TABLE OF CONTENTS

Schedule 1: Consequential Amendments     2

Part 1: Income and Corporation Taxes Act 1988     2

Paragraph 3: section 1A of ICTA     2

Paragraph 7: section 9 of ICTA     2

Paragraph 9: section 18 of ICTA     2

Paragraph 10: section 20 of ICTA     4

Paragraph 36: section 60 of ICTA     5

Paragraph 43: section 71 of ICTA     6

Paragraph 45: section 74 of ICTA     6

Paragraph 53: section 82 of ICTA     7

Paragraph 60: section 86 of ICTA     8

Paragraph 65: section 89 of ICTA     8

Section 92 of ICTA (no paragraph in Schedule 1)     8

Paragraph 94: section 113 of ICTA     8

Paragraph 106: section 122 of ICTA     9

Paragraph 141: section 333 of ICTA     9

Paragraph 146: section 347A of ICTA     9

Paragraph 147: section 348 of ICTA     10

Paragraph 148: section 349 of ICTA     10

Paragraph 167: section 391 of ICTA     11

Paragraph 168: section 392 of ICTA     11

Section 443 of ICTA (no paragraph in Schedule 1)     13

Paragraphs 209 to 228: sections 539 to 554 of ICTA     13

Paragraph 247 and 248: sections 586 and 587 of ICTA     15

Paragraphs 284 and 285: sections 695 and 696 of ICTA     15

Paragraph 327: section 817 of ICTA     16

Paragraph 333: section 827A of ICTA     16

Paragraph 338: section 833 of ICTA     16

Paragraph 348(3): paragraph 7A of Schedule 22 to ICTA     16

Paragraph 352(2): paragraph 5 of Schedule 30 to ICTA     17

Paragraph 352(3): paragraph 18 of Schedule 30 to ICTA     17

Part 2: Other Enactments     17

Paragraphs 362, 365 and 371: sections 9D, 12AE(2) and 31(3) of TMA     17

Paragraph 435: sections 148A, 148B and 148C of TCGA     18

Section 148A Futures and options involving guaranteed returns     18

Section 148B Deemed disposals at a gain under section 564(4) of ITTOIA 2005     18

Section 148C Deemed disposals at a loss under section 564(4) of ITTOIA 2005     18

Paragraph 438: section 151C of TCGA     19

Paragraph 443: section 254(1)(c) of TCGA     20

Paragraph 464: section 171(2) of FA 1993     20

Paragraph 592: section 325A of ITEPA     20

Paragraph 594: section 360A of ITEPA     20

Paragraph 606: section 575 of ITEPA     20

Paragraph 607: section 613 of ITEPA     21

Paragraph 608: section 631 of ITEPA     21

Paragraph 609: section 635 of ITEPA     21

Paragraph 610: section 644A of ITEPA     22

Paragraph 611: section 646A of ITEPA     22

Paragraph 613: section 679 of ITEPA     22

Paragraph 614: section 681A of ITEPA     22

Part 2: Changes in the law     23

Part 4: Property income     25

Part 5: Savings and investment income: general     25

Part 8: Miscellaneous income     38

Part 9: Exempt income     39

Part 11: Foreign income: special rules     40

Part 12: Other provisions     40

Schedule 3: Repeals and revocations     41

Schedule 4: Abbreviations and defined expressions     41

Part 1: Abbreviations of Acts     41

Part 2: Index of expressions defined in this Act etc.     41

Change 1: Income taxed as trade profits: omit the words "immediately derived from" in the identification of the foreign income to which the trade profit rules apply: section 7     43

Change 2: Profits of mines, quarries and other concerns: section 12     43

Change 3: Caravan sites where trade carried on: section 20     44

Change 6: Relationship between rules prohibiting deductions and rules allowing deductions: sections 31 and 274     46

Change 7: Align rules for debts proving irrecoverable after trade deemed to have ceased with general rules for bad and doubtful debts: section 35     47

Change 8: Unpaid remuneration of employees: payment made after return submitted but within 9 months of the end of the period of account: sections 37 and 865     48

Change 9: Exceptions to the rule restricting deductions for business gifts: section 47     49

Change 10: Car hire: release of debt after debtor has ceased trading: section 48     49

Change 11: Car hire: hire agreements without option to purchase: section 49     50

Change 12: Trade profits: exclusion of double relief for interest: final variation of claim: section 52     50

Change 13: Deduction for tenant under taxed lease if land is outside the United Kingdom: sections 60 and 64     51

Change 14: Requiring an apportionment to be just and reasonable: sections 61, 65, 78, 93, 289, 294, 316, 471, 472, 645, 719 and 722     52

Change 15: Restrictions on expenses under sections 61 and 292: sections 64, 65, 293 and 294     53

Change 16: Clarification of position of employees seconded to charities: section 70     55

Change 17: Retraining courses: deduction no longer dependent on employee's exemption: section 74     55

Change 18: Redundancy payments: legislate the practice of allowing voluntary payments made in connection with a cessation: section 79     56

Change 19: Devolution: sections 80, 83, 110, 167, 207, 732, 755, 769, 879 and 880.     56

Change 20: Contributions to local enterprise organisations or urban regeneration companies: disqualifying benefits: section 82     58

Change 21: Contributions to local enterprise organisations or urban regeneration companies: gifts of trading stock: charge any benefit by reference to periods of account: sections 82 and 109     58

Change 22: Trade etc and other income charged on withdrawal of relief after source ceases: sections 82, 104, 109 and 844     59

Change 23: Patent fees paid: sections 89 and 90     59

Change 24: Payments to Export Credits Guarantee Department: section 91     60

Change 25: Expenses connected with foreign trades: relax condition for family expenses: drop "functions" test: section 92     60

Change 26: Expenses connected with foreign trades: Irish trades: section 92     61

Change 27: Assets of mutual concerns: exclude distributions of capital gains from the charge to tax: section 104     61

Change 28: Sums recovered under insurance policies, etc: section 106     61

Change 29: Gifts of trading stock: drop the need for the gift to be plant and machinery in the hands of the educational establishment: section 108     62

Change 30: Gifts of trading stock: gifts "for the purpose of" a charity etc: section 108     62

Change 31: Gifts of trading stock: drop the need for a claim: section 108     63

Change 32: Herd basis rules: meaning of "substantial part of herd": section 113(6) and section 120(7)     63

Change 33: Herd basis rules: sale of whole or substantial part of herd: sections 119, 120 and 122     64

Change 34: Herd basis elections: time limit for making election: section 124     65

Change 35: Herd basis elections: date from which effective: section 124(7)     66

Change 36: Herd basis elections: 5 year gap in which no production herd kept: section 125     66

Change 37: Herd basis elections: slaughter under disease control order: section 126     67

Change 38: Tax treatment of sound recordings: sections 130, 132 and 135     68

Change 39: Treatment of interest in production and acquisition expenditure on films and sound recordings: section 130     68

Change 40: Allocation of expenditure to relevant periods: sections 135, 137 and 138     69

Change 41: Allocation of expenditure to relevant periods: sections 135 and 137     70

Change 42: Securities held as circulating capital: section 150     71

Change 43: Ministers of religion: deductions to be allowed in calculating profits of profession or vocation: section 159     71

Change 44: Ministers of religion: omission of section 332(3)(a) of ICTA: section 159     72

Change 45: Ministers of religion: alter the deduction rule in section 332(3)(b) of ICTA so that it is applied without reference to an inspector: remove the special appeals mechanism: section 159     72

Change 46: Combine pools payments rules: sections 162 and 748     72

Change 47: Extend pools payments treatment to the 1995 reduction: sections 162 and 748     73

Change 48: Waste disposal: site preparation expenditure: drop requirements to make claim and submit plans and documents: section 165     73

Change 49: Valuation of trading stock: adopt the normal self-assessment time limit for an election by connected persons: section 178     74

Change 50: Deductions for unremittable amounts: sections 187 to 191     74

Change 51: Disposal of know-how: restore an express definition of mineral deposits: sections 192 and 583     75

Change 52: Basis periods etc: to allow any reasonable and consistent time basis for apportioning profits or for calculating deductible overlap profit: sections 203, 220, 275 and 871     76

Change 53: Enterprise allowance: include in trade profits: section 207     77

Change 54: Basis periods: treat accounts regularly prepared to dates near the end of the tax year as if prepared to 5 April subject to a taxpayer's opt out: sections 208, 209 and 210     78

Change 55: Basis periods: to allow accounts prepared to a date near the end of the tax year to be treated as if prepared to 5 April: sections 208, 209, 210 and 220     78

Change 56: Basis periods: to allow accounts regularly prepared to a particular day in the year to be treated as if prepared to a particular date: sections 211, 212 and 213     79

Change 57: Overlap profit (calculating a deduction): to allow the taxpayer to disregard 29 February when there is a change of accounting date to a date late in the tax year: section 220     80

Change 58: Averaging: foreign trades: section 221     80

Change 59: Averaging: section 221     80

Change 60: Averaging: clarify the rule that a claim cannot be made in commencement or cessation year: section 222     81

Change 61: Averaging: time limit for a further claim: section 225     82

Change 62: Adjustment income: how an election affects later years: section 239     82

Change 63: Post-cessation receipts: design right: section 253     82

Change 64: Post cessation receipts treated as relevant UK earnings for pension purposes: section 256     83

Change 65: Statutory insolvency arrangement - Scotland: section 259     83

Change 66: Priority of the charge on trade profits: the "Crown Option" and sections 261, 366 and 575     84

Change 67: Territorial scope of charge to tax: land in Ireland: section 269     86

Change 68: Sums payable instead of rent, or as consideration for the variation or waiver of a term of a lease, for periods of 50 years or less: sections 276, 279 and 281     86

Change 69: Identifying the profits involved where an amount is to be taken into account as a receipt in calculating the profits of a property business: sections 277, 279, 280, 281, 282, 284 and 285     88

Change 70: Lease premiums etc: no receipt in respect of sum payable for variation or waiver of term of lease if sum due to someone other than the landlord or a person connected with landlord: section 281     90

Change 71: Applying the additional calculation rule to receipts in respect of sums payable for variation or waiver of term of lease: sections 281, 287, 288, 289 and 294     91

Change 72: Receipts in respect of sales with right to reconveyance and sale and leaseback transactions: sections 284 and 285     92

Change 73: Limiting the reductions in receipts under section 288 and the deductions for expenses under section 292: sections 287, 288, 289, 290, 291, 292 and 295     92

Change 74: Deduction for expenditure on energy-saving items: drop the requirement for a claim: section 312     94

Change 75: Meaning of "relevant period" in sections 325 and 326: non-resident companies: section 324     95

Change 76: Furnished holiday accommodation: permitted longer-term occupation: section 325     96

Change 77: Furnished holiday accommodation: period over which lettings are averaged: section 326     97

Change 78: Deduction of management expenses of owner of mineral rights: omission of condition that expenses are "necessarily" incurred: section 339     97

Change 79: Distributions made by UK companies: section 366     98

Change 80: Building society dividends: payment of dividends treated as interest: section 372     98

Change 81: Industrial and provident society payments: section 379     99

Change 82: Funding bonds: charge to tax as interest: section 380 and paragraph 168 of Schedule 1     99

Change 83: Discounts: charge to tax as interest: section 381     100

Change 84: Dividends etc from UK resident companies: tax credits etc where dividends etc received by companies who pay income tax: sections 397, 399 and 400     100

Change 85: Stock dividends from UK resident companies: the net amount of stock dividends: section 412     102

Change 86: Deeply discounted securities: deemed acquisitions at market value where deemed disposals on conversion of securities or transfer by personal representatives to legatees: section 441     103

Change 87: Strips of government securities: acquisitions and disposals: section 445     104

Change 88: Gains from contracts for life insurance etc: individuals who are not resident in the United Kingdom in the tax year not liable for tax: sections 465 and 539     105

Change 89: Gains from contracts for life insurance etc: disregard of alteration of terms of old life insurance policies where insurer stops collecting premiums: sections 488 and 489     106

Change 90: Gains from contracts for life insurance etc: allowing the deduction of gains previously charged on related policies to be made in calculating later gains: section 491(5)     106

Change 91: Gains from contracts for life insurance etc: disregard of trivial inducement benefits: section 497     107

Change 92: Gains from contracts for life insurance etc: removal of requirement for calculation under section 546(1) of ICTA to be made annually: section 498     107

Change 93: Gains from contracts for life insurance etc: treating taking a capital sum under a contract for a life annuity as a surrender of a part of the rights under the contract for all purposes: section 500     108

Change 94: Gains from contracts for life insurance etc: enactment of regulations about personal portfolio bonds in primary legislation: sections 515 to 526     109

Change 95: Gains from contracts for life insurance etc: reductions for sums chargeable to tax apart from section 547(1) of ICTA: section 527     109

Change 96: Gains from contracts for life insurance etc: reduction in gains where non-UK resident trustees hold policy: section 529     110

Change 97: Gains from contracts for life insurance etc: clarification of entitlement to credit for income tax at the lower rate in the case of certain foreign life insurance policies: section 531(5)     111

Change 98: Gains from contracts for life insurance etc: removal of requirement for claims for top slicing relief: section 535(1)     112

Change 99: Gains from contracts for life insurance etc: definition of "insurance company": section 545(1)     112

Change 100: Gains from contracts for life insurance etc: definition of "market value": section 545(1)     112

Change 101: Disposals of futures and options involving guaranteed returns: foreign non-trading income: section 555     113

Change 102: Guaranteed returns on futures and options: associated companies: section 561     114

Change 103: Charge on income treated as arising from foreign holdings: foreign dividend coupons: section 570     115

Change 104: Death of a seller of patent rights: time for serving notice: sections 593 and 862     115

Change 105: Settlements: approved pension arrangements: section 627 and paragraph 132 of Schedule 2     116

Change 106: Beneficiaries' income from estates in administration: set off of excess of allowable estate deductions in the final tax year of the administration period: beneficiaries with absolute interests: section 660     117

Change 107: Beneficiaries' income from estates in administration: exclusion of income from specific dispositions and income from contingent interests from the aggregate income of the estate: sections 664 and 666     117

Change 108: Beneficiaries' income from estates in administration: removal of the requirement for interest to be annual and a charge on residue to be deductible in calculating the residuary income of the estate: section 666     118

Change 109: Beneficiaries' income from estates in administration: how reduction in share of residuary income of estate under section 697(2) and (3) of ICTA operates for successive absolute interests: section 671     119

Change 110: Beneficiaries' income from estates in administration: requirement for apportionments where the parts of the residuary estate in which successive interests subsist do not wholly correspond: section 676     120

Change 111: Beneficiaries' income from estates in administration: omission of section 695(6) of ICTA: section 678     120

Change 112: Exempt income: savings certificates: unauthorised purchases involving multiple certificates: sections 692(2) and 693(5)     121