Office of Public Sector Information
PART III continued CHAPTER II continued
(1) After section 200D of the Taxes Act 1988 (work-related training) insert—
(1) This section applies for the purposes of Schedule E where any person (in this section, and sections 200F and 200G, called “the employer”) incurs expenditure—
(a) by making a payment to a person (“the provider”) in respect of the costs of any qualifying education or training provided by the provider to a fundable employee of the employer (in this section, and sections 200F and 200G, called “the employee”), or
(b) in paying or reimbursing any related costs.
(2) Subject to sections 200F to 200H, the emoluments of the employee from the office or employment shall not be taken to include—
(a) any amount in respect of that expenditure, or
(b) any amount in respect of the benefit of the education or training provided by means of that expenditure.
(3) In subsection (1) above “related costs”, in relation to any qualifying education or training provided to the employee, means—
(a) any costs that are incidental to the employee’s undertaking the education or training and are incurred wholly and exclusively as a result of his doing so;
(b) any expenses incurred in connection with an assessment (whether by examination or otherwise) of what the employee has gained from the education or training; and
(c) the cost of obtaining for the employee any qualification, registration or award to which he has or may become entitled as a result of undertaking the education or training or of undergoing such an assessment.
(4) In this section “qualifying education or training” means education or training of a kind that qualifies for grants whose payment is authorised by—
(a) regulations under section 108 or 109 of the Learning and Skills Act 2000, or
(b) regulations under section 1 of the [2000 c. 21. 2000 asp 8.] Education and Training (Scotland) Act 2000.
(5) For the purposes of this section, a person is a fundable employee of the employer if—
(a) he holds, or has at any time held, an office or employment under the employer, and
(b) he holds an account that qualifies under section 104 of the Learning and Skills Act 2000 or he is a party to qualifying arrangements.
(6) In subsection (5) above “qualifying arrangements” means arrangements which qualify under—
(a) section 105 or 106 of the Learning and Skills Act 2000, or
(b) section 2 of the Education and Training (Scotland) Act 2000.
(1) Section 200E shall not apply in the case of any expenditure to the extent that it is incurred in paying or reimbursing the cost of any facilities or other benefits provided or made available to the employee for either or both of the following purposes, that is to say—
(a) enabling the employee to enjoy the facilities or benefits for entertainment or recreational purposes;
(b) rewarding the employee for the performance of the duties of his office or employment under the employer, or for the manner in which he has performed them.
(2) Section 200E shall not apply in the case of any expenditure incurred in paying or reimbursing any expenses of travelling or subsistence, except to the extent that those expenses would be deductible under section 198 if the employee—
(a) undertook the education or training in question in the performance of the duties of—
(i) his office or employment under the employer, or
(ii) where the employee no longer holds an office or employment under the employer, the last office or employment that he did hold under the employer; and
(b) incurred those expenses out of the emoluments of that office or employment.
(3) Section 200E shall not apply in the case of any expenditure incurred in paying or reimbursing the cost of providing the employee with, or with the use of, any asset except where—
(a) the asset is provided or made available for use only in the course of the education or training;
(b) the asset is provided or made available for use in the course of the education or training and in the performance of the duties of the employee’s office or employment but not to any significant extent for any other use;
(c) the asset consists in training materials provided in the course of the education or training; or
(d) the asset consists in something made by the employee in the course of the education or training or incorporated into something so made.
(4) In subsection (1) above the reference to enjoying facilities or benefits for entertainment or recreational purposes includes a reference to enjoying them in the course of any leisure activity.
(5) In this section—
“subsistence” includes food and drink and temporary living accommodation; and
“training materials” means stationery, books or other written material, audio or video tapes, compact disks or floppy disks.
(1) Section 200E shall not apply to any expenditure incurred in respect of—
(a) the costs of any education or training provided to the employee, or
(b) any related costs,
unless the expenditure is incurred in giving effect to fair-opportunity arrangements that were in place at the time when the employer agreed to incur the expenditure.
In this subsection “related costs”, in relation to any education or training provided to the employee, has the meaning given by section 200E(3).
(2) For the purposes of subsection (1) above “fair-opportunity arrangements” are in place at any time if at that time arrangements are in place that provide—
(a) for the making of contributions by the employer to costs arising from qualifying education or training being undertaken by persons who hold, or have held, an office or employment under the employer, and
(b) for such contributions to be generally available, on similar terms, to the persons who at that time hold an office or employment under the employer.
In this subsection “qualifying education or training” has the same meaning as in section 200E.
(3) The Treasury may by regulations make provision specifying the persons or other entities under whom Crown servants are to be treated for the purposes of this section as holding office or employment; and such regulations may—
(a) deem a description of Crown servants (or two or more such descriptions taken together) to be an entity for the purposes of the regulations;
(b) make different provision for different descriptions of Crown servants.
In this subsection “Crown servant” means a person holding an office or employment under the Crown.
Section 200E does not apply to expenditure to the extent that—
(a) section 200B (expenditure on work-related training) applies to it, or
(b) section 588(1) (expenditure on retraining courses) has effect in respect of it.
(1) This section applies where—
(a) any person (“the employee”) who holds, or has at any time held, an office or employment under another (“the employer”) is provided by reason of that office or employment with any benefit,
(b) that benefit consists in any qualifying education or training or is provided in connection with any such education or training, and
(c) the amount which (apart from this section and sections 200E to 200H) would be included in respect of that benefit in the emoluments of the employee (“the chargeable amount”) is or includes an amount that does not represent expenditure incurred by the employer.
(2) For the purposes of Schedule E, the questions whether and to what extent those emoluments shall be taken to include an amount in respect of that benefit shall be determined in accordance with sections 200E to 200H as if the benefit had been provided by means of a payment by the employer of an amount equal to the whole of the chargeable amount.
(3) In this section “qualifying education or training” has the same meaning as in section 200E.”.
(2) In section 200A(3)(b) of that Act (definition of a qualifying absence from home), at the end of sub-paragraph (iv) insert “, or
(v) expenses the amount of which, having been paid or reimbursed by the person under whom he holds that office or employment, is excluded from his emoluments in pursuance of section 200E, or
(vi) expenses the amount of which would be so excluded if it were so paid or reimbursed.”.
(3) This section applies for the year 2000-01 and subsequent years of assessment.
Schedule 11 to this Act (which makes provision in relation to the taxation of cars available for private use) has effect for the year 2002-03 and subsequent years of assessment.
Schedule 12 to this Act has effect with respect to the provision of services through an intermediary.
Schedule 13 to this Act (which makes provision in relation to occupational and personal pension schemes) has effect.
Schedule 14 to this Act (enterprise management incentives) has effect in relation to any right to acquire shares granted after the passing of this Act.
(1) Schedule 15 to this Act (which makes provision for the corporate venturing scheme) has effect.
(2) Schedule 16 to this Act (which makes consequential amendments) has effect.
(3) Paragraph 3(2)(a)(i) to (iii) and (3) of Schedule 16 (and paragraph 3(1) so far as it relates to those provisions) have effect—
(a) in relation to claims made under section 573 of the Taxes Act 1988, in respect of disposals on or after 1st April 2000, and
(b) in relation to claims made under section 574 of that Act, in respect of disposals on or after 6th April 2000.
(4) Subject to that, Schedules 15 and 16 apply in relation to shares issued on or after 1st April 2000 but before 1st April 2010.
The provisions relating to the enterprise investment scheme are amended in accordance with Schedule 17 to this Act.
In that Schedule—
Part I makes amendments reducing various periods which apply in relation to the provisions which determine the reliefs under the scheme;
Part II makes amendments about qualifying companies;
Part III makes other minor amendments.
The provisions relating to venture capital trusts are amended in accordance with Schedule 18 to this Act.
In that Schedule—
Part I makes amendments reducing various periods which apply in relation to the provisions which determine the reliefs; and
Part II makes amendments about qualifying holdings.
(1) Section 2A of the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (taper relief) is amended as follows.
(2) In subsection (5), for the first two columns of the table (which relate to gains on disposals of business assets) substitute—
| Gains on disposals of business assets | |
|---|---|
| Number of whole years in qualifying holding period | Percentage of gain chargeable |
| 1 | 87.5 |
| 2 | 75 |
| 3 | 50 |
| 4 or more | 25 |
(3) For subsections (8) and (9) substitute—
“(8) The qualifying holding period of an asset for the purposes of this section is—
(a) in the case of a business asset, the period after 5th April 1998 for which the asset had been held at the time of its disposal;
(b) in the case of a non-business asset where—
(i) the time which, for the purposes of paragraph 2 of Schedule A1, is the time when the asset is taken to have been acquired by the person making the disposal is a time before 17th March 1998, and
(ii) there is no period which by virtue of paragraph 11 or 12 of that Schedule does not count for the purposes of taper relief,
the period mentioned in paragraph (a) plus one year;
(c) in the case of any other non-business asset, the period mentioned in paragraph (a).
This subsection is subject to paragraph 2(4) of Schedule A1 and paragraph 3 of Schedule 5BA.”.
(4) This section applies to disposals on or after 6th April 2000.
(1) Schedule A1 to the [1992 c. 12.] Taxation of Chargeable Gains Act 1992 (application of taper relief) is amended as follows.
(2) In paragraph 4 (conditions for shares to qualify as business assets)—
(a) in sub-paragraph (4) (disposal by personal representatives), for the words following “if at that time” substitute “the relevant company was a qualifying company by reference to the personal representatives”; and
(b) in sub-paragraph (5) (disposal by legatee), for paragraph (b) substitute—
“(b) the relevant company was a qualifying company by reference to the personal representatives.”.
(3) In paragraph 5 (conditions for other assets to qualify as business assets)—
(a) in sub-paragraph (2) (disposal by individual), for paragraphs (d) and (e) substitute—
“(d) the purposes of any office or employment held by that individual with a person carrying on a trade.”;
and
(b) in sub-paragraph (3) (disposal by trustees of settlement), for paragraphs (e) and (f) substitute—
“(e) the purposes of any office or employment held by an eligible beneficiary with a person carrying on a trade.”.
(4) For paragraph 6 (companies which are qualifying companies) substitute—
“6 (1) A company shall be taken to have been a qualifying company by reference to an individual at any time when—
(a) the company was a trading company or the holding company of a trading group, and
(b) one or more of the following conditions was met—
(i) the company was unlisted,
(ii) the individual was an officer or employee of the company, or of a company having a relevant connection with it, or
(iii) the voting rights in the company were exercisable, as to not less than 5%, by the individual.
(2) A company shall be taken to have been a qualifying company by reference to the trustees of a settlement at any time when—
(a) the company was a trading company or the holding company of a trading group, and
(b) one or more of the following conditions was met—
(i) the company was unlisted,
(ii) an eligible beneficiary was an officer or employee of the company, or of a company having a relevant connection with it, or
(iii) the voting rights in the company were exercisable, as to not less than 5%, by the trustees.
(3) A company shall be taken to have been a qualifying company by reference to an individual’s personal representatives at any time when—
(a) the company was a trading company or the holding company of a trading group, and
(b) one or more of the following conditions was met—
(i) the company was unlisted, or
(ii) the voting rights in the company were exercisable, as to not less than 5%, by the personal representatives.”.
(5) In paragraph 22(1) (interpretation), at the appropriate place insert—
““unlisted company” means a company—
(a) none of whose shares is listed on a recognised stock exchange, and
(b) which is not a 51 per cent subsidiary of a company whose shares, or any class of whose shares, is so listed;”;
and omit the definitions of “full-time working officer or employee” and “qualifying office or employment”.
(6) After paragraph 22 insert—
23 (1) This Schedule has effect subject to the following provisions where a company (“the investing company”) has a qualifying shareholding in a joint venture company.
(2) For the purposes of this paragraph a company is a “joint venture company” if, and only if—
(a) it is a trading company or the holding company of a trading group, and
(b) 75% or more of its ordinary share capital (in aggregate) is held by not more than five companies.
For the purposes of paragraph (b) above the shareholdings of members of a group of companies shall be treated as held by a single company.
(3) For the purposes of this paragraph a company has a “qualifying shareholding” in a joint venture company if—
(a) it holds more than 30% of the ordinary share capital of the joint venture company, or
(b) it is a member of a group of companies, it holds ordinary share capital of the joint venture company and the members of the group between them hold more than 30% of that share capital.
(4) For the purpose of determining whether the investing company is a trading company—
(a) any holding by it of shares in the joint venture company shall be disregarded, and
(b) it shall be treated as carrying on an appropriate proportion—
(i) of the activities of the joint venture company, or
(ii) where the joint venture company is the holding company of a trading group, of the activities of that group.
This sub-paragraph does not apply if the investing company is a holding company.
(5) For the purpose of determining whether the investing company is a holding company—
(a) any holding by it of shares in the joint venture company shall be disregarded, and
(b) it shall be treated as carrying on an appropriate proportion of the activities—
(i) of the joint venture company, or
(ii) where the joint venture company is the holding company of a trading group, of that group.
This sub-paragraph does not apply if the joint venture company is a 51 per cent subsidiary of the investing company.
(6) For the purpose of determining whether a group of companies is a trading group—
(a) every holding of shares in the joint venture company by a member of the group having a qualifying shareholding in that company shall be disregarded, and
(b) each member of the group having such a qualifying shareholding shall be treated as carrying on an appropriate proportion of the activities—
(i) of the joint venture company, or
(ii) where the joint venture company is the holding company of a trading group, of that group.
This sub-paragraph does not apply if the joint venture company is a member of the group.
(7) In sub-paragraphs (4)(b), (5)(b) and (6)(b) above “an appropriate proportion” means a proportion corresponding to the percentage of the ordinary share capital of the joint venture company held by the investing company or, as the case may be, by the group member concerned.
(8) The following shall be treated as having a relevant connection with each other—
(a) the investing company;
(b) the joint venture company;
(c) any company having a relevant connection with the investing company;
(d) any company having a relevant connection with the joint venture company by virtue of being—
(i) a 51 per cent subsidiary of that company, or
(ii) a member of the same commercial association of companies.
(9) The acquisition by the investing company of the qualifying shareholding shall not be treated as a relevant change of activity for the purposes of paragraph 11 above.
(10) For the purposes of this paragraph “ordinary share capital” has the meaning given by section 832(1) of the Taxes Act.”.
(7) This section has effect for determining whether an asset is a business asset at any time on or after 6th April 2000.
It does not affect the determination on or after that date whether an asset was a business asset at a time before that date.
(1) Schedule 19 to this Act (meaning of “research and development”) has effect.
In that Schedule—
Part I contains a new definition of “research and development” for the purposes of the Tax Acts, and
Part II contains consequential amendments.
(2) The amendments in Part II of that Schedule have effect—
(a) for the purposes of income tax and capital gains tax, in relation to the year 2000-01 and subsequent years of assessment, and
(b) for the purposes of corporation tax, for accounting periods ending on or after 1st April 2000.
(1) Schedule 20 to this Act (tax relief for expenditure on research and development) has effect for accounting periods ending on or after 1st April 2000.
In that Schedule—
Part I provides for entitlement to relief,
Part II provides for the manner of giving effect to the relief, and
Part III contains supplementary provisions.
(2) Schedule 21 to this Act (which contains consequential amendments) has effect accordingly.
(1) In section 22(3D) of the [1990 c. 1.] Capital Allowances Act 1990 (expenditure qualifying for 40% first year allowances), for “in the period beginning with 2nd July 1998 and ending with 1st July 2000” substitute “on or after 2nd July 1998”.
(2) In that Act—
(a) in section 22(3C)(a), (3CA)(a) and (3D)(a), for “a small company or a small business” substitute “a small or medium-sized enterprise”;
(b) in section 22A—
(i) in the sidenote, for “small company or small business”,
(ii) in subsection (1) for “small company”, and
(iii) in subsection (2) for “small business”,
substitute “small or medium-sized enterprise”.
The amendments in this subsection are of nomenclature only.
(1) In section 22 of the Capital Allowances Act 1990 (first-year allowances), after subsection (3D) insert—
“(3E) This section applies to—
(a) any expenditure on information and communications technology which, disregarding any effect of section 83(2) on the time at which it is to be treated as incurred, is incurred by a small enterprise in the period beginning with 1st April 2000 and ending with 31st March 2003; and
(b) any additional VAT liability incurred in respect of expenditure to which this section applies by virtue of paragraph (a) above.
(3F) For the purposes of subsection (3E) above expenditure on information and communications technology means expenditure on items within any of the classes set out in subsection (3G) below.
(3G) The classes referred to in subsection (3F) above are as follows:
A. Computers and associated equipment
This class covers—
(a) computers,
(b) peripheral devices designed to be used by being connected to or inserted in a computer,
(c) equipment (including cabling) for use primarily to provide a data connection—
(i) between one computer and another, or
(ii) between a computer and a data communications network,
(d) dedicated electrical systems for computers.
For this purpose “computer” does not include computerised control or management systems or other systems that are part of a larger system whose principal function is not processing or storing information.
B. Other qualifying equipment
This class covers—
(a) wireless application protocol telephones,
(b) third generation mobile telephones,
(c) devices designed to be used by being connected to a television set that are capable of receiving and transmitting information from and to data networks, and
(d) other devices substantially similar to those within paragraphs (a), (b) and (c) that are capable of receiving and transmitting information from and to data networks.
This is subject to any order under subsection (3H) below.
C. Software
This class covers the right to use or otherwise deal with software for the purposes of any equipment within Class A or B above.
(3H) The Treasury may make provision by order—
(a) further defining the descriptions of equipment within Class B in subsection (3G), or
(b) adding further descriptions of equipment to that class.”.
(2) In sections 22(4), (6B) and (6C), 23(6), 42(9) and 50(3) and (4A) of that Act, for “and (3D)” substitute “, (3D) and (3E)”.
(3) In sections 43(5), 44(5), 46(8) and 48(7) of that Act, for “or (3D)” substitute “, (3D) or (3E)”.
(4) In section 39(2)(a) of that Act for “to (3D)” substitute “to (3E)”.
After section 22A of the [1990 c. 1.] Capital Allowances Act 1990, insert—
(1) For the purposes of section 22 capital expenditure incurred by a company is capital expenditure incurred by a small enterprise if the company—
(a) qualifies as small in relation to the financial year of the company in which the expenditure is incurred, and
(b) is not a member of a large or medium-sized group at the time when the expenditure is incurred.
(2) For the purposes of section 22, capital expenditure is capital expenditure incurred by a small enterprise if—
(a) it is incurred by a business for the purposes of a trade (the “first trade”) carried on by that business, and
(b) were the first trade carried on by a company (the “hypothetical company”) in the circumstances set out in subsection (3) below, that company would qualify as small in relation to the financial year of that company in which the expenditure would be treated as incurred.
Finance Act 2000