Office of Public Sector Information
SCHEDULE 1 continued PART 1 continued
(3) In subsection (4) for “under Case VI of Schedule D on the amount” substitute “on the full amount”.
300 (1) Amend section 730 (transfers of income arising from securities) as follows.
(2) In subsection (2)—
(a) after “chargeable to” insert “income tax under Chapter 13 of Part 4 of ITTOIA 2005 or to corporation”, and
(b) after “section 18(3B)” insert “of this Act”.
(3) In subsection (4)—
(a) for “tax by virtue of section 18(3B)” substitute “income tax under Chapter 13 of Part 4 of ITTOIA 2005 (sales of foreign dividend coupons)”, and
(b) for “then the owner or beneficiary” to the end substitute “then that interest shall be charged to income tax.
(4A) The income tax chargeable by virtue of subsection (4) above shall, subject to subsection (5) below, be charged on the full amount of the interest arising in the year of assessment.
(4B) The person liable for any tax chargeable by virtue of subsection (4) above is the owner or beneficiary, but he shall be entitled to credit for any tax which the interest is shown to have borne.”
(4) In subsection (5)—
(a) for “For the purposes of subsection (4) above” substitute “But”,
(b) for “chargeable under Case IV or V of Schedule D” substitute “relevant foreign income”, and
(c) for “the tax under Case VI” substitute “the income tax chargeable by virtue of subsection (4) above”.
(5) In subsection (8)—
(a) after “charged to” insert “income tax under Chapter 13 of Part 4 of ITTOIA 2005 or to corporation”, and
(b) after “section 18(3B)” insert “of this Act”.
301 Omit section 730C (exchanges of gilts: traders etc.).
302 In section 731 (application and interpretation of sections 732 to 734: purchase and sale of securities)—
(a) in subsection (7) after “set up and commenced” insert “, or when a trade is subject to a relevant change,”, and
(b) after that subsection insert—
“(7A) For the purposes of subsection (7) above a trade is subject to a relevant change—
(a) when there is a change in the persons carrying on the trade which involves all of the persons carrying it on before the change permanently ceasing to carry it on, or
(b) when a company starts to be within the charge to income tax under Chapter 2 of Part 2 of ITTOIA 2005 in respect of the trade.”
303 In section 732(1A) (dealers in securities) for the words from “by virtue of” to the end substitute “either—
(a) by virtue of section 366(1) of ITTOIA 2005 in computing profits chargeable to income tax under Chapter 2 of Part 2 of that Act, or
(b) by virtue of section 95(1) of this Act in computing profits chargeable to corporation tax in accordance with the provisions of this Act applicable to Case I or II of Schedule D.”
304 (1) Amend section 740 (liability of non-transferors) as follows.
(2) In subsection (2)—
(a) in paragraph (a) after “for that year” insert “and be charged to income tax on that individual for that year”, and
(b) in paragraph (b) after “his income for the next following year” insert “and be charged to income tax on him for that year”.
(3) Omit subsection (4).
(4) In subsection (5) for the words from “; and subsections (6) to (9)” to the end substitute “; and sections 833 and 834 of ITTOIA 2005 shall apply for the purposes of this subsection as they would apply for the purposes of section 832 (remittance basis) of that Act if the benefit were relevant foreign income.”
305 (1) Amend section 743 (transfer of assets abroad: supplemental provision) as follows.
(2) In subsection (1) for “Schedule F” substitute “dividend” and for “income tax so chargeable shall be charged” to the end substitute “income to which section 739 applies shall be charged to income tax.”
(3) After subsection (1) insert—
“(1ZA) The charge to income tax under subsection (1) above operates on income falling within subsection (1A) below by treating the income as if it were income to which section 1A applies by virtue of subsection (2)(b) of that section.”
(4) In subsection (1A) for paragraphs (a) to (g) substitute—
“(a) income chargeable under Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.);
(b) income chargeable under Chapter 4 of that Part (dividends from non-UK resident companies);
(c) income chargeable under Chapter 5 of that Part (stock dividends from UK resident companies);
(d) income chargeable under Chapter 6 of that Part (release of loan to participator in close company); or
(e) a relevant foreign distribution chargeable under Chapter 8 of Part 5 of that Act (income not otherwise charged).”
(5) After that subsection insert—
“(1B) In subsection (1A) “relevant foreign distribution” means any distribution of a company not resident in the United Kingdom which—
(a) is not chargeable under Chapter 4 of Part 4 of ITTOIA 2005, but
(b) would be chargeable under Chapter 3 of that Part if the company were resident in the United Kingdom.”
306 In section 745(6) (transfer of assets abroad: information powers) for “section 660G(1) and (2)” substitute “section 620 of ITTOIA 2005”.
307 (1) Amend section 746 (persons resident in the Republic of Ireland) as follows.
(2) Renumber the existing text as subsection (1).
(3) In that subsection for “any provision of section 34, 35 or 36” substitute “the lease premium rules”.
(4) After that subsection insert—
“(2) Corporation tax chargeable by virtue of subsection (1)(b) above shall be charged under Case VI of Schedule D.
(3) In this section “the lease premium rules” means any provision of sections 277 to 285 of ITTOIA 2005 or sections 34 to 36 of this Act.”
308 (1) Amend section 761 (charge to income tax or corporation tax of offshore income gain) as follows.
(2) In subsection (1) for the words from “of that gain shall be treated for all” to the end substitute “of that gain—
(a) shall be treated for all the purposes of the Tax Acts as income arising at the time of the disposal to the person making the disposal, and
(b) shall be charged—
(i) to income tax for the year of assessment in which the disposal is made, or
(ii) to corporation tax as a profit or gain under Case VI of Schedule D for the accounting period in which the disposal is made.”
(3) After that subsection insert—
“(1A) The income tax charged by virtue of subsection (1)(b)(i) above shall be charged on the full amount of the income treated as arising in the year of assessment.”
309 In section 762(6) (offshore income gains accruing to persons resident or domiciled abroad)—
(a) after “740” insert “above”, and
(b) for “Part XV” substitute “Chapter 5 of Part 5 of ITTOIA 2005”.
310 In section 774(1) (transactions between dealing company and associated company)—
(a) after “shall be chargeable” insert “to tax”, and
(b) for “under Case VI of Schedule D” substitute “(in the case of corporation tax, under Case VI of Schedule D)”.
311 (1) Amend section 775 (sale by individual of income derived from his personal activities) as follows.
(2) In subsection (2) omit the words from “, and which is” to the end.
(3) After subsection (2) insert—
“(2A) Any such earned income shall be charged to income tax on the individual and the tax so charged shall be charged on the full amount of the earned income treated as arising in the year of assessment.”
312 (1) Amend section 776 (transactions in land: taxation of capital gains) as follows.
(2) In subsection (3)(a) omit the words from “, and which constitutes” to “period in which the gain is realised”.
(3) After subsection (3) insert—
“(3A) The gain treated as income shall be charged—
(a) to income tax for the year of assessment in which the gain is realised, or
(b) to corporation tax as profits or gains under Case VI of Schedule D for the accounting period in which the gain is realised.
(3B) The income tax charged by virtue of subsection (3A)(a) shall be charged on the full amount of the income treated as arising in the year of assessment; and the person liable for any tax so charged is the person whose income it is.”
(4) In subsection (6)—
(a) in paragraph (a) after “the profits under” insert “Part 2 of ITTOIA 2005 or”, and
(b) in paragraph (b) for “subsections (2) and (3) of section 99” substitute “section 158 of ITTOIA 2005 or (as the case may be) subsections (2) and (3) of section 99 above”.
(5) In subsection (7) after “the treatment under” insert “Part 2 of ITTOIA 2005 or”.
313 (1) Amend section 777 (tax avoidance: provisions supplementary to sections 775 and 776) as follows.
(2) In subsection (9) after “tax under” insert “Chapter 7 of Part 5 of ITTOIA 2005 (annual payments not otherwise charged) or”.
(3) In subsection (10) for “Part XV” substitute “Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor)”.
314 (1) Amend section 779 (sale and lease-back: limitation on tax reliefs) as follows.
(2) In subsection (10)—
(a) after “include references to” insert “—
(a)”,
(b) after “section 37” insert “or under section 37A”,
(c) after “87” insert “or 87A”,
(d) after “comprised in the lease,” insert “and
(b) expenses which the tenant under the lease is treated as incurring in respect of the land subject to the lease under sections 61 to 67 or 292 to 297 of ITTOIA 2005,”, and
(e) at end insert “and such expenses shall be treated for those purposes as having been paid as soon as they have been incurred.”
(3) In subsection (13)—
(a) after paragraph (a) insert—
“(aa) a deduction in calculating the profits of a UK property business;”,
(b) in paragraph (c) omit “392 or”, and
(c) after that paragraph insert—
“(ca) a deduction in computing profits or other income or gains chargeable to income tax under or by virtue of any provision to which section 836B applies, or in computing any loss for which relief is allowable under section 392;”.
315 (1) Amend section 780 (sale and lease-back: taxation of consideration received) as follows.
(2) In subsection (3)(b) for “a profit or gain chargeable under Case VI of Schedule D” substitute “an amount chargeable to tax in accordance with subsection (3A)”.
(3) After subsection (3) insert—
“(3A) The amount shall be charged—
(a) to income tax, or
(b) to corporation tax as a profit or gain under Case VI of Schedule D.
(3B) The income tax charged by virtue of subsection (3A)(a) above shall be charged on the full amount of the proportion of the consideration concerned arising in the year of assessment; and the person liable for any tax so charged is the lessee.”
316 (1) Amend section 781 (assets leased to traders and others) as follows.
(2) In subsection (1) for “under Case VI of Schedule D for the chargeable period in which the sum is obtained with tax” substitute “to tax (in the case of corporation tax, under Case VI of Schedule D) for the chargeable period in which the sum is obtained”.
(3) In subsection (4) after paragraph (a) insert—
“(ab) a deduction in computing profits or other income or gains chargeable to income tax under or by virtue of any provision to which section 836B applies, or in computing any loss for which relief is allowable under section 392;”.
(4) In subsection (4)(b) omit “392 or”.
317 In section 782(9) (leased assets: special cases) for “section 113 or 337(1)” substitute “section 18 of ITTOIA 2005 or section 337(1) above (companies beginning or ceasing to carry on trade)”.
318 In section 783(10)(b) (leased assets: supplemental) for “section 660G(1) and (2)” substitute “section 620 of ITTOIA 2005”.
319 In section 785 (meaning of “asset”, “capital sum” and “lease” for purposes of sections 781 to 784), in the definition of “capital sum”, after “chargeable” insert “to income tax under or by virtue of any provision to which section 836B applies or to corporation tax”.
320 (1) Amend section 786 (transactions associated with loans or credit) as follows.
(2) In subsection (3) for the words from “annuity” to “Schedule D” substitute “relevant annual payment”.
(3) After that subsection insert—
“(3A) In subsection (3) “relevant annual payment” means a payment which is not interest but is—
(a) an annuity or other annual payment falling within Part 5 of ITTOIA 2005 and chargeable to income tax otherwise than as relevant foreign income; or
(b) an annuity or other annual payment chargeable to corporation tax under Case III of Schedule D.”
(4) In subsection (5) for “he shall be chargeable to tax under Case VI of Schedule D on a sum” substitute “he shall be chargeable—
(a) to income tax, or
(b) to corporation tax under Case VI of Schedule D,
on a sum”.
(5) After that subsection insert—
“(5A) Income tax charged by virtue of subsection (5)(a) above shall be charged on the full amount of the income assigned, surrendered, waived or forgone in the year of assessment.”
321 (1) Amend section 788 (relief by agreement with other territories) as follows.
(2) In subsection (3)(d) for “section 231” substitute “section 397(1) of ITTOIA 2005”.
(3) In subsection (7) after “and, in the case of an assessment” insert “to corporation tax”.
322 In section 790(11) (unilateral relief) after “and, in the case of an assessment” insert “to corporation tax”.
323 (1) Amend section 804 (relief against income tax in respect of earlier years of commencement) as follows.
(2) In subsections (5)(b) and (5A)(b) for “section 63A(1) or (3)” substitute “section 205 or 220 of ITTOIA 2005”.
(3) In subsection (5B)(a)—
(a) for “under Case VI of Schedule D” substitute “to income tax”, and
(b) after “equal to the excess” insert “and be liable for any tax so chargeable”.
(4) In subsection (5C) for “section 63A(1)” substitute “section 220 of ITTOIA 2005”.
(5) In subsection (8), in the definition of “overlap profit” for “sections 60 to 62” substitute “Chapter 15 of Part 2 of ITTOIA 2005”.
324 In section 806K(2) (application of foreign dividend provisions to branches or agencies in the UK of persons resident elsewhere) after paragraph (b) insert—
“(bb) in relation to income tax, take any reference to a dividend chargeable under Case V of Schedule D as a reference to a dividend chargeable under Chapter 4 of Part 4 of ITTOIA 2005;”.
325 In section 807(1)(b) (sale of securities with or without accrued interest) for “Case IV or V of Schedule D” substitute “ITTOIA 2005 on relevant foreign income”.
326 In section 812(1) (withdrawal of right to tax credit of certain non-resident companies connected with unitary states)—
(a) for “section 231(3)” substitute “section 397(2)(a) of ITTOIA 2005”, and
(b) for “or, where” substitute “nor, by virtue of section 30(9) of the Finance (No. 2) Act 1997, where”.
327 (1) Amend section 817 (deductions not to be allowed in computing profits or gains) as follows.
(2) In subsection (1)—
(a) before “tax purposes” insert “corporation”, and
(b) for “the Tax Acts” substitute “the Corporation Tax Acts”.
(3) In subsection (2)—
(a) after “profits or gains” insert “for corporation tax purposes”,
(b) for “the Tax Acts” substitute “the Corporation Tax Acts”,
(c) omit “or employment”, and
(d) for “or in any profession, employment or vocation” substitute “or profession”.
328 (1) Amend section 818 (arrangements for payments of interest less tax or of fixed net amount) as follows.
(2) In subsection (2) for the words from “interest”, in the first place where it occurs, to “and” substitute “relevant interest”.
(3) After subsection (2) insert—
“(3) In subsection (2) “relevant interest” means—
(a) interest on which the recipient is chargeable to income tax, which falls within Chapter 2 of Part 4 of ITTOIA 2005 but which is not relevant foreign income, or
(b) interest on which the recipient is chargeable to corporation tax under Case III of Schedule D.”
329 In section 819(2) (old references to standard rate tax) for “Schedule F”, in both places where it occurs, substitute “dividend”.
330 In section 821(1) (under-deductions from payments made before passing of annual Act)—
(a) after “assessment” insert “or accounting period”,
(b) after “quarterly payments” insert “(or half-periodic or quarterly payments)”,
(c) after “income” insert “or corporation”,
(d) after “year”, in the second and third places where it occurs, insert “or period”,
(e) after “charged”, in the fourth place where it occurs, insert “in respect of those payments to income tax under Chapter 2 of Part 4 of ITTOIA 2005 (interest) or shall be charged to corporation tax under”, and
(f) omit “in respect of those payments”.
331 (1) Section 824 (repayment supplements: individuals and others) is amended as follows.
(2) In subsection (4A)(b) for “section 231” substitute “section 397(1) of ITTOIA 2005”.
(3) Omit subsection (8).
(4) In subsection (9) for “to (8)” substitute “to (7)”.
332 In section 827 (VAT penalties etc.)—
(a) for “for any tax purposes”, in each place where it occurs, substitute “for any corporation tax purposes (but see also subsection (3)(a) below)”,
(b) in subsection (2) for “and income tax” substitute “(but see also subsection (3)(b) below)”, and
(c) at the end insert—
“(3) For income tax purposes—
(a) provision corresponding to that made by this section (other than subsection (2) above) is made by sections 54 and 869 of ITTOIA 2005, and
(b) provision corresponding to that made by subsection (2) above is made by section 777 of ITTOIA 2005 (as read with Chapter 10 of Part 6 of that Act).”
333 After section 827 insert—
(1) This section applies in relation to any amount chargeable to income tax under or by virtue of any provision to which section 836B applies (other than a provision listed in Part 2 of the table in that section).
(2) An amount arising to a person who is resident in the United Kingdom is chargeable to tax whether or not it is from a source in the United Kingdom.
(3) An amount arising to a person who is not resident in the United Kingdom is chargeable to tax only if it is from a source in the United Kingdom.
(4) References in this section to amounts which are from a source in the United Kingdom include, in the case of any amount which does not have a source, references to amounts which have a comparable connection to the United Kingdom.
(5) This section is subject to any express or implied provision to the contrary in any provision of the Income Tax Acts.
(6) This section does not apply for the purposes of corporation tax.”
334 (1) Amend section 828 (orders and regulations made by the Treasury or the Board) as follows.
(2) In subsection (4) omit “324,”.
(3) In subsection (5)—
(a) after “section 717 of ITEPA 2003” insert “or section 873 of ITTOIA 2005”,
(b) after “under ITEPA 2003” insert “or ITTOIA 2005”, and
(c) for “that Act” substitute “either of those Acts”.
335 In section 830(3) (territorial sea and designated areas) omit “income tax or”.
336 In section 831(3) (interpretation of ICTA) after the entry relating to “ITEPA 2003” insert—
““ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;”.
337 In section 832(1) (interpretation of the Tax Acts)—
(a) for the definition of “overseas property business” substitute—
““overseas property business”—
(a) for the purposes of income tax, has the meaning given by Chapter 2 of Part 3 of ITTOIA 2005;
(b) for the purposes of corporation tax, has the meaning given by section 70A(4);”,
(b) in the appropriate place insert—
““relevant foreign income” has the meaning given by subsections (1) to (3) of section 830 of ITTOIA 2005 but also includes, for any purpose mentioned in any provision listed in subsection (4) of that section, income treated as relevant foreign income for that purpose by that provision;”.
(c) in the definition of “Schedule A business” for “income tax” substitute “corporation tax”,
(d) in the definitions of “the Schedule F ordinary rate”, “the Schedule F trust rate” and “the Schedule F upper rate” for “Schedule F” substitute “dividend”,
(e) for the definition of “tax credit” substitute—
““tax credit” means—
(a) a tax credit under section 231 for the purposes of corporation tax; and
(b) a tax credit under section 397(1) of ITTOIA 2005 for the purposes of income tax;”,
(f) in the appropriate place insert—
““UK property business” has the meaning given by Chapter 2 of Part 3 of ITTOIA 2005;”, and
(g) omit the definition of “Ulster Savings Certificates”.
338 (1) Amend section 833 (interpretation of Income Tax Acts) as follows.
(2) In subsection (3)—
(a) for “section 550” substitute “sections 535 to 537 of ITTOIA 2005”, and
(b) in paragraph (b)—
(i) for “547(1)(a)” substitute “465 of ITTOIA 2005”, and
(ii) for “547(5)” substitute “530 of that Act”.
(3) In subsection (4)—
(a) for “and” in the first place where it occurs substitute “to”, and
(b) in paragraph (c) for the words from “under” to “D” substitute “under Part 2 of ITTOIA 2005 (trading income)”.
(4) In subsection (5) for “income which is earned income by virtue of section 529” substitute “—
(a) income to which subsection (5A) applies, and
(b) income to which subsection (5B) applies.”
(5) After that subsection insert—
“(5A) This subsection applies to income arising to the individual if—
(a) it is charged to tax under section 583 of ITTOIA 2005 (income from disposals of know-how), and
(b) the individual, alone or jointly, devised the know-how in question.
Income Tax (Trading and Other Income) Act 2005