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PART 3 continued CHAPTER 3 continued
(1) In Schedule 29 to FA 2002 (corporation tax: gains and losses from intangible fixed assets), for paragraph 80 (exclusion of films and sound recordings) substitute—
80A (1) This Schedule does not apply to an intangible fixed asset held by a film production company to the extent that it represents production expenditure on a film to which Schedule 4 of the Finance Act 2006 applies.
Expressions used in this sub-paragraph have the same meaning as in Chapter 3 of Part 3 of the Finance Act 2006.
(2) Except as regards royalties, this Schedule does not apply to an intangible fixed asset held by a company to the extent that it represents expenditure by the company—
(a) on the production of the original master version of a film that commenced principal photography before 1st April 2006;
(b) on the acquisition before 1st October 2007 of the original master version of a film that commenced principal photography before 1st April 2006.
(3) In sub-paragraph (2)—
(a) “film” has the same meaning as in Chapter 3 Part 3 of the Finance Act 2006;
(b) “original master version” means the original negative, tape or disc;
(c) references to the original master version of a film include the original master version of the film soundtrack (if any);
(d) references to the original master version include any rights in the original master version that are held or acquired with it.
80B (1) Except as regards royalties, this Schedule does not apply to an intangible fixed asset held by a company to the extent that it represents expenditure by the company on the production or acquisition of the master version of a sound recording.
(2) For this purpose—
(a) “sound recording” does not include a film soundtrack;
(b) “master version” means master tape or master audio disc of the recording;
(c) references to the master version include any rights in the master version that are held or acquired with it.”.
(2) In determining for the purposes of that Schedule whether an asset representing production expenditure on a film was created before or after 1st April 2002, the asset shall be treated as created when the film was completed.
(1) The Treasury may make provision by regulations for the application of the provisions of this Chapter, and of any enactment amended by this Chapter, in relation to films that commenced principal photography before 1st April 2006 but are not completed before 1st January 2007.
(2) The regulations may provide for such adaptations and modifications of the provisions of this Chapter, of any enactment amended by this Chapter and of any other provision of the Corporation Tax Acts, as appear to the Treasury appropriate for that purpose.
(3) The regulations may—
(a) provide that the provisions of this Chapter (or any specified provisions of this Chapter) shall have effect as if they had been in force at all material times;
(b) require or authorise the making or amendment of returns, or the making of assessments, in relation to past accounting periods or tax years (whether before or after the commencement of this Chapter);
(c) authorise the making of any such return, amendment or assessment notwithstanding any limitation on the time within which a return, amendment or assessment may normally be made.
(4) No regulations shall be made under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.
(1) The provisions of this Chapter come into force on such day as the Treasury may appoint by order.
(2) The Treasury may by order amend any provision of this Chapter that refers to 1st April 2006, the date on which this Act is passed or 1st October 2007 so as to substitute a reference to a later date.
(1) After section 506 of ICTA insert—
(1) This section applies to the following transactions—
(a) the sale or letting of property by a charity to a substantial donor,
(b) the sale or letting of property to a charity by a substantial donor,
(c) the provision of services by a charity to a substantial donor,
(d) the provision of services to a charity by a substantial donor,
(e) an exchange of property between a charity and a substantial donor,
(f) the provision of financial assistance by a charity to a substantial donor,
(g) the provision of financial assistance to a charity by a substantial donor, and
(h) investment by a charity in the business of a substantial donor.
(2) For the purposes of this section a person is a substantial donor to a charity in respect of a chargeable period if—
(a) the charity receives relievable gifts of at least £25,000 from him in a period of 12 months in which the chargeable period wholly or partly falls, or
(b) the charity receives relievable gifts of at least £100,000 from him in a period of six years in which the chargeable period wholly or partly falls;
and if a person is a substantial donor to a charity in respect of a chargeable period by virtue of paragraph (a) or (b), he is a substantial donor to the charity in respect of the following five chargeable periods.
(3) A payment made by a charity to a substantial donor in the course of or for the purposes of a transaction to which this section applies shall be treated for the purposes of section 505 as non-charitable expenditure.
(4) If the terms of a transaction to which this section applies are less beneficial to the charity than terms which might be expected in a transaction at arm’s length, the charity shall be treated for the purposes of section 505 as incurring non-charitable expenditure equal to that amount which the Commissioners for Her Majesty’s Revenue and Customs determine as the cost to the charity of the difference in terms.
(5) A payment by a charity of remuneration to a substantial donor shall be treated for the purposes of section 505 as non-charitable expenditure unless it is remuneration, for services as a trustee, which is approved by—
(a) the Charity Commission,
(b) another body with responsibility for regulating charities by virtue of legislation having effect in respect of any Part of the United Kingdom, or
(c) a court.
(1) Section 506A shall not apply to a transaction within section 506A(1)(b) or (d) if the Commissioners for Her Majesty’s Revenue and Customs determine that the transaction—
(a) takes place in the course of a business carried on by the substantial donor,
(b) is on terms which are no less beneficial to the charity than those which might be expected in a transaction at arm’s length, and
(c) is not part of an arrangement for the avoidance of any tax.
(2) Section 506A shall not apply to the provision of services to a substantial donor if the Commissioners determine that the services are provided—
(a) in the course of the actual carrying out of a primary purpose of the charity, and
(b) on terms which are no more beneficial to the substantial donor than those on which services are provided to others.
(3) Section 506A shall not apply to the provision of financial assistance to a charity by a substantial donor if the Commissioners determine that the assistance—
(a) is on terms which are no less beneficial to the charity than those which might be expected in a transaction at arm’s length, and
(b) is not part of an arrangement for the avoidance of any tax.
(4) Section 506A shall not apply to investment by a charity in the business of a substantial donor where the investment takes the form of the purchase of shares or securities listed on a recognised stock exchange.
(5) A disposal at an undervalue to which section 587B applies shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
(6) A disposal at an undervalue to which section 257(2) of the 1992 Act (gifts of chargeable assets) applies shall not be a transaction to which section 506A applies (but may be taken into account in the application of section 506A(2)).
(7) In the application of section 506A payments by a charity, or benefits arising to a substantial donor from a transaction, shall be disregarded in so far as they—
(a) relate to a donation by the donor, and
(b) do not exceed the relevant limit in relation to the donation for the purposes of section 339 or section 25 of the Finance Act 1990.
(8) A company which is wholly owned by a charity within the meaning of section 339(7AB) shall not be treated as a substantial donor in relation to the charity which owns it (or any of the charities which own it).
(9) A registered social landlord or housing association shall not be treated as a substantial donor in relation to a charity with which it is connected; and for that purpose—
(a) “registered social landlord or housing association” means a body entered on a register maintained under—
(i) section 1 of the Housing Act 1996,
(ii) section 57 of the Housing (Scotland) Act 2001, or
(iii) Article 14 of the Housing (Northern Ireland) Order 1992, and
(b) a body and a charity are connected if (and only if)—
(i) the one is wholly owned, or subject to control, by the other, or
(ii) both are wholly owned, or subject to control, by the same person.
(1) A gift is “relievable” for the purposes of section 506A(2) if relief is available in respect of it under—
(a) section 83A,
(b) section 339,
(c) sections 587B and 587C,
(d) section 25 of the Finance Act 1990 (individual gift aid),
(e) section 257 of the 1992 Act (gifts of chargeable assets),
(f) section 63 of the Capital Allowances Act (gifts of plant and machinery),
(g) sections 713 to 715 of ITEPA 2003 (payroll giving),
(h) section 108 of ITTOIA 2005 (gifts of trading stock), or
(i) sections 628 and 630 of ITTOIA 2005 (gifts from settlor-interested trusts).
(2) A charity is treated as incurring expenditure in accordance with section 506A(4) at such time (or times) as the Commissioners determine.
(3) Section 506A applies to a transaction entered into in a chargeable period with a person who is a substantial donor in respect of that period, even if it was not until after the transaction was entered into that he first satisfied the definition of “substantial donor” in respect of that period.
(4) Either or both of subsections (3) and (4) of section 506A may be applied to a single transaction; but any amount of non-charitable expenditure which a charity is treated as incurring under section 506A(3) in respect of a transaction shall be deducted from any amount which it would otherwise be treated as incurring under section 506A(4) in respect of the transaction.
(5) Two or more connected charities shall be treated as a single charity for the purposes of section 506A and 506B and this section; and for this purpose “connected” means connected in a matter relating to the structure, administration or control of a charity.
(6) Where remuneration is paid otherwise than in money, section 506A(5) shall apply as to a payment in money of the amount that would, under Part 3 of ITEPA 2003, be the cash equivalent of the remuneration as a benefit.
(7) In sections 506A and 506B and this section—
(a) a reference to a substantial donor or other person includes a reference to a person connected with him within the meaning of section 839,
(b) “financial assistance” includes, in particular—
(i) the provision of a loan, guarantee or indemnity, and
(ii) entering into alternative finance arrangements within the meaning of section 46 of the Finance Act 2005, and
(c) a reference to a gift of a specified amount includes a reference to a non-monetary gift of that value.
(8) On an appeal against an assessment the Special Commissioners may review a decision of the Commissioners in connection with section 506A.
(9) The Treasury may by regulations vary a sum, or a period of time, specified in section 506A(2).”
(2) This section shall have effect in relation to transactions occurring on or after 22nd March 2006; and for that purpose a person may satisfy the definition of “substantial donor” by reference to gifts made at any time.
(3) But this section shall not have effect in relation to a transaction entered into in pursuance of a contract made before 22nd March 2006 (otherwise than in pursuance of a variation on or after that date).
(1) For section 505(3) to (8) of ICTA (charities: exemption: non-qualifying expenditure) substitute—
“(3) In subsections (4) to (7)—
(a) “charitable expenditure” has the meaning given by section 506,
(b) “relief” means relief or exemption under—
(i) subsection (1) above,
(ii) section 56(3)(c) above,
(iii) section 761(6) below,
(iv) section 256 of the 1992 Act (charities), or
(v) section 46 of the Finance Act 2000 (small trades),
(c) “relievable income and gains” means income and gains which would be eligible for relief or exemption under any of those provisions (disregarding subsections (4) to (6)), and
(d) “total income and gains” means the aggregate of—
(i) relievable income and gains,
(ii) income and gains, other than relievable income and gains, chargeable to tax, and
(iii) donations, legacies and other similar receipts that are not chargeable to tax.
(4) If a charity incurs (or is treated as incurring) non-charitable expenditure in a chargeable period, relief shall be disallowed in respect of such amount of relievable income and gains as equals the amount of the non-charitable expenditure.
(5) If in a chargeable period a charity’s non-charitable expenditure exceeds its total income and gains the excess shall be treated as non-charitable expenditure of the previous period for the purposes of subsection (4); and any necessary adjustments shall be made, whether by making assessments or otherwise.
(6) Subsection (5) may apply to a chargeable period wholly or partly as a result of the application of that subsection in respect of a later period; but no excess of non-charitable expenditure shall be treated as non-charitable expenditure of a chargeable period which ended more than six years before the end of the period in which the expenditure was actually incurred.
(7) Where an amount of a charity’s relievable income and gains is disallowed for relief by subsection (4) (whether or not as a result of the application of subsection (5))—
(a) the charity may by notice to the Board specify which items of income or gains are to be disallowed, but
(b) if the Board requires the charity to give a notice under paragraph (a) and the charity fails to comply within the period of 30 days beginning with the date on which the requirement is imposed, the Board shall determine which items to disallow.”
(2) In section 506 of ICTA (section 505: supplemental)—
(a) in subsection (1) for the definitions of “qualifying expenditure” and “non-qualifying expenditure” substitute—
““charitable expenditure” means (subject to subsections (3) to (5) below) expenditure which is exclusively for charitable purposes.”,
(b) in subsection (2) omit “and subsection (1) above,”
(c) in subsection (3) for “qualifying expenditure” substitute “charitable expenditure”,
(d) in subsection (4) for “non-qualifying expenditure” substitute “non-charitable expenditure”,
(e) in subsection (5) for “non-qualifying expenditure” substitute “non-charitable expenditure”,
(f) omit subsection (6), and
(g) for the heading, substitute “Charitable and non-charitable expenditure”.
(3) Part III of Schedule 20 to ICTA (apportionment of non-qualifying expenditure to earlier chargeable periods) shall cease to have effect.
(4) In section 256(1) of TCGA 1992 (charities) for “section 505(3)” substitute “section 505(4)”.
(5) This section shall have effect in relation to chargeable periods beginning on or after 22nd March 2006; and—
(a) section 505(5) and (6) of ICTA as substituted by subsection (1) above may cause an amount to be treated as non-charitable expenditure of a chargeable period beginning before that date, but
(b) the amount of relief or exemption to be disallowed in respect of a chargeable period beginning before that date shall not exceed the amount which would have been disallowed in respect of that period if sections 505 and 506 of ICTA (and Part III of Schedule 20) had not been amended by this section.
(1) In section 505 of ICTA (charities: exemptions) after subsection (1A) insert—
“(1B) For the purpose of subsection (1)(e)—
(a) where a trade is exercised partly in the course of the actual carrying out of a primary purpose of the charity and partly otherwise, each part shall be treated as a separate trade (for which purpose reasonable apportionment of expenses and receipts shall be made), and
(b) where the work in connection with the trade is carried out partly but not mainly by beneficiaries, the part in connection with which work is carried on by beneficiaries and the other part shall be treated as separate trades (for which purpose reasonable apportionment of expenses and receipts shall be made).”
(2) Subsection (1) shall have effect in respect of chargeable periods beginning on or after 22nd March 2006.
(1) Section 339 of ICTA (charges on income: donations to charity) is amended as follows.
(2) In subsection (1)(a) (distributions, other than those within section 209(4), not qualifying donations) after “distribution” insert “(but see subsections (1A) and (1B) below)”.
(3) After subsection (1) insert—
“(1A) In determining whether a payment is to be regarded as a distribution for the purposes of subsection (1)(a) above, the words in section 209(5) from “; and any amount” to the end are to be disregarded.
(1B) A payment (other than a dividend) made by a company which is wholly owned by a charity is not to be regarded as a distribution for the purposes of subsection (1)(a) above.”.
(4) The amendments made by this section have effect in relation to payments made on or after 1st April 2006.
(1) Section 339 of ICTA (charges on income: donations to charity) is amended as follows.
(2) In subsection (3B) (payment made by a close company not qualifying donation if subject to repayment etc) for “close company” substitute “company”.
(3) In subsection (3E) (payment made by a close company not qualifying donation if it involves acquisition of property by charity, otherwise than by way of gift, from the company or a connected person) for “close company” substitute “company”.
(4) The amendments made by this section have effect in relation to payments made on or after 1st April 2006.
(1) Section 139 of ITEPA 2003 (car with a CO2 emissions figure: the appropriate percentage) is amended as follows.
(2) In subsection (1) (appropriate percentage dependent on whether emissions figure exceeds lower threshold) for the words from “whether” to the end of the subsection substitute “whether—
(a) the car is a qualifying low emissions car for that year, or
(b) the car’s CO2 emissions figure exceeds the lower threshold for that year.”
(3) After subsection (1) insert—
“(1A) A car is a qualifying low emissions car for any year if—
(a) it has a low CO2 emissions figure for that year, and
(b) it is not an electrically propelled vehicle, within the meaning of section 140.
(1B) If the car is a qualifying low emissions car for the year, the appropriate percentage is 10%.”.
(4) For subsection (2) (emissions figure does not exceed lower threshold) substitute—
“(2) If—
(a) the car is not a qualifying low emissions car for the year, but
(b) its CO2 emissions figure does not exceed the lower threshold for the year,
the appropriate percentage for the year is 15% (“the basic percentage”).”.
(5) After subsection (3) insert—
“(3A) A car has a low CO2 emissions figure for a year if its CO2 emissions figure does not exceed the limit for that year in the following Table—
| Tax year | Limit (in g/km) |
|---|---|
| 2008-09 and subsequent tax years | 120”. |
(6) In the Table in subsection (4) (the lower threshold)—
(a) in the entry relating to 2005-06 and subsequent tax years, for “and subsequent tax years” substitute “, 2006-07 or 2007-08”, and
(b) after that entry insert—
| “2008-09 and subsequent tax years | 135”. |
(7) After subsection (5) (rounding down of emissions figures to nearest multiple of 5) insert—
“(5A) Subsection (5) does not apply for the purpose of determining whether a car has a low CO2 emissions figure for a year.”.
(8) In section 170 of ITEPA 2003 (orders etc relating to the Chapter) before subsection (3) (order varying lower threshold) insert—
“(2A) The Treasury may by order provide for a limit different from that specified in the Table in section 139(3A) (car with a low CO2 emissions figure) to apply for tax years beginning on or after 6th April 2009 or such later date as may be specified in the order.”.
(9) If a qualifying low emissions car is a car which, within the meaning of regulations under section 170(4) of ITEPA 2003,—
(a) is capable of being propelled by petrol and road fuel gas,
(b) is capable of being propelled by electricity and petrol, or
(c) is propelled solely by road fuel gas,
no reduction in the appropriate percentage is to be made by virtue of any such regulations made before 22nd March 2006.
(10) Subsections (2) to (5) and (7) to (9) have effect for the tax year 2008-09 and subsequent tax years.
(1) In section 266(2) of ITEPA 2003 (exemption of non-cash vouchers for exempt benefits), insert at the end “or
(d) section 319 (mobile telephones).”
(2) In section 267(2) of that Act (exemption of credit-tokens used for exempt benefits), after paragraph (f) insert—
“(g) section 319 (mobile telephones).”
(3) For section 319 of that Act (employment income: exemption for mobile telephones) substitute—
(1) No liability to income tax arises by virtue of section 62 (general definition of earnings) or Chapter 10 of Part 3 (taxable benefits: residual liability to charge) in respect of the provision of one mobile telephone for an employee without any transfer of property in it.
(2) In this section “mobile telephone” means telephone apparatus which—
(a) is not physically connected to a land-line, and
(b) is not used only as a wireless extension to a telephone which is physically connected to a land-line,
or any thing which may be used in such apparatus for the purpose of gaining access to, or using, a public electronic communications service.
(3) In this section the reference to the provision of a mobile telephone includes a reference to the provision, together with the mobile telephone provided, of access to, or the use of, a public electronic communications service by means of one mobile telephone number.
(4) For the purposes of subsection (2) “telephone apparatus” means wireless telegraphy apparatus designed or adapted for the primary purpose of transmitting and receiving spoken messages and used in connection with a public electronic communications service.”
(4) This section has effect for the year 2006-07 and subsequent years of assessment.
(5) But the amendment made by subsection (3) does not cause any liability to income tax to arise in respect of the provision of a mobile telephone for an employee, or a member of an employee’s family or household, if the mobile telephone was first provided to him before 6th April 2006.
(1) Omit section 320 of ITEPA 2003 (employment income: limited exemption for computer equipment).
(2) This section has effect for the year 2006-07 and subsequent years of assessment.
(3) But it does not cause any liability to income tax to arise in respect of the provision of computer equipment by making it available to an employee, or a member of an employee’s family or household, if the computer equipment was first made available to him before 6th April 2006.
(1) Part 4 of ITEPA 2003 (employment income: exemptions) is amended as follows.
(2) In Chapter 11 (miscellaneous exemptions), before section 321 (and the cross-heading “Awards and gifts”) insert—
Finance Act 2006