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(5B) This subsection applies to income arising to the individual if—

(a) it is patent income, and

(b) the individual, alone or jointly, devised the invention for which the patent in question was granted.

This is subject to subsection (5C).

(5C) If—

(a) any part of the rights in respect of the patent, or of any rights out of which they were granted, has at any time belonged to any other person, and

(b) any part of the income is properly attributable to the rights which have belonged to that other person,

subsection (5B) does not apply to that part of the income (and so it is not earned income).

(5D) In subsection (5B) “patent income” means—

(a) royalties or other sums paid in respect of the use of a patent charged to tax under section 579 of ITTOIA 2005,

(b) amounts on which tax is payable under section 587 or 593 of ITTOIA 2005, and

(c) amounts on which tax is payable under—

(i) section 472(5) of the Capital Allowances Act (patent allowances: balancing charges), or

(ii) paragraph 100 of Schedule 3 to that Act (balancing charges in respect of pre-1st April 1986 expenditure on the purchase of patent rights).

(5E) References in subsection (5C) to the rights in respect of the patent are to any right to do or authorise the doing of anything which would, but for the right, be an infringement of the patent.”

339 In section 835(6)(a) (“total income” in the Income Tax Acts) for “Schedule F” substitute “Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.)”.

340 After section 836A insert—

“836B Table of provisions to which this section applies

(1) In the Tax Acts references to any provision to which this section applies are references to any provision listed in the following table so far as it relates to income tax (but subject to any applicable limitation in subsections (3) to (5)).

(2) This is the table—

(3) For the purposes of this section the reference to section 743 of this Act does not include that section so far as relating to income falling within subsection (1A) of that section.

(4) For the purposes of this section—

(a) any reference to any provision of ITTOIA 2005 does not include that provision so far as relating to relevant foreign income,

(b) the reference to Chapter 2 of Part 4 of ITTOIA 2005 is a reference to that Chapter only so far as relating to interest falling within section 582(2)(b)(ii) of this Act (funding bonds issued in respect of interest on certain debts),

(c) the reference to Chapter 9 of Part 4 of ITTOIA 2005 is a reference to that Chapter only so far as relating to gains—

(i) which are from a policy or contract specified in section 531(3) of that Act, and

(ii) which do not fall within section 532 or 534 of that Act,

(d) the reference to section 579 of ITTOIA 2005 does not include that section so far as relating to any annual payment,

(e) the reference to Chapter 4 of Part 5 of ITTOIA 2005 does not include that Chapter so far as relating to any annual payment, and

(f) the reference to Chapter 5 of Part 5 of ITTOIA 2005 does not include that Chapter so far as relating to income which falls within section 619(3) of that Act.

(5) For the purposes of this section the reference to section 583 of ITEPA 2003 is a reference to that section only where the paying scheme (see subsection (3) of that section) is a pilots' benefit fund (see section 587 of that Act).”

341 In section 839(3) (connected persons) for “Chapter 1A of Part XV (see section 660G(1) and (2))” substitute “Chapter 5 of Part 5 of ITTOIA 2005 (see section 620 of that Act)”.

342 Omit Schedule 4A (creative artists: relief for fluctuating profits).

343 (1) Amend Schedule 5 (treatment of farm animals etc for the purposes of Case I of Schedule D) as follows.

(2) In paragraph 1—

(a) after “profits” insert “chargeable to corporation tax”, and

(b) for “his” substitute “its”.

(3) In paragraph 2—

(a) in sub-paragraph (1) for “he” substitute “the farmer”,

(b) omit sub-paragraphs (3)(a), (4)(a) and (5), and

(c) in sub-paragraph (6), omit the definitions of “commencement year” and “qualifying year of assessment”.

(4) In paragraph 3—

(a) in sub-paragraph (1) after “profits” insert “chargeable to corporation tax”,

(b) in sub-paragraph (3)(b) for “him” substitute “the farmer”,

(c) in sub-paragraph (9)(a) for “his” substitute “the seller's”, and

(d) in sub-paragraph (10)(b) for “him” substitute “the farmer”.

(5) In paragraph 4—

(a) for “him” substitute “the farmer”, and

(b) for “he” substitute “the farmer”.

(6) In paragraph 5(1) after “profits” insert “chargeable to corporation tax”.

(7) In paragraph 6—

(a) in sub-paragraph (1)—

(i) for “his” substitute “its”, and

(ii) for “him” substitute “the farmer”,

(b) omit sub-paragraphs (2)(a), and (3)(a), and

(c) in sub-paragraph (4), omit the definition of “qualifying year of assessment”.

(8) In paragraph 8—

(a) for “him”, in each place it occurs, substitute “the farmer”,

(b) in sub-paragraph (7)—

(i) before “tax” insert “corporation”, and

(ii) for “chargeable period” substitute “accounting period”.

(9) In paragraph 11 for “chargeable period” substitute “accounting period”.

344 Omit Schedule 5AA (guaranteed returns on transactions in futures and options).

345 Omit Schedule 15A (contractual savings schemes).

346 (1) Amend Schedule 15B (venture capital trusts: relief from income tax) as follows.

(2) In paragraph 4(1) and (2) omit “under Case VI of Schedule D”.

(3) Omit paragraphs 7 to 9.

347 (1) Amend Schedule 20 (charities: qualifying investments and loans) as follows.

(2) After paragraph 7 insert—

“7A Uncertificated eligible debt security units as defined in section 552(2) of ITTOIA 2005.”

(3) In paragraph 8 for “section 56(5)” substitute “for corporation tax purposes in section 56(5) above and for income tax purposes in section 552(2) of ITTOIA 2005”.

348 (1) Amend Schedule 22 (reduction of pension fund surpluses) as follows.

(2) In paragraph 7(3)(c) for the words from “section 56” to “that section” substitute “section 551 of ITTOIA 2005 shall by virtue of section 56(3)(b) of this Act”.

(3) After paragraph 7 insert—

“7A (1) This paragraph applies if a calculation falls to be made under paragraph 7 above in a case where—

(a) relief is to be given under section 454 of ITTOIA 2005 (listed deeply discounted securities held since 26th March 2003: relief for losses) in respect of a loss sustained on the disposal of securities, and

(b) had there been a profit on the disposal it would have been eligible for relief from tax for the year of assessment in which the loss is sustained by virtue of section 592(2).

(2) That relief is to be given before the calculation under paragraph 7 above is made.

(3) Then the amount of income to which the specified percentage is applied by virtue of sub-paragraph (3)(a) of that paragraph is reduced by the amount of that relief.

(4) In this paragraph “disposal” has the same meaning as in Chapter 8 of Part 4 of ITTOIA 2005.”

349 In paragraph 11A(4) of Schedule 24 (assumptions for calculating chargeable profits etc. of foreign companies) after “the Capital Allowances Act” insert “or section 48 of ITTOIA 2005”.

350 (1) Amend Schedule 27 (distributing funds) as follows.

(2) In paragraph 1(1)(d) after “under” insert “—

(i) Chapter 4 of Part 4 of ITTOIA 2005 (dividends from non-UK resident companies),

(ii) Chapter 8 of Part 5 of that Act (income not otherwise charged) so far as it relates to relevant foreign distributions (within the meaning given by section 1A(8) of this Act), or

(iii)”.

(3) In paragraph 3(1)(a)(i)—

(a) omit “Case IV or”, and

(b) after “Schedule D” insert “, or under ITTOIA 2005 on relevant foreign income,”.

(4) In paragraph 5(5) after “1996” insert “or section 714 or 715 of ITTOIA 2005”.

351 (1) Amend Schedule 28AA (provision not at arm’s length) as follows.

(2) In paragraph 6A(3) for “(valuation of trading stock at discontinuance of trade) (see subsection (2) of that section)” substitute “above (see subsection (2) of that section) or Chapter 12 of Part 2 of ITTOIA 2005 (see section 174 of that Act) (valuation of trading stock at discontinuance of trade)”.

(3) In paragraph 6E after “Schedule D” insert “or Chapter 2 of Part 4 of ITTOIA 2005”.

(4) In paragraph 11(1) after “section 492(1)” insert “above or section 16(1) of ITTOIA 2005”.

352 (1) Amend Schedule 30 (transitional provisions and savings) as follows.

(2) In paragraph 5—

(a) in sub-paragraph (6) omit paragraph (b) and the word “or” before it,

(b) in sub-paragraph (8) omit “section 113 of this Act or”,

(c) in sub-paragraph (11) omit “or vocation”, and

(d) after sub-paragraph (12) insert—

“(13) This paragraph does not apply for the purposes of income tax.”

(3) Omit paragraphs 18 and 18A.

Part 2 Other enactments

Finance Act 1950 (c. 15)

353 The Finance Act 1950 is amended as follows.

354 In section 40(3) (modification of section 39 in case of recoveries by assignees and in certain cases of subsidiary companies)—

(a) omit “by the Special Commissioners under Case VI of Schedule D”, and

(b) omit “under that Case”.

Chevening Estate Act 1959 (c. 49)

355 The Chevening Estate Act 1959 is amended as follows.

356 (1) Amend section 2 (provisions as to income tax, estate duty and stamp duty) as follows.

(2) In subsection (1)—

(a) omit paragraph (a),

(b) in paragraph (b) for “Schedule D” substitute “Part 3 of the Income Tax (Trading and Other Income) Act 2005”, and

(c) in paragraph (c) for the words from “Schedule C” to “annual payment” substitute “the provisions of the Income Tax (Trading and Other Income) Act 2005 specified in subsection (1A) in respect of the income chargeable under those provisions”.

(3) After subsection (1) insert—

“(1A) The provisions are—

(a) Chapter 2 of Part 4 (interest) so far as the income is yearly interest or public revenue dividends (as defined in section 505(1A) of the Income and Corporation Taxes Act 1988),

(b) Chapter 7 of that Part (purchased life annuity payments),

(c) Chapter 10 of that Part (distributions from unauthorised unit trusts),

(d) Chapter 13 of that Part (sales of foreign dividend coupons) so far as the income arises from foreign holdings within section 571(1)(a) (meaning of “foreign holdings” in that Chapter),

(e) Chapter 2 of Part 5, so far as it relates to annual payments (receipts from intellectual property),

(f) Chapter 4 of that Part, so far as it relates to annual payments (certain telecommunication rights: non-trading income), and

(g) Chapter 7 of that Part (annual payments not otherwise charged).”

Taxes Management Act 1970 (c. 9)

357 The Taxes Management Act 1970 is amended as follows.

358 (1) Amend section 7 (notice of liability to income tax and capital gains tax) as follows.

(2) In subsection (6)—

(a) in paragraph (c) for “Schedule F” substitute “Chapter 3 of Part 4 of ITTOIA 2005 (dividends etc. from UK resident companies etc.)”, and

(b) for “Schedule F”, in the second place where it occurs, substitute “dividend”.

(3) In subsection (9) in each of paragraphs (a) and (aa) for “Chapter II of Part XIII of the principal Act” substitute “Chapter 9 of Part 4 of ITTOIA 2005”.

359 In section 8(1AA)(b) (personal returns) for “section 231 of the principal Act” substitute “section 397(1) of ITTOIA 2005”.

360 In section 8A(1AA)(b) (trustee’s returns) for “section 231 of the principal Act” substitute “section 397(1) of ITTOIA 2005”.

361 In section 9(1) (returns to include self-assessment)—

(a) in paragraph (b) for “section 231 of the principal Act” substitute “section 397(1) of ITTOIA 2005”,

(b) omit “233(1),” and “, 249(4), 421(1) or 547(5)”, and

(c) for “or section 626 of ITEPA 2003” substitute “, section 626 of ITEPA 2003 or section 399(2), 400(2), 414(1), 421(1) or 530(1) of ITTOIA 2005”.

362 Omit section 9D (choice between different Cases of Schedule D).

363 In section 12AA(1A)(b) (partnership returns) for “section 231 of the principal Act” substitute “section 397(1) of ITTOIA 2005”.

364 In section 12AB(5) (partnership return to include partnership statement) in the definition of “tax credit” after “applies” insert “in the case of corporation tax and section 397(1) of ITTOIA 2005 applies in the case of income tax”.

365 In section 12AE(2) (choice between different Cases of Schedule D) omit paragraph (a).

366 (1) Amend section 18 (interest paid without deduction of income tax) as follows.

(2) In subsection (3E)(b) for “relevant” substitute “deeply”.

(3) For subsection (3F) substitute—

“(3F) In subsection (3E)(b) above “deeply discounted security” has the same meaning as in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see section 430 of that Act).”

367 (1) Amend section 19 (information for purposes of Schedule A) as follows.

(2) In subsection (1) after “profits or gains chargeable to tax” insert “under Chapter 3 of Part 3 of ITTOIA 2005 as the profits of a UK property business or”.

(3) In the side-note after “for purposes of” insert “charge on profits of UK property businesses or under”.

368 In section 27(2) (settled property) for “section 660G(1) and (2) of the principal Act” substitute “section 620 of ITTOIA 2005”.

369 In section 30 (recovery of overpayment of tax, etc.) omit subsection (4).

370 In section 30A(2) (assessing procedure) for “Schedule” substitute “Part or Chapter of ITEPA 2003 or ITTOIA 2005”.

371 In section 31(3) (appeals: right of appeal) omit “9D or”.

372 In section 42(7) (procedure for making claims etc.) omit the “and” before paragraph (d) and after that paragraph insert “and

(e) sections 111(1), 126(2), 129(2), 143, 185, 194 and 326 of ITTOIA 2005.”

373 (1) Amend section 46B (questions to be determined by Special Commissioners) as follows.

(2) In subsection (4)—

(a) omit “of the principal Act”,

(b) in paragraph (a) for “Chapter 1A or 1B of Part XV” substitute “Chapter 5 of Part 5 of ITTOIA 2005”,

(c) omit paragraph (b),

(d) in paragraph (c) after “743(1)” insert “of the principal Act”, and

(e) in paragraph (d) after “747(4)(a)” insert “of that Act”.

(3) After subsection (4) insert—

“(4A) Any question as to the application of—

(a) Part XVI of the principal Act (administration of estates: corporation tax), or

(b) Chapter 6 of Part 5 of ITTOIA 2005 (administration of estates: income tax),

is a question to be determined by the Special Commissioners.”

(4) In subsection (5) after paragraph (c) insert “or

(d) section 874 of ITTOIA 2005,”.

374 In section 46C (jurisdiction of Special Commissioners over certain claims included in returns) omit subsection (3)(a).

375 In section 58(3)(b) (proceedings in tax cases in Northern Ireland) before “section 11 of or paragraph 22” insert “section 186 of ITTOIA 2005,”.

376 In section 59A(8)(b) (payments on account of income tax) for “section 231 of the principal Act” substitute “section 397(1) of ITTOIA 2005”.

377 (1) Amend section 59B (payment of income tax and capital gains tax) as follows.

(2) In subsection (1)—

(a) omit “233(1),” and “, 249(4), 421(1) or 547(5)”, and

(b) for “or section 626 of ITEPA 2003” substitute “, section 626 of ITEPA 2003 or section 399(2), 400(2), 414(1), 421(1) or 530(1) of ITTOIA 2005”.

(3) In subsection (2)(b) (payment of income tax and capital gains tax) for “section 231 of that Act” substitute “section 397(1) of ITTOIA 2005”.

378 In section 90(1)(b) (disallowance of relief for interest on tax) for “any tax purposes” substitute “any corporation tax purpose (but see also sections 54 and 869 of ITTOIA 2005 for corresponding rule for income tax purposes)”.