SCHEDULE 6 continued PART 2 continued
(5) At the end of the second column of the Table insert the following entries—
| “Sections 432 and 433 of ITEPA 2003. | |
| Section 445 of ITEPA 2003. | |
| Sections 465 and 466 of ITEPA 2003. | |
| Section 486 of ITEPA 2003. | |
| Regulations under section 589 of ITEPA 2003. | |
| Regulations under section 715 of ITEPA 2003. | |
| PAYE regulations. | |
| Paragraph 52 of Schedule 5 to ITEPA 2003.” |
138 In section 98A(1) (special penalties in the case of certain returns) for “Regulations under section 203(2) (PAYE) or” substitute “PAYE regulations or regulations under section”.
139 In section 118 (interpretation) after the entry relating to “inspector” insert—
““ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003,”.
140 In section 119(4) (construction of the Act) after “1992 Act” insert “and ITEPA 2003”.
141 In paragraph 4(1A) of Schedule 1A (claims etc. not included in returns) for “section 203 of the principal Act” substitute “PAYE regulations”.
142 In paragraph 3 of Schedule 3 (rules for assigning proceedings to General Commissioners) for “regulations under section 203 of the principal Act” substitute “PAYE regulations”.
143 In Schedule 3A (electronic lodgement of tax returns etc.) in paragraph 2(4) (returns to which the Schedule applies) after “the principal Act” insert “or under ITEPA 2003”.
144 Schedule 15 to the Finance Act 1973 (territorial extension of charge to tax — supplementary provisions) is amended as follows.
145 In paragraph 2(b) for “emoluments” substitute “earnings or amounts treated as earnings which constitute employment income (see section 7(2)(a) or (b) of the Income Tax (Earnings and Pensions) Act 2003)”.
146 In paragraph 5 for “Schedule E” substitute “the Income Tax (Earnings and Pensions) Act 2003”.
147 In section 24 of the Finance Act 1974 (returns of persons treated as employees) for “any emoluments paid to him, whether or not tax is chargeable on them” substitute “any general earnings paid to him”.
148 In Schedule 1 to the Interpretation Act 1978 (words and expressions defined) after the definition of “Parliamentary election” insert—
““PAYE income” has the meaning given by section 683 of the Income Tax (Earnings and Pensions) Act 2003.
“PAYE regulations” means regulations under section 684 of that Act.”
149 In section 73B of the Education (Scotland) Act 1980 (grants and loans: Scotland)—
(a) in subsection (3)(g) for “regulations under section 203 of the Income and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE regulations”; and
(b) in subsection (4) for “income assessable to income tax under Schedule E” substitute “PAYE income”.
150 The Inheritance Tax Act 1984 is amended as follows.
151 (1) Amend the following provisions as provided in sub-paragraph (2)—
(a) section 13(4)(c) (dispositions by close companies for benefit of employees),
(b) section 72(4A) (property leaving employee trusts and newspaper trusts), and
(c) section 86(3)(c) (trusts for benefit of employees).
(2) In each of those provisions, for “an employee share ownership plan approved under Schedule 8 to the Finance Act 2000” substitute “a share incentive plan approved under Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003”.
152 In section 14(1) (waiver of remuneration), for “would be assessable to income tax under Schedule E” substitute “would be earnings, or would be treated as earnings, and would constitute employment income (see section 7(2)(a) or (b) of the Income Tax (Earnings and Pensions) Act 2003)”.
153 In paragraph 1(1) of Schedule 3 to the Bankruptcy (Scotland) Act 1985 (preferred debts) for “section 203 of the Income and Corporation Taxes Act 1988 (pay as you earn)” substitute “PAYE regulations”.
154 In paragraph 1 of Schedule 6 to the Insolvency Act 1986 (the categories of preferential debts)—
(a) for “emoluments” substitute “taxable earnings (as defined by section 10 of the Income Tax (Earnings and Pensions) Act 2003)”; and
(b) for “section 203 of the Income and Corporation Taxes Act 1988 (pay as you earn)” substitute “PAYE regulations”.
155 (1) Section 73 of the Finance Act 1988 (consideration for certain restrictive undertakings) is amended as follows.
(2) In subsection (2) for “any sum to which section 313 of that Act applies” substitute “any payment which is treated as earnings of an employee by virtue of section 225 of the Income Tax (Earnings and Pensions) Act 2003 (payments for restrictive undertakings)”.
(3) In subsection (3) for “Any sum to which section 313 of the Taxes Act 1988 applies” substitute “Any payment which is treated as earnings of an employee by virtue of section 225 of the Income Tax (Earnings and Pensions) Act 2003”.
156 The Finance Act 1989 is amended as follows.
157 For section 43 substitute—
(1) In calculating profits or gains of a trade to be charged under Schedule D for a period of account, no deduction is allowed for an amount charged in the accounts in respect of employees' remuneration, unless the remuneration is paid before the end of the period of 9 months immediately following the end of the period of account.
(2) For the purposes of subsection (1) above an amount charged in the accounts in respect of employees' remuneration includes an amount—
(a) for which provision is made in the accounts, or
(b) which is held by an intermediary,
with a view to its becoming employees' remuneration.
(3) Subsection (1) above applies whether the amount is in respect of particular employments or in respect of employments generally.
(4) If the remuneration is paid after the end of the period of 9 months mentioned in subsection (1) above, any deduction allowed in respect of it is allowed for the period of account in which it is paid and not for any other period of account.
(5) If the profits of the trade are calculated before the end of the period of 9 months mentioned in subsection (1) above—
(a) it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but
(b) if the remuneration is subsequently paid before the end of that period, the calculation is adjusted if a claim to adjust it is made to an officer of the Board within 2 years beginning with the end of the period of account.
(6) For the purposes of this section, remuneration is paid when it—
(a) is treated as received by an employee for the purposes of the Income Tax (Earnings and Pensions) Act 2003 by section 18, 19, 31 or 32 of that Act (receipt of money and non-money earnings), or
(b) would be so treated if it were not exempt income.
(7) In this section—
“employee” includes an office-holder and “employment” correspondingly includes an office, and
“remuneration” means an amount which is or is treated as earnings for the purposes of the Income Tax (Earnings and Pensions) Act 2003.”
158 For section 44 substitute—
(1) In calculating the profits of an investment company for a period of account, no deduction is allowed for an amount charged in the accounts in respect of employees' remuneration, unless the remuneration is paid before the end of the period of 9 months immediately following the end of the period of account.
(2) For the purposes of subsection (1) above an amount charged in the accounts in respect of employees' remuneration includes an amount—
(a) for which provision is made in the accounts, or
(b) which is held by an intermediary,
with a view to its becoming employees' remuneration.
(3) Subsection (1) above applies whether the amount is in respect of particular employments or in respect of employments generally.
(4) If the remuneration is paid after the end of the period of 9 months mentioned in subsection (1) above, any deduction allowed in respect of it is allowed for the period of account in which it is paid and not for any other period of account.
(5) If the profits of the trade are calculated before the end of the period of 9 months mentioned in subsection (1) above—
(a) it must be assumed, in making the calculation, that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period, but
(b) if the remuneration is subsequently paid before the end of that period, the calculation is adjusted if a claim to adjust it is made to an officer of the Board by or on behalf of the company within 2 years beginning with the end of the period of account.
(6) For the purposes of this section, remuneration is paid when it—
(a) is treated as received by an employee for the purposes of the Income Tax (Earnings and Pensions) Act 2003 by section 18, 19, 31 or 32 of that Act (receipt of money and non-money earnings), or
(b) would be so treated if it were not exempt income.
(7) Where the profits of a company carrying on life assurance business are not charged under Case I of Schedule D, this section shall apply in calculating the profits as it applies in calculating the profits of an investment company; and in any such case—
(a) subsection (4) above shall have effect subject to section 86 below, and
(b) in construing section 86 below the remuneration shall be treated as expenses for the accounting period.
(8) In this section—
“employee” includes an office-holder and “employment” correspondingly includes an office,
“investment company” has the same meaning as in Part 4 of the Taxes Act 1988, and
“remuneration” means an amount which is or is treated as earnings for the purposes of Parts 2 to 7 of the Income Tax (Earnings and Pensions) Act 2003.”
159 In section 53(2)(f) (amendments consequential on the substitution of a new section 167 of ICTA) for “sections 332(2)(c) and 418(3)(a)” substitute “section 418(3)(a)”.
160 (1) Amend section 69 (chargeable events in relation to employee share ownership trusts) as follows.
(2) In subsection (3AA)—
(a) in paragraph (a) for “an employee share ownership” substitute “a share incentive”, and
(b) in paragraph (b) for “Schedule 8 to the Finance Act 2000” substitute “Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003”.
(3) In the definition of “market value” in subsection (3AC), for “in Schedule 8 to the Finance Act 2000” substitute “it has for the purposes of the SIP code (see paragraph 92 of Schedule 2 to the Income Tax (Earnings and Pensions) Act 2003)”.
(4) In subsection (4ZA)(b)—
(a) for “a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988” substitute “an SAYE option scheme within the meaning of the SAYE code (see section 516(4) of the Income Tax (Earnings and Pensions) Act 2003)”, and
(b) in sub-paragraph (ii) for “that Schedule” substitute “Schedule 3 to that Act”.
161 (1) Amend section 76 (non-approved retirement benefits schemes) as follows.
(2) In subsection (6C)—
(a) for “paragraphs (a), (b) or (c) of section 596(1) of the Taxes Act 1988” substitute “section 387(2) of the Income Tax (Earnings and Pensions) Act 2003”;
(b) for “emoluments” in the first place where it occurs substitute “earnings”; and
(c) for “foreign emoluments within the meaning of section 192” substitute “earnings and amounts treated as earnings to which subsection (6D) applies”.
(3) After subsection (6C) insert—
“(6D) This subsection applies to earnings and amounts treated as earnings for a year of assessment if—
(a) the employer or office-holder is not domiciled in the United Kingdom in that year, and
(b) the employment is with a foreign employer.
(6E) If there is a dispute as to whether the employee or office-holder is not domiciled in the United Kingdom, sections 42 and 43 of the Income Tax (Earnings and Pensions) Act 2003 (Board to determine dispute as to domicile) apply to the dispute as they apply to a dispute mentioned in section 42(1) of that Act.”
(4) In subsection (7)—
(a) after “this section” insert—
““earnings and amounts treated as earnings” means earnings and amounts treated as earnings which constitute employment income (see section 7(2)(a) or (b) of the Income Tax (Earnings and Pensions) Act 2003),
“foreign employer” has the meaning given by section 721 of that Act,”; and
(b) for “section 596(1)(a), (b) or (c) of the Taxes Act 1988” substitute “section 387(2) of the Income Tax (Earnings and Pensions) Act 2003”.
162 In section 178(2) (setting of rates of interest)—
(a) in paragraph (m) omit the words “160,”,
(b) at the end of the first paragraph (p) omit the word “and”,
(c) renumber the second paragraph (p) as paragraph (q), and
(d) at the end of paragraph (r) insert “, and
(s) Chapter 7 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003.”.
163 (1) Amend Schedule 5 (employee share ownership trusts) as follows.
(2) In paragraph 4(2A) (beneficiaries)—
(a) for “a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988” substitute “an SAYE option scheme”, and
(b) in paragraph (b), for “that Schedule” substitute “Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003”.
(3) In paragraph 9(2ZA)(b) (transfers of securities on qualifying terms)—
(a) for “a savings-related share option scheme within the meaning of Schedule 9 to the Taxes Act 1988” substitute “an SAYE option scheme”, and
(b) in sub-paragraph (ii), for “that Schedule” substitute “Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003”.
(4) In paragraph 10 (other features)—
(a) for “savings-related share option schemes approved under Schedule 9 to the Taxes Act 1988” substitute “SAYE option schemes approved under Schedule 3 to the Income Tax (Earnings and Pensions) Act 2003”; and
(b) for “that Schedule” substitute “Schedule 9 to the Taxes Act 1988”.
(5) After paragraph 17 insert—
“18 For the purposes of this Schedule “SAYE option scheme” has the same meaning as in the SAYE code (see section 516 of the Income Tax (Earnings and Pensions) Act 2003 (approved SAYE option schemes)).”
164 In paragraph 1 of Schedule 4 to the Insolvency (Northern Ireland) Order 1989 (the categories of preferential debts)—
(a) in sub-paragraph (1), for “emoluments” substitute “taxable earnings (as defined by section 10 of the Income Tax (Earnings and Pensions) Act 2003)”; and
(b) in sub-paragraph (2), for “section 203 of the Income and Corporation Taxes Act 1988 (pay as you earn)” substitute “regulations made under section 684 of that Act (PAYE regulations)”.
165 The Finance Act 1990 is amended as follows.
166 (1) Amend section 25(2) (donations to charity by individuals) as follows.
(2) In paragraph (d) for “section 202(2) of the Taxes Act 1988” substitute “section 713(3) of the Income Tax (Earnings and Pensions) Act 2003”.
(3) In paragraph (i) for “section 132(4)(a) of the Taxes Act 1988” substitute “section 28(2) of the Income Tax (Earnings and Pensions) Act 2003”.
167 (1) Amend paragraph 4 of Schedule 14 (amendments of sections 322 and 323 of ICTA) as follows.
(2) In sub-paragraph (1) for “sections 322(1)(a) and (2) and 323(1)” substitute “section 322(1)(a)”.
(3) Omit sub-paragraph (2).
168 (1) Amend section 38 of the Finance Act 1991 (employee share schemes: non-discrimination) as follows.
(2) Omit subsection (2).
(3) In subsection (6) for “Subsections (2) and” substitute “Subsection”.
169 The Social Security Contributions and Benefits Act 1992 is amended as follows.
170 In section 1 (outline of contributory system), in subsection (2)(bb) for “emoluments” substitute “general earnings”.
171 In section 2 (categories of earners), in subsection (1)(a) for “emoluments chargeable to income tax under Schedule E” substitute “general earnings”.
172 (1) Amend section 4 (payments treated as remuneration and earnings) as follows.
(2) For subsection (4)(a) substitute—
“(a) the amount of any gain calculated under section 479 or 480 of ITEPA 2003 in respect of which an amount counts as employment income of the earner under section 476 or 477 of that Act (charge on exercise, assignment or release of share option);”.
(3) In subsection (4)(b) for “section 313 of the 1988 Act” substitute “section 225 or 226 of ITEPA 2003”.
(4) In subsection (6)(a) for “Schedule E” substitute “the employment income Parts of ITEPA 2003”.
173 In section 7(1)(b) (meaning of “secondary contributor”) for “emoluments” in both places where it occurs substitute “general earnings”.
174 (1) Amend section 10 (Class 1A National Insurance contributions: benefits in kind etc.) as follows.
(2) For subsection (1)(a) substitute—
“(a) for any tax year an earner is chargeable to income tax under ITEPA 2003 on an amount of general earnings received by him from any employment (“the relevant employment”),”.
(3) For subsection (1)(b) substitute—
“(b) the relevant employment is both—
(i) employed earner’s employment, and
(ii) an employment, other than an excluded employment, within the meaning of the benefits code (see Chapter 2 of Part 3 of ITEPA 2003),”.
(4) In subsection (1)(c) for “emolument” substitute “general earnings”.
(5) In subsection (1) in the words after paragraph (c) for “emolument” substitute “general earnings”.
(6) In subsection (2)(b) for “emolument” substitute “general earnings”.
(7) In subsection (4)—
(a) for “emolument” substitute “general earnings”;
(b) for “it” substitute “them”.
(8) In subsection (6) for “emolument as is taken” substitute “general earnings as are taken”.
(9) For subsection (7) substitute—
“(7) In calculating for the purposes of this section the amount of general earnings received by an earner from an employment, a deduction under any of the excluded provisions is to be disregarded.
This subsection does not apply in relation to a deduction if subsection (7A) applies in relation to it.
(7A) Where—
(a) a deduction in respect of a matter is allowed under an excluded provision, and
(b) the amount deductible is at least equal to the whole of any corresponding amount which would (but for this section) fall by reference to that matter to be included in the general earnings mentioned in subsection (7),
the whole of the corresponding amount shall be treated as not included.
(7B) For the purposes of subsections (7) and (7A) “excluded provision” means—
(a) any provision of Chapter 2 of Part 5 of ITEPA 2003 (deductions for employee’s expenses), other than section 352 (limited deduction for agency fees paid by entertainers), and
(b) any provision of Chapter 5 of Part 5 of ITEPA 2003 (deductions for earnings representing benefits or reimbursed expenses).”
(10) For subsection (8)(a) substitute—
“(a) modify the effect of subsections (7) and (7A) above by amending subsection (7B) so as to include any enactment contained in the Income Tax Acts within the meaning of “excluded provision”; or”.
(11) In subsection (8)(b)—
(a) for “subsection (7)” substitute “subsections (7) to (7B)”;
(b) for “under Schedule E” substitute “on employment income”.
(12) In subsection (9)(a) for “emoluments” substitute “general earnings”.
(13) Omit subsection (10).
175 (1) Amend section 10ZA (liability of third party provider of benefits in kind) as follows.
(2) In subsection (1)(a) for “an emolument” substitute “general earnings”.
(3) Amend subsection (1)(b) as follows—
(a) for “the emolument, in so far as it is one in respect of which” substitute “the general earnings, in so far as they are ones in respect of which”;
(b) for “consists” substitute “consist”.
(4) In subsection (2), in the words after paragraph (b) for “an emolument” substitute “general earnings”.
(5) In subsection (6) for “section 168(4) of the Income and Corporation Taxes Act 1988” substitute “section 721(5) of ITEPA 2003”.
176 (1) Amend section 10ZB (non-cash vouchers provided by third parties) as follows.
(2) In subsection (2)(a) for the words from “employment” to the end of the paragraph substitute “employment which is an excluded employment for the purposes of the benefits code, and”.
(3) In subsection (2)(b) for “if that Chapter did apply to that employment” substitute “if that employment were not an excluded employment”.
(4) In subsection (2), in the words following paragraph (b) for “as if that employment were employment to which that Chapter applied” substitute “as if that employment were not an excluded employment”.
(5) In subsection (3) for “section 141 of the Income and Corporation Taxes Act 1988” substitute “section 84 of ITEPA 2003”.
177 (1) Amend section 10A (Class 1B National Insurance contributions) as follows.
(2) In subsection (1) for “emoluments” substitute “general earnings”.
(3) In subsection (2)(a) for “the emoluments included” substitute “the general earnings included”.
(4) In subsection (4) for “Emoluments are chargeable emoluments” substitute “General earnings are chargeable emoluments”.
(5) In subsection (5) for “emoluments” in both places where it occurs substitute “general earnings”.
178 (1) Amend section 122(1) (interpretation of Parts 1 to 6 and supplementary provisions) as follows.
(2) Insert the following definitions in the appropriate places—
““the benefits code” has the meaning given by section 63(1) of ITEPA 2003;”
““the employment income Parts of ITEPA 2003” means Parts 2 to 7 of that Act;”
““excluded employment” has the meaning given by section 63(4) of ITEPA 2003;”
““general earnings” has the meaning given by section 7 of ITEPA 2003 and accordingly sections 3 and 112 of this Act do not apply in relation to the word “earnings” when used in the expression “general earnings”;”
““ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;”.
(3) In the definition of “PAYE settlement agreement” for “section 206A of the Income and Corporation Taxes Act 1988” substitute “Chapter 5 of Part 11 of ITEPA 2003”.
179 In section 126(5)(a)(ii) (trade disputes) for “emoluments in pursuance of section 203 of the Income and Corporation Taxes Act 1988 (PAYE)” substitute “taxable earnings (as defined by section 10 of the Income Tax (Earnings and Pensions) Act 2003) under PAYE regulations”.
180 (1) Amend section 150(2) (interpretation of Part 10) as follows.
(2) In paragraph (b) of the definition of “unemployability supplement or allowance”—
(a) in sub-paragraph (ii) for “section 315(1) of the Income and Corporation Taxes Act 1988” substitute “section 641 of the Income Tax (Earnings and Pensions) Act 2003”;
(b) omit sub-paragraph (v).
(3) In paragraph (b) of the definition of “war disablement pension” for “subsection (1) of section 315 of the Income and Corporation Taxes Act 1988” substitute “any of paragraphs (a) to (f) of section 641(1) of the Income Tax (Earnings and Pensions) Act 2003”.
(4) In the definition of “war widow’s pension” for “subsection (2)(e) of the said section 315” substitute “section 641(1)(e) or (f) of the Income Tax (Earnings and Pensions) Act 2003”.
181 In section 163(1) (interpretation of Part 11), in paragraph (a) of the definition of “employee” for “emoluments chargeable to income tax under Schedule E” substitute “general earnings (as defined by section 7 of the Income Tax (Earnings and Pensions) Act 2003)”.
182 In section 171(1) (interpretation of Part 12), in paragraph (a) of the definition of “employee” for “emoluments chargeable to income tax under Schedule E” substitute “general earnings (as defined by section 7 of the Income Tax (Earnings and Pensions) Act 2003)”.
183 In section 171ZJ(2)(a) (Part 12ZA: supplementary) for “emoluments chargeable to income tax under Schedule E” substitute “general earnings (as defined by section 7 of the Income Tax (Earnings and Pensions) Act 2003)”.
184 In section 171ZS(2)(a) (Part 12ZB: supplementary) for “emoluments chargeable to income tax under Schedule E” substitute “general earnings (as defined by section 7 of the Income Tax (Earnings and Pensions) Act 2003)”.
185 In Schedule 1 (supplementary provisions relating to contributions of Classes 1, 1A, 1B, 2 and 3)—
(a) in paragraph 6(1)(a) for “regulations under section 203 of the Income and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE regulations”;
(b) in paragraph 6(1)(b) for “regulations under that section” substitute “PAYE regulations”;
(c) in paragraph 6(7) for “regulations made under section 203 of the Income and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE regulations”;
(d) in paragraph 7(1)(a) for “regulations made by the Inland Revenue under section 203(2) or” substitute “PAYE regulations or regulations made under section”; and
(e) in paragraph 7B(1) for “regulations under section 203 of the Income and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE regulations”.