5)Omit subsection (5A) (amounts treated as qualifying distributions for purposes of the section).

(6)Omit subsection (7) (which provides for subsection (2) to be subject to repealed provisions).

(7)For the heading substitute “ Tax treated as paid on distributions received by non-UK resident persons ”.

12(1)Section 401 (relief: qualifying distribution after linked non-qualifying distribution) is amended as follows.U.K.

(2)For subsections (1) to (6) substitute—

“(1)Where a person is liable to income tax on a CD distribution, the person's liability to income tax on a subsequent non-CD distribution is reduced in accordance with this section if the non-CD distribution consists of a repayment of—

(a)the share capital, or

(b)the principal of the security,

which constituted the CD distribution.

(1A)The reduction is—

(a)the amount of income tax to which the person is liable on the CD distribution, or

(b)if lower, the amount of income tax to which the person is liable on the non-CD distribution.

(1B)For the purposes of calculating the amounts mentioned in subsection (1A)(a) and (b) assume—

(a)that the CD distribution is the lowest part of the person's dividend income in the tax year (“year 1”) in which it is made,

(b)that the non-CD distribution, if it is made in year 1, is the part of the person's dividend income in year 1 that is next lowest after the CD distribution, and

(c)that the non-CD distribution, if it is made after year 1, is the lowest part of the person's dividend income in the tax year in which it is made.”

(3)In subsection (7) (interpretation), for “ “security”” substitute “—

“CD distribution” means a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) of CTA 2010 (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company),

“non-CD distribution” means a distribution which is not a CD distribution, and

“security””.

(4)In the heading, for “qualifying distribution after linked non-qualifying distribution” substitute “ distribution repaying shares or security issued in earlier distribution ”.

13U.K.Omit section 401A (recovery of overpaid tax credit etc).

14U.K.In section 401B (power to obtain information for the purposes of section 397), for “section 397”, in each place it occurs, substitute “ this Chapter ”.

15U.K.Omit sections 406(4A) and 407(4A) (determining entitlement to tax credit).

16U.K.In section 408(2A) (interpretation of section 408(2)) omit the words from “after” to the end.

17U.K.In section 411(2) (stock dividends: amount on which tax charged) omit “, grossed up by reference to the dividend ordinary rate for the tax year”.

18U.K.In section 416 (released debts: amount on which tax charged)—

(a)in subsection (1) (tax charged on gross amount) omit “gross”, and

(b)omit subsection (2) (meaning of “gross amount”).

19U.K.In section 418(3) (release of loan: tax only on grossed-up amount of excess where part previously charged) omit “, grossed up by reference to the dividend ordinary rate”.

20U.K.In section 651 (meaning of “UK estate” and “foreign estate”)—

(a)in subsection (4), for “680(3) or (4) (sums” substitute “ 664(2)(c) or (d) or 680(4) (sums not liable to tax and sums ”, and

(b)in subsection (5), for “680(3) or (4)” substitute “ 664(2)(c) or (d) or 680(4) ”.

21U.K.In section 657 (tax charged on estate income from foreign estates), for “680(3) or (4)”, in both places, substitute “ 680(4) ”.

22U.K.In section 663 (applicable rate for purposes of grossing-up under sections 656 and 657), after subsection (4) insert—

“(5)The aggregate income of the estate, so far as it consists of income within section 664(2)(c) or (d), is treated for the purposes of this section as bearing income tax at 0%.”

23U.K.In section 670 (applicable rate for purposes of Step 2 in section 665(1)), after subsection (4) insert—

“(4A)The aggregate income of the estate, so far as it consists of income within section 664(2)(c) or (d), is treated for the purposes of this section as bearing income tax at 0%.”

24U.K.In section 680 (income of an estate that is treated as bearing income tax)—

(a)in subsection (2) omit “(3) or”, and

(b)omit subsection (3) (sums treated as bearing tax at the dividend ordinary rate).

25U.K.In section 680A (estate income treated as dividend income), in each of subsections (1)(a) and (4)(a), after “at the dividend ordinary rate” insert “ or as bearing tax at 0% because of section 663(5) ”.

26U.K.In section 854(6) (carrying on by partner of notional business: meaning of “untaxed income”)—

(a)omit the “or” at the end of paragraph (b), and

(b)after paragraph (c) insert—

“(d)income chargeable under Chapter 5 of Part 4 (stock dividends from UK resident companies), or

(e)income chargeable under Chapter 6 of Part 4 (release of loan to participator in closed company).”

27U.K.Omit section 858(3) (partnerships with foreign element: entitlement to tax credit).

Further amendments in CTA 2010U.K.

28U.K.CTA 2010 is further amended as follows.

29(1)Section 279F (ring fence profits: related 51% group company) is amended as follows.U.K.

(2)In subsection (7)(c) (conditions to be met by a company's dividend income in order for company to be a passive company), in sub-paragraph (ii) (dividends must be franked investment income) for “franked investment income” substitute “ exempt ABGH distributions ”.

(3)After subsection (9) insert—

“(10)In subsection (7)(c) “exempt ABGH distribution” means a distribution which—

(a)is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b)is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

30(1)Section 279G (ring fence profits: meaning of “augmented profits”) is amended as follows.U.K.

(2)In subsection (1)(b) (franked investment income is part of augmented profits unless excluded)—

(a)for “franked investment income” substitute “ exempt ABGH distributions ”, and

(b)for “is” substitute “ are ”.

(3)In subsection (3) (exclusion of franked investment income received from certain subsidiaries etc), for “franked investment income” substitute “ exempt ABGH distribution ”.

(4)After subsection (4) insert—

“(5)In this section “exempt ABGH distribution” means a distribution which—

(a)is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b)is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

31U.K.For section 463(7) (loan to trustees of settlement which has ended: amount on which debtor taxed when all or part of loan released or written off) substitute—

“(7)The amount which Y is treated as receiving is equal to the amount released or written off.”

32(1)Section 549 (distributions: supplementary) is amended as follows.U.K.

(2)Omit subsection (2) (which excludes entitlement to tax credits).

(3)In subsection (2A) (which disapplies sections 409 to 414 of ITTOIA 2005), for “414” substitute “ 413A ”.

33(1)Section 751 (interpretation of Part 15 (transactions in securities)) is amended as follows.U.K.

(2)The existing text becomes subsection (1).

(3)In that subsection, in the definition of “dividends”, omit “qualifying”.

(4)After that subsection insert—

“(2)In the definition of “dividends” given by subsection (1), “other distributions” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).”

34U.K.Omit section 814D(8) (which excludes entitlement to tax credits).

35U.K.Omit section 997(5) (which introduces sections 1109 to 1111).

36U.K.In sections 1026(1)(b) and 1027(2)(b) (cases where amount paid up in respect of bonus shares does not fall to be treated as a qualifying distribution) omit “qualifying”.

37(1)Section 1070 (distributions by company carrying on mutual business) is amended as follows.U.K.

(2)In subsection (2) (provisions about distributions apply to company's distributions only where made out of taxed profits or franked investment income), for paragraph (b) (franked investment income) substitute—

“(b)income of the company consisting of exempt ABGH distributions.”

(3)After subsection (5) insert—

“(5A)In subsection (2) “exempt ABGH distribution” means a distribution which—

(a)is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b)is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

38(1)Section 1071 (company not carrying on business) is amended as follows.U.K.

(2)In subsection (5) (provisions about distributions apply to company's distributions only where made out of taxed profits or franked investment income), for paragraph (b) (franked investment income) substitute—

“(b)income of the company consisting of exempt ABGH distributions.”

(3)After subsection (5) insert—

“(5A)In subsection (5) “exempt ABGH distribution” means a distribution which—

(a)is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b)is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

39(1)Section 1100 (qualifying distribution: right to request a statement) is amended as follows.U.K.

(2)In subsection (1) (requests for statement)—

(a)for “qualifying distribution” substitute “ distribution to which this section applies ”, and

(b)omit paragraph (b) (amount of any tax credit), and the “and” preceding it.

(3)After subsection (4) insert—

“(4A)This section applies to any distribution other than one which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).”

(4)Omit subsections (2) and (5) (interpretation of subsection (1)(b)).

(5)In subsection (7) (section to be read with section 396A(2) of ITTOIA 2005)—

(a)for “needs” substitute “ , and sections 1101 to 1103, need ”, and

(b)for “as “qualifying distributions” for the purposes of this section” substitute “ as distributions to which this section applies ”.

(6)In the heading, for “Qualifying” substitute “ Certain ”.

40(1)Section 1101 (non-qualifying distributions etc: returns and information) is amended as follows.U.K.

(2)In subsection (1) (duty to make return), for “which is not a qualifying distribution” substitute “ to which section 1100 does not apply ”.

(3)In subsection (4) (duty to make return where not clear whether distribution is non-qualifying), for “which is not a qualifying distribution” substitute “ to which section 1100 does not apply ”.

(4)In the heading, and in the heading of section 1102, for “Non-qualifying” substitute “ Other ”.

41U.K.In section 1103 (regulations about information about non-qualifying distributions)—

(a)in subsection (2) (purpose for which sections 1101 and 1102 may be rewritten), for “which are not qualifying distributions” substitute “ to which section 1100 does not apply ”,

(b)in subsection (4) (special arrangements about matters specified in subsection (5)), for “matters” substitute “ matter ”, and

(c)in subsection (5)—

(i)for “Those matters are” substitute “ That matter is ”, and

(ii)omit paragraph (b) (tax credits), and the “and” preceding it.

42(1)Section 1106 (interpretation of sections 1104 and 1105) is amended as follows.U.K.

(2)In subsection (4) (meaning of “tax certificate”)—

(a)after paragraph (a) insert “ and ”, and

(b)omit paragraph (c) (tax credits), and the “and” preceding it.

(3)Omit subsections (5) and (6) (interpretation of subsection (4)(c)).

43U.K.Omit sections 1110 and 1111 (recovery of overpaid tax credits etc).

44(1)Section 1115 (meaning of “new consideration” in Part 23) is amended as follows.U.K.

(2)In subsections (5)(a) and (6)(b) for “qualifying” substitute “ non-CD ”.

(3)After subsection (6) insert—

“(7)In this section “non-CD distribution” means any distribution other than one which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).”

45U.K.In section 1119 (definitions for the purposes of the Corporation Tax Acts) omit the entries for “franked investment income”, “qualifying distribution” and “tax credit”.

46U.K.Omit section 1126 (meaning of “franked investment income”).

47U.K.Omit section 1136 (meaning of “qualifying distribution”).

48U.K.Omit section 1139(4) (“relief” includes tax credit).

49U.K.In Schedule 2 (transitionals and savings etc) omit paragraph 106(1) (operation of sections 1026 and 1027 in relation to share capital issued before 7 April 1973).

50U.K.In Schedule 4 (index of defined expressions) omit the entries for “franked investment income”, “qualifying distribution” and “tax credit”.

Other amendmentsU.K.

51(1)TMA 1970 is amended as follows.U.K.

(2)In section 8(1AA)(b) (payable income tax is chargeable amount less tax deducted at source and tax credits) omit the words after “source”.

(3)In section 8A(1AA)(b) (payable income tax is chargeable amount less tax deducted at source and tax credits) omit the words after “source”.

(4)In section 9(1) (self-assessment)—

(a)in paragraph (b) (payable income tax is assessed amount less tax deducted at source and tax credits) omit the words after “source”, and

(b)in the words after paragraph (b) omit “, 400(2), 414(1), 421(1)”.

(5)In section 12AA(1A)(b) (partner's payable income tax is chargeable amount less tax deducted at source and tax credits) omit the words after “source”.

(6)In section 12AB (partnership statement in partnership return)—

(a)in subsection (1)(a)—

(i)after sub-paragraph (ia) insert “ and ”, and

(ii)omit sub-paragraph (iii) (tax credits), and the “and” preceding it,

(b)in subsection (1)(b) for “, tax or credit” substitute “ or tax ”, and

(c)in subsection (5) omit the definition of “tax credit”.

(7)In section 12B(4A)(a)(i) (statements themselves must be preserved if of amount of qualifying distribution and tax credit), after “amount” insert “ of distribution, formerly amount ”.

(8)In section 59A(8)(b) (amounts included in annual total of deductions at source) omit “or are tax credits to which section 397(1) or 397A(1) of ITTOIA 2005 applies,”.

(9)In section 59B (payment of income tax and capital gains tax)—

(a)in subsection (1) omit “, 400(2), 414(1), 421(1)”, and

(b)in subsection (2)(b) omit “or is a tax credit to which section 397(1) or 397A(1) of ITTOIA 2005 applies,”.

(10)Omit section 87A(5) (interest on assessments under section 1110 of CTA 2010 on overpaid tax credits etc).

(11)In section 98 (special returns), in the first column of the table omit the entry for section 1109 of CTA 2010.

52(1)ICTA is amended as follows.U.K.

(2)Omit section 231B (arrangements to pass on value of tax credit).

(3)Omit section 824(2) (repayment supplements: tax credits).

(4)In section 824(4A) omit paragraph (b) (repayment supplements: tax credit treated as income tax deducted at source), and the “and” preceding it.

(5)In section 825(1) (repayment supplements: companies) omit paragraph (c) (tax credits comprised in franked investment income), and the “or” preceding it.

(6)In section 826 (interest on tax overpaid by companies)—

(a)in subsection (1) omit paragraph (c) (tax credits), including the “or” at the end, and

(b)in subsection (3)—

(i)omit “or a payment of the whole or part of a tax credit falling within subsection (1)(c) above”, and

(ii)omit “or, as the case may be, the franked investment income referred to in subsection (1)(c) above”.

53U.K.In FA 1988, in Schedule 13 omit paragraph 7(c) (post-consolidation amendment of section 824(2) of ICTA).

54U.K.In FA 1989—

(a)omit section 115 (double taxation: tax credits), and

(b)in section 179(1)(b)(i) (amendments of provisions of TMA 1970 including section 87A(1) and (5)) omit “and (5)”.

55U.K.In FA 1993 omit section 171(2B) (which excludes entitlement to tax credits).

56U.K.In FA 1994 omit section 219(4B) (which excludes entitlement to tax credits).

57(1)F(No.2)A 1997 is amended as follows.U.K.

(2)Omit section 22(1) (which inserted section 171(2B) of FA 1993).

(3)Omit section 28 (which inserted section 231B of ICTA).

(4)Omit section 30(9) and (10) (effect of double taxation arrangements in relation to tax credits).

(5)In Schedule 6 (repeal of provisions relating to foreign income dividends), in paragraph 23 (transitional provision for certain foreign income dividends paid before 6 April 1999 but received on or after that date) omit—

(a)“qualifying”, and

(b)“nine tenths of”.

58(1)FA 1998 is amended as follows.U.K.

(2)Omit section 76(3) (regulations about tax credits where non-UK residents have invested in individual savings accounts).

(3)In Schedule 18 (company tax returns etc)—

(a)omit paragraph 9(3) (certain claims by companies for payment of tax credits),

(b)in paragraphs 22(3)(a)(i) and 23(3)(a)(i) (which relate to a statement as to amount of qualifying distribution and tax credit), after “amount” insert “ of distribution, but formerly amount ”, and

(c)in paragraph 52(2)(a) omit “or payment of a tax credit”.

59U.K.In the Commonwealth Development Corporation Act 1999, in Schedule 3 omit paragraph 6(2)(b) (provisions about tax credits do not apply in relation to distributions by the Corporation).

60U.K.In the Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629)—

(a)omit article 82(a), and

(b)in article 87(a) omit “and (4B)”.

61(1)ITEPA 2003 is amended as follows.U.K.

(2)Omit sections 58(6) and 61H(6) (tax credits to be reduced in line with reductions in distributions).

(3)In Part 2 of Schedule 1 (index of defined expressions) omit the entry for “tax credit”.

62U.K.In ITTOIA 2005, in Schedule 1 (minor and consequential amendments) omit paragraphs 116, 331(2), 359, 360, 361(a), 363, 364, 376, 377(3), 464(3), 496, 503 and 510(2).

63(1)ITA 2007 is amended as follows.U.K.

(2)In section 26(1)(b) (list of provisions giving tax reductions), in the entry for section 401 of ITTOIA 2005, for “qualifying distribution after linked non-qualifying distribution” substitute “ distribution repaying shares or security issued in earlier distribution ”.

(3)In section 31 (calculation of total income)—

(a)omit subsection (3) (dividend etc treated as increased by amount of tax credit), and

(b)in subsection (4), for “Subsections (2) and (3) apply” substitute “ Subsection (2) applies ”.

(4)In section 425(5) (deductions in calculating total amount of income tax for gift aid purposes)—

(a)in paragraph (a)—

(i)in sub-paragraph (i) omit “or 400(2)”, and

(ii)omit sub-paragraphs (ii) and (iii),

(b)after paragraph (a) insert “ and ”,

(c)in paragraph (b), for “680(3)(b) or (4)” substitute “ 680(4) ”, and

(d)omit paragraph (c), and the “and” before it.

(5)In section 482 (types of amount charged at special rates for trustees), in the entry for Type 1 amounts, omit “qualifying”.

(6)In section 487(6) (non-UK resident trustees: disregarded income which is not included in untaxed income)—

(a)after paragraph (a) insert “ or ”, and

(b)omit paragraph (c) (income in respect of which there is a tax credit), and the “or” preceding it.

(7)In section 498 (discretionary payments by trustees: types of tax to be included in trustees' tax pool)—

(a)in subsection (1)—

(i)in Type 1 (tax at special rates for trustees on income not attracting tax credits), omit “2, 3 or”,

(ii)omit Types 2 and 3 (tax at dividend trust rate on income attracting dividend tax credits), and

(iii)in Type 4 (tax charged at basic rate as a result of section 491), omit “at the basic rate”, and

(b)omit subsection (2) (interpretation of Types 2 and 3).

(8)In section 502(3) (non-UK resident beneficiaries: disregarded income which is not included in untaxed income)—

(a)after paragraph (a) insert “ or ”, and

(b)omit paragraph (c) (income in respect of which there is a tax credit), and the “or” preceding it.

(9)In section 614ZD (treatment of recipient of manufactured payment)—

(a)in subsection (3), for “to (6)” substitute “ and (5) ”, and

(b)omit subsection (6) (which excludes entitlement to tax credits).

(10)In section 687 (transactions in securities: meaning of “income tax advantage”)—

(a)omit “qualifying” in each place, and

(b)in subsection (4), after “In this section” insert “—

(a)distribution” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) of CTA 2010 (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company), and

(b)”.

(11)In section 713 (interpretation of Chapter 1 (transactions in securities))—

(a)the existing text becomes subsection (1),

(b)in that subsection, in the definition of “dividends”, omit “qualifying”, and

(c)after that subsection insert—

“(2)In the definition of “dividends” given by subsection (1), “other distributions” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).”

(12)In section 745(1) (transfer of assets abroad: same rate of tax not to be charged twice)—

(a)after “at the basic rate,” insert “ or ”, and

(b)omit “or the dividend ordinary rate”.

(13)In section 809S(4) (meaning of “income tax advantage”) omit the words after paragraph (d).

(14)In section 811(4) (limit on liability to income tax of non-UK residents)—

(a)after paragraph (a) insert “ and ”, and

(b)omit paragraph (c) (tax credits), and the “and” preceding it.

(15)In section 815(3) (limit on liability to income tax of non-UK resident companies)—

(a)after paragraph (a) insert “ and ”, and

(b)omit paragraph (c) (tax credits), and the “and” preceding it.

(16)In section 989 (definitions for the purposes of the Income Tax Acts) omit the entries for “qualifying distribution” and “tax credit”.

(17)In section 1026 (“non-qualifying income” includes income on which tax treated as paid)—

(a)in paragraph (a) (deemed payment under sections 399 and 400 of ITTOIA 2005)—

(i)omit “or 400(2)”, and

(ii)for “from UK resident companies on which there is no tax credit” substitute “ to non-UK resident persons ”, and

(b)omit paragraphs (b) and (c) (deemed payment under sections 414 and 421 of ITTOIA 2005).

(18)In Schedule 1 (minor and consequential amendments) omit paragraphs 26, 245(2)(a) and (3), 446(27), 515(3), 516, 517(2), 520 and 522.

(19)In Schedule 4 (index of defined expressions) omit the entries for “qualifying distribution” and “tax credit”.

64U.K.In FA 2008, in Schedule 12 (amendments relating to tax credits) omit paragraphs 3, 5, 6, 8 to 16, 19, 20, 24(b) and 31.

65(1)CTA 2009 is amended as follows.U.K.

(2)In section 1222 (company with investment business: amount deductible for management expenses to be reduced by income from sources not charged to tax)—

(a)in subsection (1) (UK resident company), for paragraph (c) (franked investment income does not reduce deductibles) substitute—

“(c)the income does not consist of exempt ABGH distributions.”,

(b)in subsection (2) (non-UK resident company), for paragraph (d) (franked investment income does not reduce deductibles) substitute—

“(d)the income does not consist of exempt ABGH distributions.”, and

(c)after subsection (3) insert—

“(4)In this section “exempt ABGH distribution” means a distribution which—

(a)is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1) of CTA 2010, and

(b)is exempt for the purposes of Part 9A (company distributions).”

(3)Omit section 1266(3) (partnerships with foreign element: entitlement to tax credit).

(4)In Schedule 4 (index of defined expressions) omit the entry for “qualifying distribution”.

66(1)FA 2009 is amended as follows.U.K.

(2)In Schedule 19 (amendments relating to tax credits) omit paragraphs 2(2) and (3), 3, 5, 6(2)(a), (3) and (4), 7, 9, 10(a), 11, 12 and 13(c).

(3)In paragraph 14 of Schedule 19 (amendments made by the Schedule have effect in relation to distributions etc arising or paid on or after 22 April 2009), after sub-paragraph (2) insert—

“(3)Section 873(4) of ITTOIA 2005 (inserted by paragraph 8), so far as relating to any order or regulations made after the passing of FA 2016 under any provision of ITTOIA 2005 other than section 397BA of that Act, has effect as if sub-paragraph (1) did not apply in relation to it.”

(4)In Schedule 53 (late payment interest) omit—

(a)paragraph 6 (late payment interest start date in relation to assessments of overpaid tax credits etc under section 1110 of CTA 2010), and

(b)the italic heading preceding it.

(5)In paragraph 9B of Schedule 54 (repayment interest start date: companies: income tax and certain tax credits)—

(a)in sub-paragraph (1) omit paragraph (b) (tax credit comprised in franked investment income), and the “and” preceding it, and

(b)in sub-paragraph (2)—

(i)omit “or payment”, and

(ii)omit “or the franked investment income mentioned in sub-paragraph (1)(b)”.

(6)In paragraph 14 of Schedule 54 (interpretation) omit paragraph (b) (tax deducted at source treated as including tax credits), and the “and” preceding it.

67U.K.In Schedule 1 to CTA 2010 (minor and consequential amendments) omit paragraphs 19, 153, 156(3), 282, 303(2), 456, 562(7), 704(27) and 722.

68(1)TIOPA 2010 is amended as follows.U.K.

(2)In section 6(2) (effect of double taxation arrangements)—

(a)after paragraph (e) insert “ or ”, and

(b)omit paragraph (g) (tax credits), and the “or” preceding it.

(3)In section 187A (excess interest treated as a qualifying distribution), in subsection (2), and the heading, omit “qualifying”.

(4)Omit section 234(2) (“relief” includes tax credit).

(5)In Schedule 8 (minor and consequential amendments) omit paragraphs 38, 51, 52, 66 and 67.

69U.K.In FA 2011—

(a)in Part 6 of Schedule 23 (consequential provisions) omit paragraph 64(3), and

(b)in Schedule 26 omit paragraph 1(2)(a)(i) (which amended section 231B of ICTA), including the “and” at the end.

70U.K.In FA 2012, in section 169(2) (payments by certain friendly societies treated as qualifying distributions) omit “qualifying”.

71U.K.In FA 2013—

(a)in paragraph 6(2) of Schedule 19 (which amends section 549 of CTA 2010), for “subsections (2) and” substitute “ subsection ”, and

(b)in Part 3 of Schedule 29 (manufactured dividends: consequential etc amendments) omit paragraphs 13, 14(a) and 44(3).

72U.K.In FA 2015, in section 19—

(a)in subsection (1), for “credits etc” substitute “ treated as paid ”, and

(b)omit subsections (5) and (6) (which insert sections 397(5A) and 399(5A) of ITTOIA 2005).

CommencementU.K.

73(1)Subject to the following sub-paragraphs of this paragraph, the amendments made by this Schedule have effect in relation to dividends paid or arising (or treated as paid), and other distributions made (or treated as made), in the tax year 2016-17 or at any later time.U.K.

(2)The following have effect for the tax year 2016-17 and subsequent tax years—

(a)the amendments in sections 8 to 9, 12AA and 59B of TMA 1970,

(b)the amendments in section 854(6) of ITTOIA 2005,

(c)the amendments in section 425 except the amendment in section 425(5)(b), and the amendments in sections 498, 745 and 1026, of ITA 2007,

(d)the repeals of paragraphs 359, 360, 361(a), 363 and 377(3) of Schedule 1 to ITTOIA 2005,

(e)the repeals of paragraphs 8 to 11 and 14 of Schedule 12 to FA 2008, and

(f)the repeals of the following provisions of Schedule 19 to FA 2009—

(i)paragraph 9(a) and (b),

(ii)paragraph 9(c) so far as relating to section 12AA of TMA 1970, and

(iii)paragraph 9(d) so far as relating to section 59B of TMA 1970.

(3)The amendment in paragraph 23 of Schedule 6 to F(No.2)A 1997 has effect in relation to foreign income dividends received on or after 6 April 2016.

(4)The amendments in sections 393 and 406 of ITTOIA 2005, and the repeal of paragraph 19 of Schedule 12 to FA 2008, have effect in relation to cash dividends paid over in the tax year 2016-17 or at any later time.

(5)The amendment in section 396A of ITTOIA 2005 has effect in relation to things received on or after 6 April 2016 (even if the choice to receive them was made before that date).

(6)The amendments in section 401 of ITTOIA 2005 have effect where the subsequent distribution is made in the tax year 2016-17 or at any later time, even if the prior distribution is made before 6 April 2016.

(7)The amendments in sections 411 and 414 of ITTOIA 2005, and the repeal of paragraph 520 of Schedule 1 to ITA 2007, have effect in relation to stock dividend income treated as arising in the tax year 2016-17 or at any later time.

(8)The amendments in sections 651 to 680A of ITTOIA 2005 (but not the repeal of section 680(3)(a) of that Act) and the amendment in section 425(5)(b) of ITA 2007—

(a)so far as they relate to income within section 664(2)(c) of ITTOIA 2005 (stock dividends), have effect in relation to stock dividend income treated as arising in the tax year 2016-17 or at any later time, and

(b)so far as they relate to income within section 664(2)(d) of ITTOIA 2005 (release of loans), have effect in relation to amounts released or written off in the tax year 2016-17 or at any later time.

(9)The amendments in Chapter 6 of Part 4 of ITTOIA 2005 and in section 463 of CTA 2010, and the repeal of paragraph 522 of Schedule 1 to ITA 2007, have effect in relation to amounts released or written off in the tax year 2016-17 or at any later time.

(10)The amendments in section 614ZD of ITA 2007 have effect in relation to manufactured payments made on or after 6 April 2016.

(11)The amendments in section 687 of ITA 2007 have effect where the relevant consideration is received in the tax year 2016-17 or at any later time.

(12)The amendments in section 1222 of CTA 2009 have effect in relation to income arising in the tax year 2016-17 or at any later time.

(13)The amendment in section 1026(1) of CTA 2010 has effect where the bonus share capital is issued on or after 6 April 2016.

(14)Sub-paragraph (1) does not apply in relation to—

(a)the amendments in section 401B of ITTOIA 2005;

(b)the amendment in paragraph 14 of Schedule 19 to FA 2009.

Section 12

SCHEDULE 2U.K.Sporting testimonial payments

Income tax: sporting testimonial payments treated as earningsU.K.

1U.K.After section 226D of ITEPA 2003 (shareholder or connected person having material interest in company) insert—

“Sporting testimonial paymentsU.K.

226ESporting testimonial payments

(1)This section applies in relation to an individual who is or has been employed as a professional sportsperson (“S”).

(2)In this section “sporting testimonial” means—

(a)a series of relevant events or activities which each have the same controller, or

(b)a single relevant event or activity not forming part of such a series.

(3)An event or activity is (subject to subsection (4)(b)) a relevant event or activity if—

(a)its purpose (or one of its purposes) is to raise money for or for the benefit of S, and

(b)the only or main reason for doing that is to recognise S's service as a professional sportsperson who is or has been employed as such.

(4)An activity that meets the conditions in subsection (3)(a) and (b) and consists solely of inviting and collecting donations for or for the benefit of S—

(a)is a relevant activity if it is one of a series of relevant events or activities for the purposes of subsection (2)(a), but

(b)is not a relevant activity for the purposes of subsection (2)(b) so long as both conditions in subsection (5) are met while the activity takes place.

(5)The conditions are—

(a)that any person who is responsible (alone or with others) for collecting the donations or who is the controller (or a member of a committee which is the controller) of the activity is not—

(i)S,

(ii)a person who is (or has been) the controller of any other relevant event or activity for or for the benefit of S,

(iii)a person connected with S or a person mentioned in sub-paragraph (ii),

(iv)a person acting for or on behalf of a person mentioned in sub-paragraphs (i) to (iii), and

(b)that the donations collected do not include any sums paid (directly or indirectly) out of money raised by any other relevant event or activity.

(6)A “sporting testimonial payment” is a payment made by (or on behalf of) the controller of a sporting testimonial out of money raised for or for the benefit of S which—

(a)is made to S, to a member of S's family or household, to a prescribed person, to S's order or otherwise for S's benefit, and

(b)does not (apart from this section) constitute earnings from an employment.

(7)A sporting testimonial payment is to be treated as earnings of S from the employment or former employment to which the sporting testimonial is most closely linked.

(8)For the purposes of this section if at any material time S is dead—

(a)anything done for or for the benefit of S's estate is to be regarded as done for or for the benefit of S; and

(b)a payment made to S's personal representatives or to their order is to be treated as a payment to S or to S's order.

(9)In this section—

• “controller”, in relation to an event or activity which meets the conditions in subsection (3)(a) and (b), means the person who controls the disbursement of any money raised for or for the benefit of S from that event or activity,

• “money” includes money's worth and “payment” includes the transfer of money's worth or the provision of any benefit,

• “prescribed person” means a person prescribed in regulations made by the Treasury.

(10)Section 993 of ITA 2007 (meaning of “connected” persons) has effect for the purposes of this section.”

Income tax: limited exemption for sporting testimonial paymentsU.K.

2U.K.After section 306A of ITEPA 2003 (exemption for carers) insert—

“Professional sportspersonsU.K.

306BLimited exemption for sporting testimonial payments

(1)This section applies to any sporting testimonial payments which are—

(a)made out of money raised by a sporting testimonial (“the sporting testimonial”), and

(b)treated by virtue of section 226E as earnings of a person (“S”).

(2)No liability to income tax arises in respect of sporting testimonial payments to which this section applies.

(3)Subsection (2) has effect subject to and in accordance with the following provisions.

(4)It only applies—

(a)if the controller of the relevant event or activity (or of all the relevant events or activities in a series) constituting the sporting testimonial is an independent person,

(b)if S has not already benefitted from an exemption under this section in relation to one or more sporting testimonial payments made out of money raised by another sporting testimonial, and

(c)where the sporting testimonial consists of a series of relevant events or activities taking place over more than a year, if the sporting testimonial payment is made out of money raised by events or activities taking place within the period of one year beginning with the day on which the first event or activity in the series took place.

(5)It only applies to the first £100,000 of sporting testimonial payments made out of money raised by the sporting testimonial.

(6)If sporting testimonial payments are made (out of money raised by the sporting testimonial) in two or more tax years, any part of the exempt amount that is not used in the first of those years is to be carried forward to the next tax year (and so on).

(7)This section applies to sporting testimonial payments made to or to the order of the personal representatives of S (where S has died) but only if the payments are made within the period of 24 months beginning with the date of death.

(8)In subsection (4)(a) “independent person” means a person who is not (or where the controller is a committee, a committee none of whose members are)—

(a)S or a person connected with S,

(b)an employer or former employer of S or a person connected with an employer or former employer of S, or

(c)a person acting for or on behalf of a person mentioned in paragraph (a) or (b).

(9)If the first relevant event or activity in a series took place before 6 April 2017, subsection (4)(c) has effect as if it referred to the year beginning with 6 April 2017.

(10)Section 993 of ITA 2007 (meaning of “connected” persons) has effect for the purposes of this section.

(11)Terms used in this section and section 226E have the same meaning as in that section.”

Corporation tax: deductions from total profits for sporting testimonial payments and associated paymentsU.K.

3U.K.After section 996 of CTA 2010 (miscellaneous provisions: use of different accounting periods within a group of companies) insert—

“Sporting testimonial payments and associated paymentsU.K.

996ADeductions from total profits for sporting testimonial payments and associated payments

(1)This section applies where a company, in any accounting period—

(a)is the controller of a relevant event or activity that constitutes or is part of a sporting testimonial, and

(b)makes a relevant sporting testimonial payment out of money raised by the sporting testimonial.

(2)In this section “relevant sporting testimonial payment” means a sporting testimonial payment that is (or so much of it as is) made out of proceeds of a relevant event or activity which are brought into account in determining the company's total profits or any component of its total profits.

(3)In calculating the amount of corporation tax chargeable for the accounting period, an amount equal to the aggregate of the following amounts is allowed as a deduction from the company's total profits—

(a)so much of the relevant sporting testimonial payment as is paid to or for the benefit of the sportsperson to whom the sporting testimonial relates,

(b)any income tax or employee's national insurance contributions deducted at source from that payment, and

(c)any employer's national insurance contributions relating to that payment.

(4)The amount is deducted—

(a)from the company's total profits for the accounting period in which the relevant sporting testimonial payment is made, and

(b)if a claim by the company for relief so requires, previous accounting periods.

(5)A claim under subsection (4)(b) must be made within 2 years after the end of the accounting period in which the relevant sporting testimonial payment is made.

(6)If for an accounting period deductions under subsection (4) are to be made for relevant sporting testimonial payments made in more than one accounting period, the deductions are to be made in the order in which the payments were made (starting with the earliest of them).

(7)The amount of the deduction to be made under subsection (4) for an accounting period is the amount that cannot be deducted under that subsection for a subsequent accounting period.

(8)The amount of the deduction to be made for any accounting period is limited to the amount that reduces the company's taxable total profits for that period to nil.

(9)The deduction is only available if and to the extent that the amount mentioned in subsection (3) is not otherwise deductible in calculating the company's total profits or any component of its total profits.

(10)Terms used in this section and in section 226E of ITEPA 2003 have the same meaning as in that section.”

Application of this ScheduleU.K.

4(1)The amendments made by this Schedule have effect in relation to a sporting testimonial payment made out of money raised by a sporting testimonial if—U.K.

(a)the sporting testimonial was made public on or after 25 November 2015, and

(b)the payment is made out of money raised by one or more relevant events or activities which take place on or after 6 April 2017.

(2)Terms used in sub-paragraph (1) and section 226E of ITEPA 2003 (as inserted by paragraph 1) have the same meaning as in that section.

Section 16

SCHEDULE 3U.K.Employee share schemes: minor amendments

Enterprise management incentives and employee ownership trustsU.K.

1(1)In section 534 of ITEPA 2003 (disqualifying events relating to relevant company), at the end insert—U.K.

“(7)Subsection (1)(a) and (b) do not apply where the relevant company is subject to an employee-ownership trust (within the meaning of paragraph 27(4) to (6) of Schedule 2).”

(2)The amendment made by this paragraph is treated as having come into force on 1 October 2014.

Share incentive plansU.K.

2(1)Schedule 2 to ITEPA 2003 (share incentive plans) is amended as follows.U.K.

(2)In paragraph 1 (introduction), after sub-paragraph (4) insert—

“(5)Sub-paragraph (A1) is also subject to Part 10A of this Schedule (disqualifying events).”

(3)After Part 10 insert—

“PART 10A U.K.Disqualifying events

85A(1)A SIP ceases to be a Schedule 2 SIP if (and with effect from the time when) a disqualifying event occurs.

(2)The following are disqualifying events—

(a)an alteration being made in—

(i)the share capital of a company any of whose shares are subject to the plan trust, or

(ii)the rights attaching to any shares of such a company,

that materially affects the value of the shares that are subject to the plan trust;

(b)shares of a class of shares that is subject to the plan trust receiving different treatment in any respect from the other shares of that class.

(3)Sub-paragraph (2)(b) applies in particular to different treatment in respect of—

(a)the dividend payable,

(b)repayment, or

(c)any offer of substituted or additional shares, securities or rights of any description in respect of the shares.

(4)Sub-paragraph (2)(b) does not however apply where the difference in treatment arises from—

(a)a key feature of the plan, or

(b)any of the participants' shares being subject to any restriction.

(5)Nor does sub-paragraph (2)(b) apply as a result only of the fact that shares which have been newly issued receive, in respect of dividends payable with respect to a period beginning before the date on which they were issued, treatment less favourable than that accorded to shares issued before that date.

(6)For the purposes of this paragraph a “key feature” of a plan is a provision of it that is necessary to meet the requirements of this Schedule.

(7)This paragraph does not affect the operation of the SIP code in relation to shares awarded to participants in the plan before the disqualifying event occurred.”

(4)The amendments made by this paragraph have effect in relation to disqualifying events occurring on or after the day on which this Act is passed.

Notification of plans and schemes to HMRCU.K.

3(1)In Schedule 2 to ITEPA 2003 (share incentive plans), Part 10 (notification of plans etc) is amended as follows.U.K.

(2)In paragraph 81A (notice of SIP to be given to HMRC), after sub-paragraph (5) insert—

“(5A)Sub-paragraph (5) does not apply if the company satisfies HMRC (or, on an appeal under paragraph 81K, the tribunal) that there is a reasonable excuse for failing to give notice on or before the initial notification deadline.

(5B)Paragraph 81C(9) (what constitutes a reasonable excuse) applies for the purposes of sub-paragraph (5A).

(5C)Where HMRC are required under sub-paragraph (5A) to consider whether there was a reasonable excuse, HMRC must notify the company of their decision within the period of 45 days beginning with the day on which HMRC received the company's request to consider the excuse.

(5D)Where HMRC are required to notify the company as specified in sub-paragraph (5C) but do not do so—

(a)HMRC are to be treated as having decided that there was no reasonable excuse, and

(b)HMRC must notify the company of the decision which they are treated as having made.”

(3)In paragraph 81K (appeals)—

(a)at the beginning insert—

“(A1)The company may appeal against a decision of HMRC under paragraph 81A(5A) that there was no reasonable excuse for its failure to give notice on or before the initial notification deadline.”;

(b)in sub-paragraph (6), before paragraph (a) insert—

“(za)in the case of an appeal under sub-paragraph (A1), notice of HMRC's decision is given to the company;”;

(c)in sub-paragraph (7), after “sub-paragraph” insert “ (A1), ”.

(4)The amendments made by this paragraph have effect in relation to notices given under paragraph 81A of Schedule 2 to ITEPA 2003 on or after 6 April 2016.

4(1)In Schedule 3 to ITEPA 2003 (SAYE option schemes), Part 8 (notification of schemes etc) is amended as follows.U.K.

(2)In paragraph 40A (notice of scheme to be given to HMRC), after sub-paragraph (5) insert—

“(5A)Sub-paragraph (5) does not apply if the scheme organiser satisfies HMRC (or, on an appeal under paragraph 40K, the tribunal) that there is a reasonable excuse for the failure to give notice on or before the initial notification deadline.

(5B)Paragraph 40C(9) (what constitutes a reasonable excuse) applies for the purposes of sub-paragraph (5A).

(5C)Where HMRC are required under sub-paragraph (5A) to consider whether there was a reasonable excuse, HMRC must notify the scheme organiser of their decision within the period of 45 days beginning with the day on which HMRC received the scheme organiser's request to consider the excuse.

(5D)Where HMRC are required to notify the scheme organiser as specified in sub-paragraph (5C) but do not do so—

(a)HMRC are to be treated as having decided that there was no reasonable excuse, and

(b)HMRC must notify the scheme organiser of the decision which they are treated as having made.”

(3)In paragraph 40K (appeals)—

(a)at the beginning insert—

“(A1)The scheme organiser may appeal against a decision of HMRC under paragraph 40A(5A) that there was no reasonable excuse for the failure to give notice on or before the initial notification deadline.”;

(b)in sub-paragraph (5), before paragraph (a) insert—

“(za)in the case of an appeal under sub-paragraph (A1), notice of HMRC's decision is given to the scheme organiser;”;

(c)in sub-paragraph (6), after “sub-paragraph” insert “ (A1), ”.

(4)The amendments made by this paragraph have effect in relation to notices given under paragraph 40A of Schedule 3 to ITEPA 2003 on or after 6 April 2016.

5(1)In Schedule 4 to ITEPA 2003 (CSOP schemes), Part 7 (notification of schemes etc) is amended as follows.U.K.

(2)In paragraph 28A (notice of scheme to be given to HMRC), after sub-paragraph (5) insert—

“(5A)Sub-paragraph (5) does not apply if the scheme organiser satisfies HMRC (or, on an appeal under paragraph 28K, the tribunal) that there is a reasonable excuse for the failure to give notice on or before the initial notification deadline.

(5B)Paragraph 28C(9) (what constitutes a reasonable excuse) applies for the purposes of sub-paragraph (5A).

(5C)Where HMRC are required under sub-paragraph (5A) to consider whether there was a reasonable excuse, HMRC must notify the scheme organiser of their decision within the period of 45 days beginning with the day on which HMRC received the scheme organiser's request to consider the excuse.

(5D)Where HMRC are required to notify the scheme organiser as specified in sub-paragraph (5C) but do not do so—

(a)HMRC are to be treated as having decided that there was no reasonable excuse, and

(b)HMRC must notify the scheme organiser of the decision which they are treated as having made.”

(3)In paragraph 28K (appeals)—

(a)at the beginning insert—

“(A1)The scheme organiser may appeal against a decision of HMRC under paragraph 28A(5A) that there was no reasonable excuse for the failure to give notice on or before the initial notification deadline.”;

(b)in sub-paragraph (5), before paragraph (a) insert—

“(za)in the case of an appeal under sub-paragraph (A1), notice of HMRC's decision is given to the scheme organiser;”;

(c)in sub-paragraph (6), after “sub-paragraph” insert “ (A1), ”.

(4)The amendments made by this paragraph have effect in relation to notices given under paragraph 28A of Schedule 4 to ITEPA 2003 on or after 6 April 2016.

Price for acquisition of shares under share optionU.K.

6(1)In Schedule 3 to ITEPA 2003 (SAYE option schemes), paragraph 28 (requirements as to price for acquisition of shares) is amended as follows.U.K.

(2)In sub-paragraph (1)—

(a)in paragraph (b), for “at that time” substitute “—

(i)at that time, or

(ii)at such earlier time as may be determined in accordance with guidance issued by the Commissioners for Her Majesty's Revenue and Customs.”

(b)for “sub-paragraphs (2) and (3)” substitute “ sub-paragraph (3) ”.

(3)Omit sub-paragraph (2).

7(1)In Schedule 4 to ITEPA 2003 (CSOP schemes), paragraph 22 (requirements as to price for acquisition of shares) is amended as follows.U.K.

(2)In sub-paragraph (1)—

(a)in paragraph (b), for “at the time when the option is granted” substitute “—

(i)at the time when the option is granted, or

(ii)at such earlier time as may be determined in accordance with guidance issued by the Commissioners for Her Majesty's Revenue and Customs.”;

(b)for “sub-paragraphs (2) and (3)” substitute “ sub-paragraph (3) ”.

(3)Omit sub-paragraph (2).

Tag-along rightsU.K.

8(1)In Schedule 5 to ITEPA 2003 (enterprise management incentives), in paragraph 39 (company reorganisations: introduction), in sub-paragraph (2)(c), after “982” insert “ or 983 to 985 ”.U.K.

(2)The amendment made by this paragraph is treated as having come into force on 17 July 2013.

Exercise of EMI optionsU.K.

9(1)In section 238A of TCGA 1992 (share schemes and share incentives), in subsection (2), omit paragraph (d) and the preceding “and”.U.K.

(2)In Schedule 7D to TCGA 1992 (share schemes and share incentives), omit Part 4.

(3)In section 527 of ITEPA 2003 (enterprise management incentives: qualifying options), in subsection (3)—

(a)after paragraph (a) insert “ and ”;

(b)omit paragraph (c) and the preceding “and”.

(4)The amendments made by this paragraph do not affect—

(a)the application of paragraph 14(4) of Schedule 7D to TCGA 1992 in relation to a disqualifying event occurring before 6 April 2016, or

(b)the application of paragraph 16 of that Schedule in relation to an allotment for payment mentioned in section 126(2)(a) of that Act taking place before 6 April 2016.

Section 19

SCHEDULE 4U.K.Pensions: [F1lump sum allowance and lump sum and death benefit allowance]: transitional provision

PART 1U.K.“Fixed protection 2016”

The protectionU.K.

1(1)Sub-paragraph (2) applies at any particular time on or after 6 April 2016 in the case of an individual if—U.K.

(a)each of the conditions specified in paragraph 2 is met,

(b)there is no protection-cessation event (see paragraph 3) in the period beginning with 6 April 2016 and ending with the particular time,

(c)paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection 2014”) does not apply in the individual's case at the particular time, and

(d)at the particular time or any later time, the individual has a reference number (see Part 3 of this Schedule) for the purposes of sub-paragraph (2).

[F2(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—

(a)the amount specified in section 637P of that Act (individual’s lump sum allowance) were £312,500, and

(b)the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were £1,250,000.]

The initial conditionsU.K.

2U.K.The conditions mentioned in paragraph 1(1)(a) are—

(a)that, on 6 April 2016, the individual has one or more arrangements under—

(i)a registered pension scheme, or

(ii)a relieved non-UK pension scheme of which the individual is a relieved member,

(b)that paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not [F3apply on 6 April 2016] in relation to the individual,

(c)that paragraph 12 of that Schedule (enhanced protection) does not apply in the individual's case on 6 April 2016,

(d)that paragraph 14 of Schedule 18 to FA 2011 (transitional provision relating to new standard lifetime allowance for the tax year 2012-13) does not apply in the individual's case on 6 April 2016, and

(e)that paragraph 1 of Schedule 22 to FA 2013 (“fixed protection 2014” relating to new standard lifetime allowance for the tax year 2014-15) does not apply in the individual's case on 6 April 2016.

Protection-cessation eventsU.K.

3U.K.There is a protection-cessation event if [F4the reference number for the purposes of paragraph 1(2) was issued pursuant to an application made on or after 15 March 2023 and]—

(a)there is benefit accrual in relation to the individual under an arrangement under a registered pension scheme,

(b)there is an impermissible transfer into any arrangement under a registered pension scheme relating to the individual,

(c)a transfer of sums or assets held for the purposes of, or representing accrued rights under, any such arrangement is made that is not a permitted transfer, or

(d)an arrangement relating to the individual is made under a registered pension scheme otherwise than in permitted circumstances.

Protection-cessation events: interpretation: “benefit accrual”U.K.

4(1)For the purposes of paragraph 3(a) there is benefit accrual in relation to the individual under an arrangement—U.K.

(a)in the case of a money purchase arrangement that is not a cash balance arrangement, if a relevant contribution is paid under the arrangement on or after 6 April 2016,

(b)in the case of a cash balance arrangement or defined benefits arrangement, if there is an increase in the value of the individual's rights under the arrangement at any time on or after that date (but subject to sub-paragraph (5)), and

(c)in the case of a hybrid arrangement—

(i)where the benefits that may be provided to or in respect of the individual under the arrangement include money purchase benefits other than cash balance benefits, if a relevant contribution is paid under the arrangement on or after 6 April 2016, and

(ii)in any case, if there is an increase in the value of the individual's rights under the arrangement at any time on or after that date (but subject to sub-paragraph (5)).

(2)For the purposes of sub-paragraphs (1)(b) and (c)(ii) and (5) whether there is an increase in the value of the individual's rights under an arrangement (and its amount if there is) is to be determined—

(a)in the case of a cash balance arrangement (or a hybrid arrangement under which cash balance benefits may be provided to or in respect of the individual under the arrangement), by reference to whether there is an increase in the amount that would, on the valuation assumptions, be available for the provision of benefits to or in respect of the individual (and, if there is, the amount of the increase), and

(b)in the case of a defined benefits arrangement (or a hybrid arrangement under which defined benefits may be provided to or in respect of the individual under the arrangement), by reference to whether there is an increase in the benefits amount.

(3)For the purposes of sub-paragraph (2)(b) “the benefits amount” is—

(4)Paragraph 14 of Schedule 36 to FA 2004 (when a relevant contribution is paid under an arrangement) applies for the purposes of sub-paragraph (1)(a) and (c)(i).

(5)Increases in the value of the individual's rights under an arrangement are to be ignored for the purposes of sub-paragraph (1)(b) or (c)(ii) if in no tax year do they exceed the relevant percentage.

(6)The relevant percentage, in relation to a tax year, means—

(a)where the arrangement (or a predecessor arrangement) includes provision for the value of the rights of the individual to increase during the tax year at an annual rate specified in the rules of the pension scheme (or a predecessor registered pension scheme) on 9 December 2015—

(i)that percentage (or, where more than one arrangement includes such provision, the higher or highest of the percentages specified), plus

(ii)the relevant statutory increase percentage;

(b)otherwise—

(i)the percentage by which the consumer prices index for the month of September in the previous tax year is higher than it was for the September before that (or 0% if it is not higher), or

(ii)if higher, the relevant statutory increase percentage.

(7)In sub-paragraph (6)(a)—

• “predecessor arrangement”, in relation to an arrangement, means another arrangement (under the same or another registered pension scheme) from which some or all of the sums or assets held for the purposes of the arrangement directly or indirectly derive;

• “predecessor registered pension scheme”, in relation to a registered pension scheme, means another registered pension scheme from which some or all of the sums or assets held for the purposes of the arrangement under the pension scheme directly or indirectly derive.

(8)In sub-paragraph (6) “the relevant statutory increase percentage”, in relation to a tax year, means the percentage increase in the value of the individual's rights under the arrangement during the tax year so far as it is attributable solely to one or more of the following—

(a)an increase in accordance with section 15 of the Pension Schemes Act 1993 or section 11 of the Pension Schemes (Northern Ireland) Act 1993 (increase of guaranteed minimum where commencement of guaranteed minimum pension postponed);

(b)a revaluation in accordance with section 16 of the Pension Schemes Act 1993 or section 12 of the Pension Schemes (Northern Ireland) Act 1993 (early leavers: revaluation of earnings factors);

(c)a revaluation in accordance with Chapter 2 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act 1993 (early leavers: revaluation of accrued benefits);

(d)a revaluation in accordance with Chapter 3 of Part 4 of the Pension Schemes Act 1993 or the Pension Schemes (Northern Ireland) Act 1993 (early leavers: protection of increases in guaranteed minimum pensions);

(e)the application of section 67 of the Equality Act 2010 (sex equality rule for occupational pension schemes).

(9)Sub-paragraph (10) applies in relation to a tax year if—

(a)the arrangement is a defined benefits arrangement which is under an annuity contract treated as a registered pension scheme under section 153(8) of FA 2004,

(b)the contract provides for the value of the rights of the individual to be increased during the tax year at an annual rate specified in the contract, and

(c)the contract limits the annual rate to the percentage increase in the retail prices index over a 12 month period specified in the contract.

(10)Sub-paragraph (6)(b)(i) applies as if it referred instead to the annual rate of the increase in the value of the rights during the tax year.

(11)For the purposes of sub-paragraph (9)(c) the 12 month period must end during the 12 month period preceding the month in which the increase in the value of the rights occurs.

Protection-cessation events: interpretation: “impermissible transfer”U.K.

5U.K.Paragraph 17A of Schedule 36 to FA 2004 (impermissible transfers) applies for the purposes of paragraph 3(b) but as if—

(a)the references to a relevant existing arrangement were to the arrangement, and

(b)the reference in sub-paragraph (2) to 5 April 2006 were to 5 April 2016.

Protection-cessation events: interpretation: “permitted transfer”U.K.

6U.K.Sub-paragraphs (7) to (8B) of paragraph 12 of Schedule 36 to FA 2004 (when there is a permitted transfer) apply for the purposes of paragraph 3(c).

Protection-cessation events: interpretation: “permitted circumstances”U.K.

7U.K.Sub-paragraphs (2A) to (2C) of paragraph 12 of Schedule 36 to FA 2004 (“permitted circumstances”) apply for the purposes of paragraph 3(d).

Protection-cessation events: interpretation: relieved non-UK pension schemesU.K.

8(1)Subject to sub-paragraphs (2) to (4), paragraph 3 applies in relation to an individual who is a relieved member of a relieved non-UK pension scheme as if the relieved non-UK pension scheme were a registered pension scheme; and the other paragraphs of this Part of this Schedule apply accordingly.U.K.

(2)Sub-paragraphs (3) and (4) apply for the purposes of paragraph 3(a) (instead of paragraph 4(1)) in determining if there is benefit accrual in relation to an individual under an arrangement under a relieved non-UK pension scheme of which the individual is a relieved member.

(3)There is benefit accrual in relation to the individual under the arrangement if there is a pension input amount under sections 230 to 237 of FA 2004 (as applied by Schedule 34 to that Act) greater than nil in respect of the arrangement for a tax year; and, in such a case, the benefit accrual is treated as occurring at the end of the tax year.

(4)There is also benefit accrual in relation to the individual under the arrangement if—

(a)in a tax year there occurs a benefit crystallisation event in relation to the individual (whether in relation to the arrangement or to any other arrangement under any pension scheme or otherwise), and

(b)had the tax year ended immediately before the benefit crystallisation event, there would have been a pension input amount under sections 230 to 237 of FA 2004 greater than nil in respect of the arrangement for the tax year,

and, in such a case, the benefit accrual is treated as occurring immediately before the benefit crystallisation event.

PART 2U.K.“Individual protection 2016”

The protectionU.K.

9(1)Sub-paragraph (2) applies at any particular time on or after 6 April 2016 in the case of an individual if—U.K.

(a)the individual has one or more relevant arrangements (see sub-paragraph (3)) on 5 April 2016,

(b)the individual's relevant amount at the particular time is greater than £1,000,000 (see sub-paragraphs (4) and (7)),

(c)paragraph 7 of Schedule 36 to FA 2004 (primary protection) does not [F5apply on 6 April 2016] in relation to the individual,

(d)none of the provisions listed in sub-paragraph (5) applies in the individual's case at the particular time, and

(e)at the particular time or any later time, the individual has a reference number (see Part 3 of this Schedule) for the purposes of sub-paragraph (2).

[F6(2) Chapter 15A of Part 9 of ITEPA 2003 (pension income: lump sums under registered pension schemes) has effect in relation to the individual as if—

(a)the amount specified in section 637P of that Act (individual’s lump sum allowance) were the lower of—

(i)25% of the individual’s relevant amount;

(ii)£312,500, and

(b)the amount specified in section 637R of that Act (individual’s lump sum and death benefit allowance) were the lower of—

(i)the individual’s relevant amount;

(ii)£1,250,000.]

(3)“Relevant arrangement”, in relation to an individual, means an arrangement relating to the individual under—

(a)a registered pension scheme of which the individual is a member, or

(b)a relieved non-UK pension scheme of which the individual is a relieved member.

(4)An individual's “relevant amount” is the sum of amounts A, B, C and D (see paragraphs 10 to 13, but see also sub-paragraph (7)).

(5)The provisions mentioned in sub-paragraph (1)(d) are—

(a)paragraph 12 of Schedule 36 to FA 2004 (enhanced protection);

(b)paragraph 14 of Schedule 18 to FA 2011 (fixed protection 2012);

(c)paragraph 1 of Schedule 22 to FA 2013 (fixed protection 2014);

(d)paragraph 1(2) of Schedule 6 to FA 2014 (individual protection 2014);

(e)paragraph 1(2) of this Schedule (fixed protection 2016).

(6)Sub-paragraph (7) applies if rights of an individual under a relevant arrangement become subject to a pension debit where the transfer day falls on or after 6 April 2016.

(7)For the purpose of applying sub-paragraph (2) in the case of the individual on and after the transfer day, the individual's relevant amount is reduced (or further reduced) by the following amount—

(8)In sub-paragraphs (6) and (7) “appropriate amount” and “transfer day”, in relation to a pension debit, have the same meaning as in section 29 of WRPA 1999 or Article 26 of WRP(NI)O 1999 (as the case may be).

Amount A (pre-6 April 2006 pensions in payment)U.K.

10(1)To determine amount A—U.K.

(a)apply sub-paragraph (2) if a benefit crystallisation event has occurred in relation to the individual during the period beginning with 6 April 2006 and ending with 5 April 2016;

(b)otherwise, apply sub-paragraph (6).

(2)If this sub-paragraph is to be applied, amount A is—

(3)Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the definition of “ARP” in sub-paragraph (2) (and, for this purpose, in paragraph 20(4) any reference to “the time” is to be read as a reference to the time immediately before the benefit crystallisation event occurred).

(4)If the time immediately before the benefit crystallisation event occurred falls before 6 April 2015, in sub-paragraph (3) references to paragraph 20(4) are to be read as references to that provision as it had effect in relation to benefit crystallisation events occurring at the time immediately before the benefit crystallisation event occurred.

(5)If more than one benefit crystallisation event has occurred, in sub-paragraphs (2) to (4) references to the benefit crystallisation event are to be read as references to the first benefit crystallisation event.

(6)If this sub-paragraph is to be applied, amount A is—

(7)Paragraph 20(4) of Schedule 36 to FA 2004 applies for the purposes of the definition of “ARP” in sub-paragraph (6) (and, for this purpose, in paragraph 20(4) any reference to “the time” is to be read as a reference to 5 April 2016).

(8)In this paragraph “relevant existing pension” means (subject to sub-paragraph (9)) a pension, annuity or right—

(a)which was, at the end of 5 April 2006, a “relevant existing pension” as defined by paragraph 10(2) and (3) of Schedule 36 to FA 2004, and

(b)to the payment of which the individual had, at the end of 5 April 2006, an actual (rather than a prospective) right.

(9)If—

(a)before 6 April 2016, there was a recognised transfer of sums or assets representing a relevant existing pension, and

(b)those sums or assets were, after the transfer, applied towards the provision of a scheme pension (“the new scheme pension”),

the new scheme pension is also to be a “relevant existing pension” (including for the purposes of this sub-paragraph).

Amount B (pre-6 April 2016 benefit crystallisation events)U.K.

11(1)To determine amount B—U.K.

(a)identify each benefit crystallisation event that has occurred in relation to the individual during the period beginning with 6 April 2006 and ending with 5 April 2016,

(b)determine the amount that was crystallised by each of those benefit crystallisation events (applying paragraph 14 of Schedule 34 to FA 2004 if relevant), and

(c)multiply each crystallised amount by the following fraction—

(2)Amount B is the sum of the crystallised amounts determined under sub-paragraph (1)(b) as adjusted under sub-paragraph (1)(c).

Amount C (uncrystallised rights at end of 5 April 2016 under registered pension schemes)U.K.

12U.K.Amount C is the total value of the individual's uncrystallised rights at the end of 5 April 2016 under arrangements relating to the individual under registered pension schemes of which the individual is a member as determined in accordance with section 212 of FA 2004.

Amount D (uncrystallised rights at end of 5 April 2016 under relieved non-UK schemes)U.K.

13(1)To determine amount D—U.K.

(a)identify each relieved non-UK pension scheme of which the individual is a relieved member at the end of 5 April 2016, and

(b)in relation to each such scheme—

(i)assume that a benefit crystallisation event occurs in relation to the individual at the end of 5 April 2016, and

(ii)in accordance with paragraph 14 of Schedule 34 to FA 2004, determine what the untested portion of the relevant relieved amount would be immediately before the assumed benefit crystallisation event.

(2)Amount D is the sum of the untested portions determined under sub-paragraph (1)(b)(ii).

PART 3U.K.Reference numbers etc

Issuing of reference numbers for fixed or individual protection 2016U.K.

14(1)An individual has a reference number for the purposes of paragraph 1(2), or for the purposes of paragraph 9(2), if a reference number—U.K.

(a)has been issued by or on behalf of the Commissioners in respect of the individual for the purposes concerned, and

(b)has not been withdrawn.

(2)Such a reference number—

(a)may include, or consist of, characters other than figures, and

(b)may be issued only if a valid application for its issue is received by or on behalf of the Commissioners.

(3)A valid application is an application—

(a)made by or on behalf of the individual concerned,

(b)made on or after 6 April 2016 [F7but before 6 April 2025],

(c)made by means of a digital service provided for the purpose by or on behalf of the Commissioners, or by other means authorised in a particular case by an officer of Revenue and Customs,

(d)containing—

(i)the following details for the individual and, where the individual is not the applicant, also for the applicant: title, full name, full postal address and e-mail address,

(ii)the individual's date of birth,

(iii)the individual's national insurance number, or the reason why the individual does not qualify for a national insurance number, and

(iv)a declaration that everything stated in the application is true and complete to the best of the applicant's knowledge and belief,

(e)containing also in the case of an application for a reference number for the purposes of paragraph 1(2)—

(i)a declaration that the conditions specified in paragraph 2 are met in the individual's case, and

(ii)a declaration that there has been no protection-cessation event (see paragraph 3) in the individual's case in the period beginning with 6 April 2016 and ending with the making of the application, and

(f)containing also in the case of an application for a reference number for the purposes of paragraph 9(2)—

(i)the individual's relevant amount (see paragraph 9(4) and (7)),

(ii)amounts A, B, C and D for the individual (see paragraphs 10 to 13),

(iii)if rights of the individual under a relevant arrangement have become subject to a relevant pension debit, the appropriate amount and transfer day for each such pension debit,

(iv)a declaration that the condition in paragraph 9(1)(c) is met in the individual's case, and

(v)a declaration that paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection 2014”) does not apply in the individual's case.

(4)Where an application for a reference number for the purposes of paragraph 1(2) or 9(2) is unsuccessful, or is successful on a dormant basis, that must be notified to the applicant by or on behalf of the Commissioners.

(5)In sub-paragraph (3)(f)(iii) and this sub-paragraph—

• “relevant arrangement” has the meaning given by paragraph 9(3);

• “relevant pension debit”, in relation to an application for a reference number, means a pension debit where—

  (a)

  the transfer day falls on or after 6 April 2016 and before the day on which the application is made, and

  (b)

  the individual has, before the day on which the application is made, received notice under regulation 8(2) or (3) of the Pensions on Divorce etc. (Provision of Information) Regulations 2000 (S.I. 2000/1048) relating to discharge of liability in respect of the pension credit corresponding to the pension debit;

• “appropriate amount” and “transfer day”, in relation to a pension debit, have the same meaning as in paragraph 9(6) and (7) (see paragraph 9(8)).

(6)Sub-paragraph (3)(c) is not to be read as requiring a digital service to be provided and available for the purpose referred to.

(7)For the purposes of this Part of this Schedule, an application for a reference number for the purposes of paragraph 1(2) is successful on a dormant basis if the decision on the application is that—

(a)the application would have been unconditionally successful but for the fact that paragraph 1(2) of Schedule 6 to FA 2014 (“individual protection 2014”) applies in the case of the individual concerned, and

(b)a reference number for the purposes of paragraph 1(2) will be issued in response to the application but only when paragraph 1(2) of Schedule 6 to FA 2014 does not apply in the individual's case.

(8)For the purposes of this Part of this Schedule, an application for a reference number for the purposes of paragraph 9(2) is successful on a dormant basis if the decision on the application is that—

(a)the application would have been unconditionally successful but for the fact that a prior provision applies in the case of the individual concerned, and

(b)a reference number for the purposes of paragraph 9(2) will be issued in response to the application but only when no prior provision applies in the individual's case.

(9)For the purposes of sub-paragraph (8), the prior provisions are—

(a)paragraph 12 of Schedule 36 to FA 2004 (enhanced protection),

(b)paragraph 14 of Schedule 18 to FA 2011 (fixed protection 2012),

(c)paragraph 1 of Schedule 22 to FA 2013 (fixed protection 2014), and

(d)paragraph 1(2) of this Schedule (fixed protection 2016).

Withdrawal of reference numbersU.K.

15(1)This paragraph applies where a reference number for the purposes of paragraph 1(2) or 9(2) has been issued by or on behalf of the Commissioners in respect of an individual.U.K.

(2)The number may be withdrawn by an officer of Revenue and Customs.

(3)The number may be withdrawn only if—

(a)something contained in the application for the number was incorrect, or

(b)where the number was for the purposes of paragraph 1(2)—

(i)there has been a protection-cessation event (see paragraph 3) in the individual's case since the making of the application, or

(ii)paragraph 1(2) of Schedule 6 to FA 2014 has come to apply in the individual's case, or

(c)where the number was for the purposes of paragraph 9(2)—

(i)a provision listed in paragraph 9(5) has come to apply in the individual's case, or

(ii)paragraph 9(2) has ceased to apply in the individual's case as a result of the operation of paragraph 9(7), or

(d)the individual—

(i)has been given a notice under paragraph 1 of Schedule 36 to FA 2008 (information and inspection powers: taxpayer notice) in connection with (as the case may be) Part 1 or 2 of this Schedule, and

(ii)fails to comply with the notice within the period specified in the notice.

(4)Where the number is withdrawn—

(a)notice of the withdrawal, and

(b)reasons for the withdrawal,

are to be given by an officer of Revenue and Customs to the individual.

(5)Where the number is withdrawn, the effect of the withdrawal is as follows—

(a)in the case of withdrawal in reliance on sub-paragraph (3)(a), the number is treated as never having been issued,

(b)in the case of withdrawal in reliance on paragraph (b) or (c) of sub-paragraph (3), the number is treated as having been withdrawn at the time of the event mentioned in sub-paragraph (i) or (ii) of that paragraph, and

(c)in the case of withdrawal in reliance on sub-paragraph (3)(d), the number is treated as having been withdrawn at the time specified in the notice of the withdrawal as the effective time of the withdrawal, which may be any time not earlier than the time of issue of the number.

Appeals against non-issue or withdrawal of reference numbersU.K.

16(1)Where—U.K.

(a)an application is made for a reference number for the purposes of paragraph 1(2) or 9(2) in respect of an individual, and

(b)the application is unsuccessful (see sub-paragraph (9)),

the individual may appeal against the decision on the application.

(2)Where a reference number issued in respect of an individual for the purposes of paragraph 1(2) or 9(2) is withdrawn, the individual may appeal against the withdrawal.

(3)Where a reference number issued in respect of an individual for the purposes of paragraph 1(2) or 9(2) is withdrawn in reliance on paragraph 15(3)(d), the individual may appeal against the time specified (in the notice of the withdrawal) as the effective time of the withdrawal.

(4)Where an appeal under sub-paragraph (1) is notified to the tribunal, the tribunal—

(a)must allow the appeal if satisfied—

(i)that the application was a valid application,

(ii)that everything in the application was correct, and

(iii)that, at the time of deciding the appeal, paragraph 15(3)(b), (c) or (d) does not authorise withdrawal of the requested number (assuming it had been issued), and

(b)must otherwise dismiss the appeal.

(5)Where an appeal under sub-paragraph (2) is notified to the tribunal, the tribunal—

(a)must allow the appeal if satisfied that the withdrawal was not authorised by paragraph 15(3), and

(b)must otherwise dismiss the appeal.

(6)Where an appeal under sub-paragraph (3) is notified to the tribunal, the tribunal must decide whether it was just and reasonable to specify the particular time specified and—

(a)if the tribunal decides that it was, the tribunal must dismiss the appeal, and

(b)otherwise—

(i)the tribunal must decide what time it would have been just and reasonable to specify, and

(ii)the withdrawal has effect as if the notice of the withdrawal had specified the time decided by the tribunal.

(7)Notice of an appeal under this paragraph must be given to Her Majesty's Revenue and Customs before the end of 30 days beginning with the date on which notice under paragraph 14(4) or 15(4) (as the case may be) is given.

(8)In this paragraph “the tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal.

(9)The references in sub-paragraph (1) and paragraph 17(3)(b)(ii) to an application being unsuccessful do not include a case where an application for a reference number for the purposes of paragraph 1(2) or 9(2) is successful on a dormant basis (see paragraph 14(7) and (8)).

Notification of subsequent protection-cessation eventsU.K.

17(1)Sub-paragraph (2) applies if, in the case of an individual, there is a protection-cessation event (see paragraphs 3 to 8) at a time when—U.K.

(a)the individual has a reference number for the purposes of paragraph 1(2),

(b)there is a pending application for a reference number for those purposes in respect of the individual, or

(c)an appeal under paragraph 16(2) or (3) is in progress in connection with withdrawal of a reference number issued for those purposes in respect of the individual.

(2)The individual—

(a)must notify the Commissioners of the event, and

(b)must do so—

(i)before the end of 90 days beginning with the day on which the individual could first reasonably be expected to have known that the event had occurred, and

(ii)by means of a digital service provided for the purpose by or on behalf of the Commissioners, or by other means authorised in a particular case by an officer of Revenue and Customs.

(3)For the purposes of this paragraph—

(a)an application is pending if—

(i)it has been made,

(ii)no reference number has been issued in response to the application, and

(iii)the applicant has not been notified that the application has been unsuccessful;

(b)an application is also pending if—

(i)it has been made,

(ii)it has been unsuccessful, and

(iii)an appeal under paragraph 16(1) is in progress against the decision on the application;

(c)an appeal under paragraph 16(1), (2) or (3) is in progress until one of the following happens—

(i)it, or any further appeal, is withdrawn, or

(ii)it and any further appeal brought have been determined, and there is no prospect of further appeal.

Notification of subsequent pension debitsU.K.

18(1)Sub-paragraph (2) applies if an individual receives a discharge notice related to a pension debit at a time when—U.K.

(a)the individual has a reference number for the purposes of paragraph 9(2),

(b)there is a pending application for a reference number for those purposes in respect of the individual, or

(c)an appeal under paragraph 16(2) or (3) is in progress in connection with withdrawal of a reference number issued for those purposes in respect of the individual.

(2)The individual—

(a)must notify the Commissioners of the appropriate amount and transfer day for the pension debit, and

(b)must do so—

(i)before the end of 60 days beginning with the date of the discharge notice related to the pension debit, and

(ii)by means of a digital service provided for the purpose by or on behalf of the Commissioners, or by other means authorised in a particular case by an officer of Revenue and Customs.

(3)For the purposes of this paragraph—

(a)a notice is a discharge notice related to a pension debit if it is notice under regulation 8(2) or (3) of the Pensions on Divorce etc. (Provision of Information) Regulations 2000 (S.I. 2000/1048) relating to discharge of liability in respect of the pension credit corresponding to the pension debit;

(b)an application is pending if—

(i)it has been made,

(ii)no reference number has been issued in response to the application,

(iii)the applicant has not been notified that the application has been unsuccessful, and

(iv)the applicant has not been notified that the application has been successful on a dormant basis (see paragraph 14(8));

(c)an application is also pending if—

(i)it has been made,

(ii)it has been unsuccessful, and

(iii)an appeal under paragraph 16(1) is in progress against the decision on the application;

(d)an appeal under paragraph 16(1), (2) or (3) is in progress until one of the following happens—

(i)it, or any further appeal, is withdrawn, or

(ii)it and any further appeal brought have been determined, and there is no prospect of further appeal.

Personal representativesU.K.

19U.K.If an individual dies—

(a)anything which could have been done under or by virtue of this Part of this Schedule by the individual may be done by the individual's personal representatives,

(b)paragraph 14(3)(d)(ii) has effect in relation to an application made in respect of the individual after the individual's death as if it also required a valid application to contain the individual's date of death, and

(c)any notice or reasons given under paragraph 15(4) after the individual's death are to be given to the individual's personal representatives.

Penalties for non-supply, or fraudulent etc supply, of information under paragraph 17 or 18U.K.

20U.K.In column 2 of the Table in section 98 of TMA 1970 (provisions about information where non-compliance etc attracts penalties), at the appropriate place insert—

PART 4U.K.Information

Preservation of records in connection with individual protection 2016U.K.

21U.K.If an individual is issued with a reference number for the purposes of paragraph 9(2), the individual must preserve, for the period of 6 years beginning with the date the application for the reference number was made, all such records as were required for the purpose of enabling the individual's relevant amount (see paragraph 9), and amounts A, B, C and D for the individual (see paragraphs 10 to 13), to be correctly calculated.

Amendments of regulationsU.K.

22(1)The Registered Pension Schemes (Provision of Information) Regulations 2006 (S.I. 2006/567) are amended in accordance with paragraphs 23 to 26.U.K.

(2)The amendments made by those paragraphs are to be treated as having been made by the Commissioners under such of the powers cited in the instrument containing the Regulations as are applicable.

23U.K.In regulation 2(1) (interpretation)—

(a)after the entry for “fixed protection 2014” insert—

““fixed protection 2016” means protection under paragraph 1(2) of Schedule 4 to FA 2016;”, and

(b)after the entry for “individual protection 2014” insert—

““individual protection 2016” means protection under paragraph 9(2) of Schedule 4 to FA 2016;”.

24(1)In the table in regulation 3(1) (provision of event reports by scheme administrators to HM Revenue and Customs), the entry for reportable event 6 (report where benefit crystallisation event occurs in relation to member of scheme) is amended as follows.U.K.

(2)In column 1 of the entry, in paragraph (b)—

(a)omit the “or” at the end of sub-paragraph (iv), and

(b)after sub-paragraph (v) insert “, or

(vi)fixed protection 2016 or individual protection 2016.”

(3)In column 2 of the entry—

(a)in the words before paragraph (a), before “the Commissioners” insert “ or on behalf of ”,

(b)omit the “or” at the end of paragraph (c), and

(c)after paragraph (d) insert “, or

(e)Schedule 4 to the Finance Act 2016 (where the member relies on fixed protection 2016 or individual protection 2016).”

(4)In the heading of the entry, for the words after “Benefit crystallisation events and” substitute “ non-standard lifetime allowances ”.

25(1)Regulation 11 (information provided to scheme administrator by member intending to rely on transitional protection in connection with lifetime allowance) is amended as follows.U.K.

(2)In paragraph (1)—

(a)omit the “or” at the end of sub-paragraph (b),

(b)after sub-paragraph (c) (but before the closing words of paragraph (1)) insert “, or

(d)fixed protection 2016 by virtue of Part 1 of Schedule 4 to the Finance Act 2016,”, and

(c)in those closing words—

(i)before “the Commissioners” insert “ or on behalf of ”, and

(ii)before “in respect of that entitlement” insert “ or Schedule 4 to the Finance Act 2016 ”.

(3)After paragraph (2) insert—

“(3)If the member of a registered pension scheme intends to rely on individual protection 2016 by virtue of Part 2 of Schedule 4 to the Finance Act 2016, the member must notify the scheme administrator of—

(a)the reference number in respect of the member issued by or on behalf of the Commissioners for the purposes of paragraph 9(2) of that Schedule, and

(b)the member's relevant amount calculated in accordance with Part 2 of that Schedule.”

(4)In the heading—

(a)for the “or” substitute a comma, and

(b)at the end insert “ , fixed protection 2016 or individual protection 2016 ”.

26U.K.After regulation 14B insert—

“14CIndividual protection 2016: provision of information by scheme administrator to member on request

(1)Where—

(a)an individual is a member of a registered pension scheme on 5 April 2016,

(b)the individual makes a written request to the scheme administrator for the information mentioned in paragraph (2), and

(c)the request is received by the scheme administrator before 6 April 2020,

the scheme administrator must provide the individual with the information within 3 months following receipt of the request.

(2)The information is such information relating to the member's rights under the scheme as is necessary for calculating, in accordance with Part 2 of Schedule 4 to the Finance Act 2016 (individual protection 2016), the member's relevant amount for the purposes of paragraph 9(2) of that Schedule.”

27U.K.In consequence of paragraph 24(4), in each of—

(a)the Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2013 (S.I. 2013/1742), and

(b)the Registered Pension Schemes (Provision of Information) (Amendment) Regulations 2014 (S.I. 2014/1843),

omit regulation 4(2)(a).

PART 5U.K.Amendments in connection with protection of pre-6 April 2006 rights

28(1)In Part 1 of Schedule 29 to FA 2004 (pension schemes: interpretation of the lump sum rule), in paragraph 2 (permitted maximum amount of pension commencement lump sums, calculated in certain cases by deducting adjusted value of previously crystallised amounts from current standard lifetime allowance), in sub-paragraph (10) (modified adjustments where member has protection under paragraph 7 or 12 of Schedule 36 by reference to pre-6 April 2006 rights), after “have effect” insert “— U.K.

(a)where the member becomes entitled to the lump sum on or after 6 April 2014, as if PSLA in the case of any previous benefit crystallisation event which occurs on or after 6 April 2014 were £1,500,000 if that is greater than PSLA in that case, and

(b)”.

(2)In paragraph 28(3) of Schedule 36 to FA 2004 (transitional provision for pre-6 April 2006 rights: modified version of paragraph 2 of Schedule 29 that applies in certain cases), in the sub-paragraph (7) treated as substituted in paragraph 2 of Schedule 29 to FA 2004, in the definition of “ PSLA ”, after “became entitled to the lump sum” insert “ if that occurred before 6 April 2012 but, if that occurred on or after 6 April 2012, PSLA is the greater of £1,800,000 and the standard lifetime allowance at the time the individual became entitled to the lump sum ”.

(3)The amendment made by sub-paragraph (1) is treated as having come into force on 6 April 2014.

(4)The amendment made by sub-paragraph (2) is treated as having come into force on 6 April 2012.

PART 6U.K.Interpretation and regulations

Interpretation of Parts 1, 2 and 3U.K.

29(1)Expressions used in Part 1, 2 or 3 of this Schedule, and in Part 4 of FA 2004 (pension schemes), have the same meaning in that Part of this Schedule as in that Part of that Act.U.K.

(2)In particular, references to a relieved non-UK pension scheme or a relieved member of such a scheme are to be read in accordance with paragraphs 13(3) and (4) and 18 of Schedule 34 to FA 2004 (application of lifetime allowance charge provisions to members of overseas pension schemes).

Interpretation of Parts 3 and 4 and this PartU.K.

30U.K.In Parts 3 and 4, and this Part, of this Schedule “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.

RegulationsU.K.

31(1)The Commissioners may by regulations amend Part 1, 2 or 3 of this Schedule.U.K.

(2)Regulations under this paragraph may (for example)—

(a)add to the cases in which paragraph 1(2) is to apply or is to cease to apply;

(b)add to the cases in which paragraph 9(2) is to apply.

(3)Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made, but—

(a)the time must not be earlier than 6 April 2016, and

(b)the provision must not increase any person's liability to tax.

(4)Regulations under this paragraph may include—

(a)supplementary or incidental provision;

(b)consequential amendments of the Table in section 98 of TMA 1970 (information requirements: penalties).

(5)Power to make regulations under this paragraph is exercisable by statutory instrument.

(6)A statutory instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of the House of Commons.

Section 22

SCHEDULE 5U.K.Pension flexibility

Serious ill-health lump sumsU.K.

1(1)Part 4 of FA 2004 (registered pension schemes etc) is amended as follows.U.K.

(2)Omit section 205A (serious ill-health lump sum charge on payment to member who has reached 75).

(3)In Part 1 of Schedule 29 (interpretation of lump sum rule), paragraph 4 (serious ill-health lump sums) is amended in accordance with sub-paragraphs (4) and (5).

(4)In sub-paragraph (1) (meaning of “serious ill-heath lump sum”)—

(a)at the end of paragraph (b) insert “ and ”, and

(b)for paragraphs (c) and (d) substitute—

“(ca)either—

(i)it is paid in respect of an uncrystallised arrangement, and it extinguishes the member's entitlement to benefits under the arrangement, or

(ii)it is paid in respect of uncrystallised rights of the member under an arrangement other than an uncrystallised arrangement, and it extinguishes the member's uncrystallised rights under the arrangement.”

(5)After sub-paragraph (2) insert—

“(2A)In subsection (1)(ca)(ii) “uncrystallised rights”, in relation to the member, means rights of the member that are uncrystallised rights as defined by section 212(1) and (2).”

2(1)Section 636A of ITEPA 2003 (exemption for certain lump sums under registered pension schemes) is amended as follows.U.K.

(2)In the heading, for “Exemption” substitute “ Exemptions and liabilities ”.

(3)For subsection (3A) (serious ill-health lump sum paid to member who has reached 75 is taxed only under section 205A of FA 2004) substitute—

“(3A)Section 579A applies in relation to a serious ill-health lump sum which is paid under a registered pension scheme to a member who has reached the age of 75 as it applies to any pension under a registered pension scheme.”

3(1)In consequence of the amendment made by paragraph 1(2), in Part 4 of FA 2004—U.K.

(a)in section 164(2)(b) omit “, the serious ill-health lump sum charge”,

(b)omit section 272A(7)(a)(ii),

(c)in section 280(2) omit the entry for “serious ill-health lump sum charge”, and

(d)in Schedule 34—

(i)omit paragraph 1(3)(ca), and

(ii)in paragraph 5 omit “, serious ill-health lump sum charge”.

(2)In consequence of the amendment made by paragraph 1(2), in section 30(1) of ITA 2007 omit the entry for section 205A of FA 2004.

(3)In consequence of the amendments made by paragraphs 1 and 2 and sub-paragraphs (1) and (2)—

(a)in Schedule 16 to FA 2011, omit paragraphs 28(2)(a), 40, 42(3), 63, 77(4), 81(2) and (4)(b) and 83, and

(b)omit section 2(4) of the Taxation of Pensions Act 2014.

4U.K.The amendments made by paragraphs 1 to 3 have effect in relation to lump sums paid after the day on which this Act is passed.

Charity lump sum death benefitsU.K.

5(1)In paragraph 18(1A) of Schedule 29 to FA 2004 (when lump sum paid out of uncrystallised funds is charity lump sum death benefit), omit paragraph (a) (member must have died after reaching 75).U.K.

(2)The amendment made by sub-paragraph (1) has effect in relation to lump sums paid after the day on which this Act is passed.

Dependants' flexi-access drawdown fundsU.K.

6(1)Part 2 of Schedule 28 to FA 2004 (interpretation of pension death benefit rules) is amended as follows.U.K.

(2)In paragraph 15 (meaning of “dependant”), after sub-paragraph (2) insert—

“(2A)A child of the member is a dependant of the member if the child—

(a)has reached the age of 23, and

(b)is not within sub-paragraph (2)(b).

(2B)But this paragraph, so far as it has effect for the purpose of determining the meaning of “dependant”—

(a)in paragraphs 16 to 17 and 27A, and

(b)in paragraph 18 of Schedule 29,

has effect with the omission of sub-paragraph (2A).”

(3)In paragraph 22 (meaning of “dependant's drawdown pension fund”)—

(a)in sub-paragraph (2)(a) and (aa) omit “to the dependant”, and

(b)in sub-paragraph (3), after “representing a” insert “person's”.

(4)The amendments made by this paragraph come into force on the day after the day on which this Act is passed.

(5)The sub-paragraphs inserted by sub-paragraph (2)—

(a)apply for the purpose of determining whether a payment of an annuity is a payment of a dependants' short-term annuity only if the annuity is purchased after the day on which this Act is passed, and

(b)apply for the purpose of determining whether a payment to a person is a payment of dependants' income withdrawal if, but only if, the person reaches the age of 23 after the day on which this Act is passed.

(6)In sub-paragraph (5) “dependants' short-term annuity” and “dependants' income withdrawal” have the same meaning as in Part 4 of FA 2004.

Trivial commutation lump sumU.K.

7(1)Paragraph 7 of Schedule 29 to FA 2004 (interpretation of lump sum rule: meaning of “trivial commutation lump sum”) is amended as follows.U.K.

(2)In sub-paragraph (1)(aa) (sum must be paid in respect of a defined benefits arrangement), after “arrangement,” insert “ or in respect of a scheme pension payable by the scheme administrator to which the member has become entitled under a money purchase arrangement (an “in-payment money-purchase in-house scheme pension”), or partly in respect of the former and partly in respect of the latter, ”.

(3)In sub-paragraph (1)(d) (sum must extinguish member's entitlement to defined benefits under the scheme), after “defined benefits” insert “ , and any entitlement to payments of in-payment money-purchase in-house scheme pensions, ”.

8(1)Section 636B of ITEPA 2003 (taxation of trivial commutation, and winding-up, lump sums) is amended as follows.U.K.

(2)In subsection (3) (taxation of lump sum where member has uncrystallised rights under the pension scheme)—

(a)in the words before paragraph (a) omit “(within the meaning of section 212 of FA 2004)”, and

(b)in paragraph (b), for “the uncrystallised rights calculated in accordance with that section” substitute “ any uncrystallised rights extinguished by the lump sum ”.

(3)After subsection (4) insert—

“(5)In this section “uncrystallised rights” has the same meaning as in section 212 of FA 2004; and the value for the purposes of this section of any uncrystallised rights is to be calculated in accordance with that section.”

9U.K.The amendments made by paragraphs 7 and 8 have effect in relation to lump sums paid after the day on which this Act is passed.

Top-up of dependants' death benefitsU.K.

10(1)In paragraph 15 of Schedule 29 to FA 2004 (uncrystallised funds lump sum death benefits), after sub-paragraph (2) insert—U.K.

“(2A)Where—

(a)the arrangement is a cash balance arrangement,

(b)under the arrangement, a dependant of the member is entitled to be paid after the member's death an amount by way of a lump sum,

(c)the dependant's entitlement to a lump sum of that amount under the arrangement comes into being at a time no later than the member's death,

(d)such of the sums and assets held for the purposes of the arrangement immediately after the member's death as are held for the purpose of meeting the liability to pay the lump sum are insufficient for that purpose (including where that is because none are held for that purpose), and

(e)a person who was an employer in relation to the member pays a contribution to the scheme—

(i)for or towards making good that insufficiency, and

(ii)of no more than is needed for making good the insufficiency,

the sums and assets held for the purposes of the arrangement that represent the contribution are to be treated as “relevant uncrystallised funds” for the purposes of this paragraph.”

(2)The amendment made by sub-paragraph (1) has effect in relation to contributions paid after the day on which this Act is passed.

Inheritance tax as respects cash alternatives to annuities for dependants etcU.K.

11(1)In section 152 of the Inheritance Tax Act 1984 (where annuity payable on person' death to dependant etc, person treated as not beneficially entitled to sum that could have been paid to personal representatives instead of being used for annuity), for “or dependant” substitute “ , dependant or nominee ”.U.K.

(2)The amendment made by sub-paragraph (1)—

(a)is to be treated as having come into force on 6 April 2015, and

(b)has effect where the person on whose death an annuity is payable dies on or after that date.

Section 39

SCHEDULE 6U.K.Deduction of income tax at source

PART 1 U.K.Abolition of duty to deduct tax from interest on certain investments

1U.K.In Chapter 2 of Part 15 of ITA 2007 (deduction of income tax at source by deposit-takers and building societies) omit—

(a)section 851 (duty to deduct when making payment of interest on relevant investment), and

(b)the italic heading preceding it.

PART 2 U.K.Deduction of tax from yearly interest: exception for deposit-takers

2U.K.In section 876 of ITA 2007 (interest paid by deposit-takers), for subsections (1) and (2) substitute—

“(1)The duty to deduct a sum representing income tax under section 874 does not apply to a payment of interest on an investment if—

(a)the payment is made by a deposit-taker, and

(b)when the payment is made, the investment is a relevant investment.

(1A)In this section “deposit-taker”, “investment” and “relevant investment” have the meaning given by Chapter 2.”

PART 3 U.K.Amendments of or relating to Chapter 2 of Part 15 of ITA 2007

Amendments of Chapter 2 of Part 15 of ITA 2007U.K.

3U.K.Chapter 2 of Part 15 of ITA 2007 (deduction of income tax at source by deposit-takers and building societies) is amended in accordance with paragraphs 4 to 18.

4U.K.For the Chapter heading substitute “ Meaning of “relevant investment” for purposes of section 876 ”.

5(1)Section 850 (overview of Chapter) is amended as follows.U.K.

(2)For subsection (1) substitute—

“(1)This Chapter has effect for the purposes of section 876 (duty under section 874 to deduct tax from payments of yearly interest: exception for deposit-takers).”

(3)Omit subsection (2) (which introduces sections 851 and 852).

(4)In subsection (4)(b) (which introduces sections 858 to 870), for “858” substitute “ 863 ”.

(5)In subsection (5) (which introduces sections 871 to 873), for “871 to” substitute “ 872 and ”.

(6)In subsection (6) (interpretation), for the words from “Chapter—” to “crediting” substitute “ Chapter, crediting ”.

6U.K.Omit section 852 (power to disapply section 851).

7U.K.In section 853(1) (meaning of “deposit-taker”), after “In this Chapter” insert “ and section 876 ”.

8U.K.In section 854(3) (meaning of “relevant investment” in section 851(1)(b)), for “851(1)(b)” substitute “ 876(1)(b) ”.

9U.K.For section 855(1) (meaning of “investment”) substitute—

“(1)In this Chapter, and section 876, “investment” means a deposit with a deposit-taker.”

10(1)Section 856 (meaning of “relevant investment”) is amended as follows.U.K.

(2)In subsection (1), for “this Chapter” substitute “ section 876 ”.

(3)In subsection (2) (exceptions), for “858” substitute “ 863 ”.

11U.K.In section 857 (treating investments as being or not being relevant investments) omit “or building society” in each place.

12U.K.Omit—

(a)sections 858 to 861 (investments which are not relevant investments and in relation to which duty under section 874 does not apply), and

(b)the italic heading preceding section 858.

13U.K.In the italic heading preceding section 863, for “Other investments” substitute “ Investments ”.

14U.K.In sections 863, 864, 865 and 868(4) (investments with deposit-takers or building societies) omit “or building society” in each place.

15U.K.Omit sections 868(3), 869 and 870(2) (investments with building societies).

16U.K.Omit section 871 (power to make regulations to give effect to Chapter).

17U.K.In section 872 (power to amend Chapter)—

(a)in subsection (2) (different provision for different deposit-takers)—

(i)for “which amends this Chapter in its application to deposit-takers may do so” substitute “ may amend this Chapter ”, and

(ii)in each of paragraphs (a) and (b), for “relation” substitute “ its application ”, and

(b)omit subsections (4) and (5) (which refer to provisions repealed by this Act).

18U.K.Omit section 873(3) to (6) (interpretation of section 861).

Amendments relating to Chapter 2 of Part 15 of ITA 2007U.K.

19U.K.In Schedule 12 to FA 1988 (transfer of building society's business to a company), in paragraph 6(1) (treatment for tax purposes of benefits conferred in connection with a transfer) omit—

(a)“either”, and

(b)paragraph (b) (benefit not to be subject to deduction of tax under Chapter 2 of Part 15 of ITA 2007), and the “or” preceding it.

20(1)In section 564Q(1) of ITA 2007 (alternative finance return: deduction of income tax at source under Chapter 2 of Part 15)—U.K.

(a)after “Chapter 2 of Part 15” insert “ and section 876 ”,

(b)for “deduction by deposit-takers and building societies” substitute “ exception for deposit-takers ”, and

(c)after “Chapter 2 of that Part” insert “ and section 876 ”.

(2)In section 564Q(5) of ITA 2007 (alternative finance return: deduction of income tax at source under Chapters 3 to 5 of Part 15)—

(a)after “of Part 15” insert “ except section 876 ”, and

(b)for “those Chapters” substitute “ those provisions ”.

21U.K.In section 847 of ITA 2007 (overview of Part 15)—

(a)in subsection (2) omit paragraph (a) (which introduces Chapter 2), and

(b)in subsection (5) (which introduces Chapters containing provision connected with the duties to deduct), before paragraph (a) insert—

“(za)Chapter 2 (interpretation of section 876 in Chapter 3: exception for deposit-takers),”.

22U.K.In section 946 of ITA 2007 (collection of tax deducted at source: payments to which Chapter applies) omit paragraph (a) (payments from which deductions required to be made under section 851).

23U.K.In Schedule 2 to ITA 2007 omit paragraphs 154 to 156 (transitional provisions related to Chapter 2 of Part 15 of ITA 2007).

24U.K.In Schedule 4 to ITA 2007 (index of defined expressions)—

(a)omit the entry for “beneficiary under a discretionary or accumulation settlement (in Chapter 2 of Part 15)”,

(b)in the entry for “deposit-taker (in Chapter 2 of Part 15)”, after “Part 15” insert “ and section 876 ”,

(c)omit the entry for “dividend (in Chapter 2 of Part 15)”,

(d)in the entry for “investment (in Chapter 2 of Part 15)”, after “Part 15” insert “ and section 876 ”, and

(e)omit the entry for “relevant investment (in Chapter 2 of Part 15)”.

25U.K.In consequence of the amendments made by Part 1 of this Schedule and the preceding provisions of this Part of this Schedule—

(a)in Schedule 1 to ITA 2007 omit paragraph 277,

(b)in Schedule 1 to FA 2008 omit paragraph 25,

(c)in Schedule 46 to FA 2013—

(i)in paragraph 68(1) omit paragraph (a) including the “and” at the end,

(ii)in paragraph 69(1) omit paragraph (a) including the “and” at the end,

(iii)omit paragraph 70(1), and

(iv)in paragraph 71(3) omit paragraph (b) and the “and” preceding it, and

(d)in FA 2014 omit section 3(4).

PART 4 U.K.Deduction of tax from UK public revenue dividends

26U.K.In section 877 of ITA 2007 (duty to deduct under section 874: exception relating to UK public revenue dividends)—

(a)for “in respect of” substitute “ that is ”, and

(b)after “dividend” insert “ (as defined by section 891) ”.

27(1)Chapter 5 of Part 15 of ITA 2007 (deduction from payments of UK public revenue dividends) is amended as follows.U.K.

(2)In section 893(2) (securities which are gross-paying government securities)—

(a)before the “or” at the end of paragraph (a) insert—

“(aa)securities, so far as they are not gilt-edged securities, issued or treated as issued under—

(i)the National Loans Act 1939, or

(ii)the National Loans Act 1968,”, and

(b)in paragraph (b), for “894(1) or (3)” substitute “ 894(3) ”.

(3)In section 894 (power to direct that securities are gross-paying government securities)—

(a)omit subsections (1) and (2) (power in relation to securities within the new section 893(2)(aa)), and

(b)in subsection (5) omit “(1) or”.

PART 5 U.K.Commencement

28(1)The amendments made by Parts 1 and 3 of this Schedule have effect in relation to—U.K.

(a)interest paid or credited on or after 6 April 2016, and

(b)dividends or other distributions paid by a building society on or after that date.

(2)Sub-paragraph (1) does not apply to—

(a)the repeals in Schedule 12 to FA 1988;

(b)the amendments in section 564Q of ITA 2007;

(c)the repeal of paragraph 277 of Schedule 1 to ITA 2007.

(3)The repeals mentioned in sub-paragraph (2)(a) and (c) have effect in relation to benefits conferred on or after 6 April 2016.

(4)The amendments mentioned in sub-paragraph (2)(b) have effect in relation to alternative finance return paid on or after 6 April 2016.

(5)The amendments made by Part 2 of this Schedule, and the amendments made by this Schedule in sections 893 and 894 of ITA 2007, have effect in relation to interest paid on or after 6 April 2016.

Section 49

SCHEDULE 7U.K.Loan relationships and derivative contracts

IntroductoryU.K.

1U.K.CTA 2009 is amended as follows.

Non-market loansU.K.

2U.K.In Chapter 15 of Part 5 (loan relationships: tax avoidance), after section 446 insert—

“Non-market loansU.K.

446ANon-market loans

(1)This section applies as respects any accounting period if—

(a)a company has a debtor relationship in the period,

(b)the amount recognised in the company's accounts in respect of the debt at the time the company became party to the debtor relationship was less than the transaction price,

(c)credits in respect of the whole or part of the discount were not brought into account for the purposes of this Part, and

(d)in a case where the creditor is a company, the non-qualifying territory condition is met.

(2)The debits which are to be brought into account for the accounting period for the purposes of this Part by the debtor company in respect of the loan relationship are not to include debits relating to the relevant discount amount, to the extent that that amount is referable to the accounting period.

(3)In this section “relevant discount amount” means—

(a)in a case where credits in respect of the whole of the discount were not brought into account for the purposes of this Part, an amount equal to the whole discount, and

(b)in a case where credits in respect of part of the discount were not brought into account for the purposes of this Part, an amount equal to that part of the discount.

(4)The non-qualifying territory condition referred to in subsection (1)(d) is that the creditor company is—

(a)resident for tax purposes in a non-qualifying territory at any time in the accounting period, or

(b)effectively managed in a non-taxing non-qualifying territory at any such time.

(5)In this section—

• “discount” means the difference between the two amounts referred to in subsection (1)(b);

• “non-qualifying territory” has the meaning given in section 173 of TIOPA 2010;

• “non-taxing non-qualifying territory” means a non-qualifying territory under whose law companies are not liable to tax by reason of domicile, residence or place of management;

• “resident for tax purposes” means liable, under the law of the non-qualifying territory, to tax there by reason of domicile, residence or place of management.”

Transfer pricingU.K.

3U.K.In section 446 (loan relationships: bringing transfer-pricing adjustments into account), after subsection (7) insert—

“(8)No credit is to be brought into account for the purposes of this Part to the extent that it corresponds to an amount which, as a result of the preceding provisions of this section, has not previously been brought into account as a debit.”

4U.K.In section 693 (derivative contracts: bringing transfer-pricing adjustments into account), after subsection (5) insert—

“(6)No credit is to be brought into account for the purposes of this Part to the extent that it corresponds to an amount which, as a result of the preceding provisions of this section, has not previously been brought into account as a debit.”

Exchange gains and lossesU.K.

5U.K.In section 447 (exchange gains and losses on debtor relationships: loans disregarded under Part 4 of TIOPA 2010), after subsection (4) insert—

“(4A)If the debtor relationship is to any extent matched, subsections (2) and (3) apply to leave out of account only the lesser of—

(a)the amount of the exchange gain or loss (in the case of subsection (2)) or the proportion of the exchange gain or loss (in the case of subsection (3)) which would be left out of account apart from this subsection, and

(b)the amount of the exchange gain or loss arising in respect of a liability representing the debtor relationship to the extent that the debtor relationship is unmatched (an amount which may be nil).”

6U.K.In section 448 (exchange gains and losses on debtor relationships: equity notes where holder associated with issuer), after subsection (2) insert—

“(3)If the debtor relationship is to any extent matched, subsection (2) applies to leave out of account only the amount of the exchange gain or loss arising in respect of a liability representing the debtor relationship to the extent that the debtor relationship is unmatched (an amount which may be nil).”

7U.K.In section 449 (exchange gains and losses on creditor relationships: no corresponding debtor relationship), after subsection (4) insert—

“(4A)If the creditor relationship is to any extent matched, subsection (2) applies to leave out of account only the amount of the exchange gain or loss arising in respect of an asset representing the creditor relationship to the extent that the creditor relationship is unmatched (an amount which may be nil).”

8U.K.In section 451 (exception to section 449 where loan exceeds arm's length amount), after subsection (4) insert—

“(4A)If the creditor relationship is to any extent matched, subsections (3) and (4) apply to leave out of account only the lesser of—

(a)the proportion of the exchange gain or loss which would be left out of account apart from this subsection, and

(b)the amount of the exchange gain or loss arising in respect of an asset representing the creditor relationship to the extent that the creditor relationship is unmatched (an amount which may be nil).”

9(1)Section 452 (exchange gains and losses where loan not on arm's length terms) is amended as follows.U.K.

(2)For subsection (3) substitute—

“(3)Subsections (4) and (5) apply if, because of a claim made under section 192(1) of TIOPA 2010, or because of the claim that is assumed to be made under subsection (2)—

(a)one company is treated for any purpose as having a debtor relationship, or

(b)more than one company is treated for any purpose as having a debtor relationship represented by the same liability.”

(3)In subsection (4)—

(a)after “exchange gains” insert “ from that debtor relationship (in a subsection (3)(a) case) or ”;

(b)after “those debtor relationships” insert “ (in a subsection (3)(b) case) ”;

(c)for the words from “debits” to the end substitute “ exchange gains or the proportion of the exchange gains to be left out of account under section 447 by the issuing company in respect of the loan relationship ”.

(4)In subsection (5)—

(a)after “exchange losses” insert “ from that debtor relationship (in a subsection (3)(a) case) or ”;

(b)after “those debtor relationships” insert “ (in a subsection (3)(b) case) ”;

(c)for the words from “credits” to the end substitute “ exchange losses or the proportion of the exchange losses to be left out of account under section 447 by the issuing company in respect of the loan relationship ”.

(5)After subsection (5) insert—

“(5A)In this section “issuing company” is to be construed in accordance with section 191(1)(a) of TIOPA 2010.”

10U.K.After section 475A insert—

“Meaning of “matched”U.K.

475BMeaning of “matched”

(1)This section applies for the purposes of this Part.

(2)A loan relationship of a company is matched if and to the extent that—

(a)it is in a matching relationship with another loan relationship or a derivative contract of the company, or

(b)exchange gains or losses arising in relation to an asset or liability representing the loan relationship are excluded from being brought into account under regulations under section 328(4),

and “unmatched” is to be construed accordingly.

(3)A loan relationship is in a matching relationship with another loan relationship or derivative contract if one is intended by the company to act to eliminate or substantially reduce the economic risk of the other.

(4)In this section “economic risk” means a risk which can be attributed to fluctuations in exchange rates between currencies over a period of time.

(5)In this section “derivative contract” has the same meaning as in Part 7 (see section 576).”

11(1)Section 694 (derivative contracts: exchange gains and losses) is amended as follows.U.K.

(2)After subsection (3) insert—

“(3A)If the contract is to any extent matched, subsection (3) applies to leave out of account only the amount of the exchange gains or losses arising to the company in relation to the contract to the extent that the contract is unmatched (an amount which may be nil).”

(3)After subsection (7) insert—

“(7A)Subsections (5) to (7) apply only to the extent that the contract is unmatched.”

(4)After subsection (10) insert—

“(11)For the purposes of this section a derivative contract of a company is matched if and to the extent that—

(a)it is in a matching relationship with another derivative contract or loan relationship of the company, or

(b)exchange gains or losses arising in relation to the derivative contract are excluded from being brought into account under regulations under section 606(4)(b),

and “unmatched” is to be construed accordingly.

(12)A derivative contract is in a matching relationship with another derivative contract or loan relationship if one is intended by the company to act to eliminate or substantially reduce the economic risk of the other.

(13)In this section “economic risk” means a risk which can be attributed to fluctuations in exchange rates between currencies over a period of time.

(14)In this section “loan relationship” has the same meaning as in Part 5 (see section 302).”

CommencementU.K.

12(1)The amendments made by this Schedule have effect in relation to accounting periods beginning on or after 1 April 2016.U.K.

(2)For the purposes of sub-paragraph (1), where the accounting period of a company begins before 1 April 2016 and ends on or after that date (the “straddling period”), so much of the straddling period as falls before that date, and so much of the straddling period as falls on or after that date, are to be treated as separate accounting periods.

Section 54

SCHEDULE 8U.K.Tax relief for production of orchestral concerts

PART 1 U.K.Amendment of CTA 2009

1U.K.After Part 15C of CTA 2009 insert—

“PART 15D U.K.Orchestra tax relief

CHAPTER 1U.K.Introduction

OverviewU.K.

1217POverview

(1)This Part is about the production of orchestral concerts, and applies for corporation tax purposes.

(2)This Chapter explains what is meant by “orchestral concert” and how a company comes to be treated as the production company in relation to a concert.

(3)Chapter 2 is about the taxation of the activities of a production company and includes—

(a)provision for the company's activities in relation to its concert, or its concert series, to be treated as a separate trade, and

(b)provision about the calculation of the profits and losses of that trade.

(4)Chapter 3 is about relief (called “orchestra tax relief”) which may be given to a production company in relation to its concert or concert series—

(a)by way of additional deductions to be made in calculating the profits or losses of the company's separate trade, or

(b)by way of a payment (an “orchestra tax credit”) to be made on the company's surrender of losses from that trade,

and describes the conditions a company must meet to qualify for orchestra tax relief.

(5)Chapter 4 contains provision about the use of losses of the separate trade (including provision about relief for terminal losses).

(6)Chapter 5 provides—

(a)for relief under Chapters 3 and 4 to be given on a provisional basis, and

(b)for such relief to be withdrawn if it turns out that conditions that must be met for such relief to be given are not actually met.

InterpretationU.K.

1217PA“Orchestral concert”

(1)In this Part “orchestral concert” means a concert by an orchestra, ensemble, group or band consisting wholly or mainly of instrumentalists who are the primary focus of the concert.

(2)But a concert is not an orchestral concert if—

(a)the main purpose, or one of the main purposes, of the concert is to advertise or promote any goods or services,

(b)the concert is to consist of or include a competition or contest, or

(c)the making of a relevant recording is the main object of the production company's activities in relation to the concert.

(3)A recording of a concert is a “relevant recording” if the recording is made for the purpose of using it (or an edited version of it) in any of the following ways—

(a)broadcast, at the time of the concert or later, to the general public;

(b)release, at the time of the concert or later, to the paying public (by digital or other means);

(c)use as a soundtrack (or part of a soundtrack) to a television, radio, theatre, video game or similar production for broadcast, exhibition or release to the general public;

(d)use in a film (or part of a film) for exhibition to the paying public at the commercial cinema.

(4)In this section—

• “broadcast” means broadcast by any means (including television, radio or the internet);

• “film” has the same meaning as in Part 15 (see section 1181).

1217PBProduction company

(1)A company is the production company in relation to a concert if the company (acting otherwise than in partnership)—

(a)is responsible for putting on the concert from the start of the production process to the finish, including employing or engaging the performers,

(b)is actively engaged in decision-making in relation to the concert,

(c)makes an effective creative, technical and artistic contribution to the concert, and

(d)directly negotiates for, contracts for and pays for rights, goods and services in relation to the concert.

(2)No more than one company can be the production company in relation to a concert.

(3)If more than one company meets the conditions in subsection (1) in relation to a concert, the company that is most directly engaged in the activities mentioned in that subsection is the production company.

(4)If no company meets the conditions in subsection (1), there is no production company in relation to the concert.

CHAPTER 2U.K.Taxation of activities of production company

Separate orchestral tradeU.K.

1217QSeparate orchestral trade

(1)Subsection (2) applies to a company in relation to a concert if—

(a)the company qualifies for orchestra tax relief in relation to the production of the concert (see section 1217RA(2)), and

(b)the concert is not included in a concert series in relation to which the company has made an election under subsection (4).

(2)The company's activities in relation to the production of the concert are treated as a trade separate from any other activities of the company (including activities in relation to the production of any other concert).

(3)Subsections (4) and (5) apply to a company in relation to concerts in a series if the conditions in section 1217RA(4)(a), (b), (c) and (d) are met in relation to the company and the concert series.

(4)The company may, for the purposes of this Part, make an election in relation to the concert series.

See section 1217QA for provision about making an election.

(5)Where the company makes an election in relation to a concert series (and accordingly qualifies for orchestra tax relief in relation to the production of the series), the company's activities in relation to the production of the concert series are treated as a trade separate from any other activities of the company (including activities in relation to the production of any other concert).

(6)In this Part the separate trade mentioned in subsection (2) or (5) is called the “separate orchestral trade”.

(7)If the separate orchestral trade relates to a single concert, the company is treated as beginning to carry on that trade—

(a)at the beginning of the pre-performance stage of the concert, or

(b)if earlier, at the time of the first receipt by the company of any income from the production of the concert.

1217QAElection for concert series

(1)An election under section 1217Q(4) must be made by the company by notice in writing to an officer of Her Majesty's Revenue and Customs before the date of the first concert in the series.

(2)An election has effect in relation to the orchestral concerts specified in it, and must also specify which of those concerts (if any) are not to be qualifying orchestral concerts (see section 1217RA(3)).

(3)An election—

(a)may have effect in relation to concerts in two or more accounting periods, and

(b)is irrevocable.

(4)If the separate orchestral trade relates to a concert series, the company is treated as beginning to carry on that trade—

(a)at the beginning of the pre-performance stage of the first concert in the series, or

(b)if earlier, at the time of the first receipt by the company of any income from the production of the concert series.

Profits and losses of separate orchestral tradeU.K.

1217QBCalculation of profits or losses of separate orchestral trade

(1)This section applies for the purpose of calculating the profits or losses of the separate orchestral trade.

(2)For the first period of account during which the separate orchestral trade is carried on, the following are brought into account—

(a)as a debit, the costs of the production of the concert or concert series incurred to date;

(b)as a credit, the proportion of the estimated total income from that production treated as earned at the end of that period.

(3)For subsequent periods of account the following are brought into account—

(a)as a debit, the difference between the amount (“C”) of the costs of the production of the concert or concert series incurred to date and the amount corresponding to C for the previous period, and

(b)as a credit, the difference between the proportion (“PI”) of the estimated total income from that production treated as earned at the end of that period and the amount corresponding to PI for the previous period.

(4)The proportion of the estimated total income treated as earned at the end of a period of account is—

1217QCIncome from the production

(1)References in this Chapter to income from a production of a concert or concert series are to any receipts by the company in connection with the production or exploitation of the concert or concert series.

(2)This includes—

(a)receipts from the sale of tickets or of rights in the concert or concert series;

(b)royalties or other payments for use of the concert or concert series;

(c)payments for rights to produce merchandise;

(d)receipts by the company by way of a profit share agreement.

(3)Receipts that (apart from this subsection) would be regarded as being of a capital nature are treated as being of a revenue nature.

1217QDCosts of the production

(1)References in this Chapter to the costs of a production of a concert or concert series are to expenditure incurred by the company on—

(a)activities involved in developing and putting on the concert or concert series, or

(b)activities with a view to exploiting the concert or concert series.

(2)This is subject to any provision of the Corporation Tax Acts prohibiting the making of a deduction, or restricting the extent to which a deduction is allowed, in calculating the profits of a trade.

(3)Expenditure which, apart from this subsection, would be regarded as being of a capital nature only because it is incurred on the creation of an asset (the concert or concert series) is treated as being of a revenue nature.

1217QEWhen costs are taken to be incurred

(1)For the purposes of this Chapter, the costs that have been incurred on a production of a concert or concert series at a given time do not include any amount that has not been paid unless it is the subject of an unconditional obligation to pay.

(2)Where an obligation to pay an amount is linked to income being earned from the production of the concert or concert series, the obligation is not treated as having become unconditional unless an appropriate amount of income is or has been brought into account under section 1217QB.

1217QFPre-trading expenditure

(1)This section applies if, before the company begins to carry on the separate orchestral trade, it incurs expenditure on activities falling within section 1217QD(1)(a).

(2)The expenditure may be treated as expenditure of the separate orchestral trade and as if incurred immediately after the company begins to carry on that trade.

(3)If expenditure so treated has previously been taken into account for other tax purposes, the company must amend any relevant company tax return accordingly.

(4)Any amendment or assessment necessary to give effect to subsection (3) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

1217QGEstimates

Estimates for the purposes of section 1217QB must be made as at the balance sheet date for each period of account, on a just and reasonable basis taking into consideration all relevant circumstances.

CHAPTER 3U.K.Orchestra tax relief

IntroductionU.K.

1217ROverview of orchestra tax relief

(1)Relief under this Chapter (“orchestra tax relief”) is given by way of—

(a)additional deductions (see sections 1217RD to 1217RF), and

(b)orchestra tax credits (see sections 1217RG to 1217RJ).

(2)See Schedule 18 to FA 1998 (in particular, Part 9D) for provision about the procedure for making claims for orchestra tax relief.

Companies qualifying for orchestra tax reliefU.K.

1217RACompanies qualifying for orchestra tax relief

(1)Subsection (2) applies in the case of an orchestral concert which is not included in a concert series in relation to which an election has been made under section 1217Q(4).

(2)A company qualifies for orchestra tax relief in relation to the production of a concert if—

(a)the concert is a qualifying orchestral concert,

(b)the company is the production company in relation to the concert,

(c)the company intends that the concert should be performed live—

(i)before the paying public, or

(ii)for educational purposes, and

(d)the EEA expenditure condition is met in relation to the concert (see section 1217RB).

(3)In this Part “qualifying orchestral concert” means an orchestral concert—

(a)in which the instrumentalists number at least 12, and

(b)in which none of the musical instruments to be played, or a minority of those instruments, is electronically or directly amplified.

(4)A company qualifies for orchestra tax relief in relation to the production of a concert series if—

(a)the concert series is a qualifying orchestral concert series,

(b)the company is the production company in relation to every concert in the series,

(c)the company intends that all or a high proportion of the concerts in the series should be performed live—

(i)before the paying public, or

(ii)for educational purposes,

(d)the EEA expenditure condition is met in relation to the series, and

(e)the company has made an election under section 1217Q(4) in relation to the series.

(5)In this section “qualifying orchestral concert series” means two or more orchestral concerts, all or a high proportion of which are qualifying orchestral concerts.

(6)For the purposes of this section a concert is “live” if it is to an audience before whom the musicians are actually present.

(7)A concert is not regarded as performed for educational purposes if the production company is, or is associated with, a person who—

(a)has responsibility for the beneficiaries, or

(b)is otherwise connected with the beneficiaries (for instance, by being their employer).

(8)For the purposes of subsection (7), a production company is associated with a person (“P”) if—

(a)P controls the production company, or

(b)P is a company which is controlled by the production company or by a person who also controls the production company.

(9)In this section—

• “the beneficiaries” means persons for whose benefit the concert will or may be performed;

• “control” has the same meaning as in Part 10 of CTA 2010 (see section 450 of that Act).

(10)There is further related provision in section 1217RL (tax avoidance arrangements).

1217RBThe EEA expenditure condition

(1)The “EEA expenditure condition” is that at least 25% of the core expenditure on the production of the concert or concert series incurred by the company is EEA expenditure.

(2)In this Part “EEA expenditure” means expenditure on goods or services that are provided from within the European Economic Area.

(3)Any apportionment of expenditure as between EEA and non-EEA expenditure for the purposes of this Part is to be made on a just and reasonable basis.

(4)The Treasury may by regulations—

(a)amend the percentage specified in subsection (1);

(b)amend subsection (2).

(5)See also sections 1217T and 1217TA (which are about the giving of relief provisionally on the basis that the EEA expenditure condition will be met).

1217RC“Core expenditure”

(1)In this Part “core expenditure”, in relation to the production of a concert or concert series, means expenditure on the activities involved in producing the concert or concert series.

(2)The reference in subsection (1) to “expenditure on the activities involved in producing the concert or concert series” includes expenditure on travel to and from a venue which is not a usual venue for concerts produced by the company.

(3)But that reference does not include—

(a)expenditure on any matters not directly involved with putting on the concert or concerts (for instance, financing, marketing, legal services or storage),

(b)speculative expenditure on activities not involved with putting on the concert or concerts, and

(c)expenditure on the actual performance or performances (for instance, payments to musicians for their performances in the concert or concert series).

Additional deductionU.K.

1217RDClaim for additional deduction

(1)A company which qualifies for orchestra tax relief in relation to the production of a concert or concert series may claim an additional deduction in relation to the production.

(2)A claim under subsection (1) is made with respect to an accounting period.

(3)Where a company has made a claim, the company is entitled to make an additional deduction, in accordance with section 1217RE, in calculating the profit or loss of the separate orchestral trade for the accounting period concerned.

(4)Where the company tax return in which a claim is made is for an accounting period later than that in which the company begins to carry on the separate orchestral trade, the company must make any amendments of company tax returns for earlier periods that may be necessary.

(5)Any amendment or assessment necessary to give effect to subsection (4) may be made despite any limitation on the time within which an amendment or assessment may normally be made.

1217REAmount of additional deduction

(1)The amount of an additional deduction to which a company is entitled as a result of a claim under section 1217RD is calculated as follows.

(2)For the first period of account during which the separate orchestral trade is carried on, the amount of the additional deduction is E, where E is—

(a)so much of the qualifying expenditure incurred to date as is EEA expenditure, or

(b)if less, 80% of the total amount of qualifying expenditure incurred to date.

(3)For any period of account after the first, the amount of the additional deduction is—

(4)The Treasury may by regulations amend the percentage specified in subsection (2) or (3).

1217RF“Qualifying expenditure”

(1)In this Chapter “qualifying expenditure”, in relation to the production of a concert or concert series, means core expenditure (see section 1217RC) on the production that—

(a)falls to be taken into account under sections 1217QB to 1217QG in calculating the profit or loss of the separate orchestral trade for tax purposes, and

(b)is not expenditure which is otherwise relievable.

(2)For the purposes of this section expenditure is otherwise relievable if it is expenditure in respect of which (assuming a claim were made) the company would be entitled to—

(a)film tax relief under Chapter 3 of Part 15,

(b)television tax relief under Chapter 3 of Part 15A,

(c)video games tax relief under Chapter 3 of Part 15B,

(d)an additional deduction under Part 15C (theatrical productions), or

(e)a theatre tax credit under Part 15C.

Orchestra tax creditsU.K.

1217RGOrchestra tax credit claimable if company has surrenderable loss

(1)A company which qualifies for orchestra tax relief in relation to the production of a concert or concert series may claim an orchestra tax credit in relation to the production for an accounting period in which the company has a surrenderable loss.

(2)Section 1217RH sets out how to calculate the amount of any surrenderable loss that the company has in the accounting period.

(3)A company making a claim may surrender the whole or part of its surrenderable loss in the accounting period.

(4)The amount of the orchestra tax credit to which a company making a claim is entitled for the accounting period is 25% of the amount of the loss surrendered.

(5)The company's available loss for the accounting period (see section 1217RH(2)) is reduced by the amount surrendered.

1217RHAmount of surrenderable loss

(1)The company's surrenderable loss in the accounting period is—

(a)the company's available loss for the period in the separate orchestral trade (see subsections (2) and (3)), or

(b)if less, the available qualifying expenditure for the period (see subsections (4) and (5)).

(2)The company's available loss for an accounting period is—

(3)The “relevant unused loss” of a company is so much of any available loss of the company for the previous accounting period as has not been—

(a)surrendered under section 1217RG, or

(b)carried forward under section 45 of CTA 2010 and set against profits of the separate orchestral trade.

(4)For the first period of account during which the separate orchestral trade is carried on, the available qualifying expenditure is the amount that is E for that period for the purposes of section 1217RE(2).

(5)For any period of account after the first, the available qualifying expenditure is—

(6)If a period of account of the separate orchestral trade does not coincide with an accounting period, any necessary apportionments are to be made by reference to the number of days in the periods concerned.

1217RIPayment in respect of orchestra tax credit

(1)If a company—

(a)is entitled to an orchestra tax credit for an accounting period, and

(b)makes a claim,

the Commissioners for Her Majesty's Revenue and Customs (“the Commissioners”) must pay the amount of the credit to the company.

(2)An amount payable in respect of—

(a)an orchestra tax credit, or

(b)interest on an orchestra tax credit under section 826 of ICTA,

may be applied in discharging any liability of the company to pay corporation tax.

To the extent that it is so applied the Commissioners' liability under subsection (1) is discharged.

(3)If the company's company tax return for the accounting period is enquired into by the Commissioners, no payment in respect of an orchestra tax credit for that period need be made before the Commissioners' enquiries are completed (see paragraph 32 of Schedule 18 to FA 1998).

In those circumstances the Commissioners may make a payment on a provisional basis of such amount as they consider appropriate.

(4)No payment need be made in respect of an orchestra tax credit for an accounting period before the company has paid to the Commissioners any amount that it is required to pay for payment periods ending in that accounting period—

(a)under PAYE regulations,

(b)under section 966 of ITA 2007 (visiting performers), or

(c)in respect of Class 1 national insurance contributions under Part 1 of the Social Security Contributions and Benefits Act 1992 or Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(5)A payment in respect of an orchestra tax credit is not income of the company for any tax purpose.

1217RJLimit on State aid

In accordance with Commission Regulation (EU) No. 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market, the total amount of orchestra tax credits payable under section 1217RI in the case of any undertaking is not to exceed 50 million euros per year.

1217RKNo account to be taken of amount if unpaid

(1)In determining for the purposes of this Chapter the amount of costs incurred on a production of a concert or concert series at the end of a period of account, ignore any amount that has not been paid 4 months after the end of that period.

(2)This is without prejudice to the operation of section 1217QE (when costs are taken to be incurred).

Anti-avoidance etcU.K.

1217RLTax avoidance arrangements

(1)A company does not qualify for orchestra tax relief in relation to the production of a concert or concert series if there are any tax avoidance arrangements relating to the production.

(2)Arrangements are “tax avoidance arrangements” if their main purpose, or one of their main purposes, is the obtaining of a tax advantage.

(3)In this section—

• “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable;

• “tax advantage” has the meaning given by section 1139 of CTA 2010.

1217RMTransactions not entered into for genuine commercial reasons

(1)A transaction is to be ignored for the purpose of determining orchestra tax relief so far as the transaction is attributable to arrangements (other than tax avoidance arrangements) entered into otherwise than for genuine commercial reasons.

(2)In this section “arrangements” and “tax avoidance arrangements” have the same meaning as in section 1217RL.

CHAPTER 4U.K.Losses of separate orchestral trade

1217SApplication of sections 1217SA to 1217SC

(1)Sections 1217SA to 1217SC apply to a company which is treated under section 1217Q(2) or (5) as carrying on a separate trade in relation to the production of a concert or concert series.

(2)In those sections—

(a)“the completion period” means the accounting period in which the company ceases to carry on the separate orchestral trade;

(b)“loss relief” includes any means by which a loss might be used to reduce the amount in respect of which a company, or any other person, is chargeable to tax.

1217SARestriction on use of losses before completion period

(1)Subsection (2) applies if a loss is made by the company in the separate orchestral trade in an accounting period preceding the completion period.

(2)The loss is not available for loss relief, except to the extent that the loss may be carried forward under section 45 of CTA 2010 to be set against profits of the separate orchestral trade in a subsequent period.

1217SBUse of losses in the completion period

(1)Subsection (2) applies if a loss made in the separate orchestral trade is carried forward under section 45 of CTA 2010 to the completion period.

(2)So much (if any) of the loss as is not attributable to orchestra tax relief (see subsection (4)) may be treated for the purposes of loss relief as if it were a loss made in the completion period.

(3)If a loss is made in the separate orchestral trade in the completion period, the amount of the loss that may be—

(a)deducted from total profits of the same or an earlier period under section 37 of CTA 2010, or

(b)surrendered as group relief under Part 5 of that Act,

is restricted to the amount (if any) that is not attributable to orchestra tax relief (see subsection (4)).

(4)The amount of a loss in any period that is attributable to orchestra tax relief is found by—

(a)calculating what the amount of the loss would have been if there had been no additional deduction under Chapter 3 in that or any earlier period, and

(b)deducting that amount from the total amount of the loss.

(5)This section does not apply to loss surrendered, or treated as carried forward, under section 1217SC (terminal losses).

1217SCTerminal losses

(1)This section applies if—

(a)the company ceases to carry on the separate orchestral trade, and

(b)if the company had not ceased to carry on that trade, it could have carried forward an amount under section 45 of CTA 2010 to be set against profits of that trade in a later period (“the terminal loss”).

Below in this section the company is referred to as “company A” and the separate orchestral trade is referred to as “trade 1”.

(2)If company A—

(a)is treated under section 1217Q(2) or (5) as carrying on a separate trade in relation to the production of another concert or concert series (“trade 2”), and

(b)is carrying on trade 2 when it ceases to carry on trade 1,

company A may (on making a claim) make an election under subsection (3).

(3)The election is to have the terminal loss (or a part of it) treated as if it were a loss brought forward under section 45 of CTA 2010 to be set against the profits of trade 2 of the first accounting period beginning after the cessation and so on.

(4)Subsection (5) applies if—

(a)another company (“company B”) is treated under section 1217Q(2) or (5) as carrying on a separate trade (“company B's trade”) in relation to the production of another concert or concert series,

(b)company B is carrying on that trade when company A ceases to carry on trade 1, and

(c)company B is in the same group as company A for the purposes of Part 5 of CTA 2010 (group relief).

(5)Company A may surrender the loss (or a part of it) to company B.

(6)On the making of a claim by company B the amount surrendered is treated as if it were a loss brought forward by company B under section 45 of CTA 2010 to be set against the profits of company B's trade of the first accounting period beginning after the cessation and so on.

(7)The Treasury may by regulations make administrative provision in relation to the surrender of a loss under subsection (5) and the resulting claim under subsection (6).

(8)“Administrative provision” means provision corresponding, subject to such adaptations or other modifications as appear to the Treasury to be appropriate, to that made by Part 8 of Schedule 18 to FA 1998 (company tax returns: claims for group relief).

CHAPTER 5U.K.Provisional entitlement to relief

1217TProvisional entitlement to relief

(1)In relation to a company and the production of a concert or concert series, “interim accounting period” means any accounting period that—

(a)is one in which the company carries on a separate orchestral trade, and

(b)precedes the accounting period in which it ceases to do so.

(2)A company is not entitled to orchestra tax relief for an interim accounting period unless—

(a)its company tax return for the period states the amount of planned core expenditure on the production of the concert or concert series that is EEA expenditure (see section 1217RB(2)), and

(b)that amount is such as to indicate that the EEA expenditure condition (see section 1217RB) will be met in relation to the production.

If those requirements are met, the company is provisionally treated in relation to that period as if the EEA expenditure condition were met.

1217TAClawback of provisional relief

(1)If a statement is made under section 1217T(2) but it subsequently appears that the EEA expenditure condition will not be met on the company's ceasing to carry on the separate orchestral trade, the company—

(a)is not entitled to orchestra tax relief for any period for which its entitlement depended on such a statement, and

(b)must amend accordingly its company tax return for any such period.

(2)When a company ceases to carry on the separate orchestral trade, the company's company tax return for the period in which that cessation occurs must—

(a)state that the company has ceased to carry on the separate orchestral trade, and

(b)be accompanied by a final statement of the amount of the core expenditure on the production of the concert or concert series that is EEA expenditure.

(3)If that statement shows that the EEA expenditure condition is not met—

(a)the company is not entitled to orchestra tax relief or to relief under section 1217SC (transfer of terminal losses) for any period, and

(b)must amend accordingly its company tax return for any period for which such relief was claimed.

(4)Any amendment or assessment necessary to give effect to this section may be made despite any limitation on the time within which an amendment or assessment may normally be made.

CHAPTER 6U.K.Interpretation

1217UInterpretation

In this Part—

• “company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1) of that Schedule);

• “core expenditure” has the meaning given by section 1217RC;

• “costs”, in relation to a concert or concert series, has the meaning given by section 1217QD;

• “EEA expenditure” has the meaning given by section 1217RB(2);

• “EEA expenditure condition” has the meaning given by section 1217RB;

• “income”, in relation to a concert or concert series, has the meaning given by section 1217QC;

• “orchestra tax relief” is to be read in accordance with Chapter 3 (see in particular section 1217R(1));

• “orchestral concert” has the meaning given by section 1217PA;

• “production company” has the meaning given by section 1217PB;

• “qualifying expenditure” has the meaning given by section 1217RF;

• “qualifying orchestral concert” has the meaning given by section 1217RA(3);

• “qualifying orchestral concert series” has the meaning given by section 1217RA(5);

• the “separate orchestral trade” is to be read in accordance with section 1217Q.”