Office of Public Sector Information

“(10) In this section “charitable company” has the same meaning as in section 506.”

52 (1) Amend section 347A (annual payments: general rule) as follows.

(2) For subsection (1) substitute—

“(1) A payment to which this section applies shall not, for the purposes of corporation tax, form part of the income of—

(a) any company to which it is made, or

(b) any other company.”

(3) Omit subsection (2A).

(4) In subsection (6) omit “or (2A)”.

53 Omit section 347B (qualifying maintenance payments).

54 Omit section 348 (payments out of profits or gains brought into charge to income tax: deduction of tax).

55 Omit section 349 (payments not out of profits or gains brought into charge to income tax, and annual interest).

56 Omit section 349ZA (extension of section 349: proceeds of sale of UK patent rights).

57 Omit sections 349A to 349D (exceptions to section 349 for payments between companies).

58 Omit section 349E (deductions under section 349(1): payment of royalties overseas).

59 Omit section 350 (charge to tax where payments made under section 349).

60 Omit section 350A (UK public revenue dividends: deduction of tax).

61 Omit section 352 (certificates of deduction of tax).

62 (1) Amend section 353 (relief for payments of interest: general) as follows.

(2) In subsection (1)—

(a) omit “sections 359 to 368 of this Act and”, and

(b) for “sections 359 to 365” substitute “section 365”.

(3) For subsection (1A) substitute—

“(1A) Where a person is entitled for a year of assessment to relief under this section in respect of an amount of interest which is eligible for relief by virtue of section 365, the relief is given as a tax reduction for that tax year.

(1AA) The amount of the tax reduction is 23% of the amount of the interest.

(1AB) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007.”

(4) Omit subsection (1B).

(5) In subsection (1E)—

(a) omit “under this section”,

(b) for “subsection (1B) above” substitute “section 383 of ITA 2007 (relief for interest payments)”,

(c) for “those subsections” substitute “those provisions”, and

(d) for the words from “and subsection (1A) or (1B)” to the end substitute “and subsection (1A) above or section 383 of ITA 2007 shall apply accordingly to the case in which that subsection or section applies”.

(6) Omit subsections (1F) to (1H).

63 Omit section 359 (loan to buy machinery or plant).

64 Omit section 360 (loan to buy interest in close company).

65 Omit section 360A (meaning of “material interest” in section 360).

66 Omit section 361 (loan to buy interest in co-operative or employee-controlled company).

67 Omit section 362 (loan to buy into partnership).

68 Omit section 363 (provisions supplementary to sections 360 to 362).

69 Omit section 364 (loan to pay inheritance tax).

70 In section 366(1)(c) (information) omit the words from “(or” to “income)”.

71 In section 367 (provisions supplementary to sections 354 to 366) omit subsections (2) to (4).

72 Omit section 368 (exclusion of double relief etc).

73 Omit Chapter 1 of Part 10 (loss relief: income tax).

74 (1) Amend section 397 (restriction of relief in case of farming and market gardening) as follows.

(2) Omit subsection (1).

(3) In subsection (3)—

(a) for “Subsections (1) and (2) above” substitute “This section”, and

(b) for “he” substitute “that farmer or market gardener”.

(4) In subsection (4) for “Subsections (1) and (2) above” substitute “This section”.

(5) In subsection (5)—

(a) omit the definition of “chargeable period”,

(b) for the definition of “prior five years” substitute—

““prior five years” means, in relation to a loss incurred in a company’s accounting period, the last five years before the beginning of that period;”,

(c) in the definition of “prior period of loss”—

(i) omit “years of assessment or”, and

(ii) for “in applying this definition to a chargeable period of a company” substitute “for this purpose”, and

(d) for the definitions of “farming” and “market gardening” substitute—

““farming” and “market gardening” shall be construed in accordance with the definitions in section 832, but as if those definitions were not restricted to activities in the United Kingdom.”

(6) In subsection (7)—

(a) omit “the calculation of the profits of a trade in Part 2 of ITTOIA 2005 or to”,

(b) after “Schedule D” insert “(or to the calculation of the profits of a trade in Part 2 of ITTOIA 2005)”, and

(c) omit “, in relation to a chargeable period of a company,”.

(7) In subsection (8)—

(a) for “Subsections (1) and (2) above” substitute “This section”, and

(b) for “Tax Acts” substitute “Corporation Tax Acts”.

(8) In subsection (10)—

(a) omit “from income tax or from corporation tax”, and

(b) for the words from “some of which are incurred” to “chargeable periods” substitute “(computed without regard to capital allowances) some of which are incurred in an accounting period wholly or partly comprised in the prior five years and some of which are incurred in a year of assessment wholly or partly comprised in the prior five years”.

75 (1) Amend section 398 (transactions in deposits with and without certificates or in debts) as follows.

(2) For “a person” substitute “a company”.

(3) Omit “above or Chapter 11 of Part 4 of ITTOIA 2005 (transactions in deposits)”.

(4) In paragraph (a)—

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

(b) omit “above or that Chapter”.

(5) In paragraph (b) for the words from “he is chargeable” to “that Act” substitute “the company is chargeable to corporation tax under Schedule D”.

(6) For the words from “the amount of his loss may be set off in pursuance” to the end substitute “the amount of its loss may be set off under section 396.”

76 (1) Amend section 399 (dealings in commodity futures etc: withdrawal of loss relief) as follows.

(2) In subsection (2)—

(a) for “any person under section 380, 381 or” substitute “any company under section”,

(b) in paragraph (a) omit “and that person or one or more of the other partners was a company”,

(c) in paragraph (b) for “that person from his” substitute “that company from its”, and

(d) for “tax liability” substitute “corporation tax liability”.

(3) In subsection (3) for the words after “assessment” substitute “to corporation tax under Case VI of Schedule D.”

77 In section 414(1) (close companies) for “Tax Acts” substitute “Corporation Tax Acts”.

78 (1) Amend section 458 (capital redemption business) as follows.

(2) In subsection (1) omit “and the Income Tax Acts”.

(3) In subsection (2) omit “section 380 or”.

(4) Omit subsection (2)(b) and the “and” immediately before it.

79 In section 459 (exemption for unregistered friendly societies) omit “income tax and”.

80 In section 460(1) (exemption for registered friendly societies: life or endowment business) omit “income tax and”.

81 (1) Section 461 (exemption for registered friendly societies: other business) is amended as follows.

(2) In subsection (1) omit “income tax and”.

(3) In subsection (4)(b) omit “income tax or”.

82 (1) Amend section 461B (exemption for qualifying incorporated friendly societies: other business) as follows.

(2) In subsection (1) omit “income tax and”.

(3) In subsection (5) omit “income tax or”.

83 In section 466 (interpretation of Chapter 2 of Part 12) after subsection (2) insert—

“(2ZA) In subsection (2) “industrial assurance business” means any industrial assurance business within the meaning given by—

(a) section 1(2) of the Industrial Assurance Act 1923, or

(b) Article 3(1) of the Industrial Assurance (Northern Ireland) Order 1979,

which was carried on before 1 December 2001.”

84 (1) Amend section 467(1) (exemption for trade unions and employers' associations) as follows.

(2) After “entitled” insert “to exemption from corporation tax”.

(3) In paragraph (a) omit “to exemption from income tax and corporation tax”.

(4) In paragraph (b) omit “to exemption from tax”.

85 (1) Amend section 468 (authorised unit trusts) as follows.

(2) In subsection (1A) for “lower rate” substitute “savings rate”.

(3) In subsection (6) omit the definition of “unit trust scheme” and the “and” immediately before it.

86 In section 468A(1) (open-ended investment companies) for “lower rate” substitute “savings rate”.

87 (1) Amend section 469 (unauthorised unit trusts) as follows.

(2) In subsection (2)—

(a) for “Tax Acts” substitute “Corporation Tax Acts”, and

(b) omit the words from “and, in the case of income” to the end.

(3) Omit subsections (2A) to (4).

(4) Before subsection (5) insert—

“(4A) For the purposes of the Corporation Tax Acts, the trustees are treated as making an annual payment (under deduction of income tax) to each unit holder if an amount is shown in the scheme’s accounts as income available for payment to unit holders or for investment.

(4B) The amount of an annual payment to a unit holder for a distribution period before the deduction of income tax is its gross amount.

(4C) Section 548(2) of ITTOIA 2005 applies for the purpose of calculating the gross amount of an annual payment for a distribution period as it applies for the purpose of calculating the gross amount of income treated as received for a distribution period under Chapter 10 of Part 4 of that Act.

(4D) Section 941 of ITA 2007 deals with the deduction of income tax from the gross amount so calculated.”

(5) In subsection (5) for “payments are”, in both places where it occurs, substitute “payment is”.

(6) Omit subsections (5A) to (5D) and (7) to (10).

88 (1) Amend section 477A (building societies: regulations for deduction of tax) as follows.

(2) Omit subsections (1) to (2A).

(3) In subsection (3)—

(a) omit the words from “For any” to “above apply,”, and

(b) in paragraph (b) omit the words “paid or credited in the year of assessment”.

(4) Omit subsection (7).

(5) For subsection (9) substitute—

“(9) In this section “dividend” includes any distribution (whether or not described as a dividend).”

(6) In subsection (10) omit the definitions of “qualifying certificate of deposit”, “qualifying deposit right” and “security”.

(7) In the sidenote for “regulations for deduction of tax” substitute “loan relationships”.

89 Omit sections 480A to 482 (deduction of tax by deposit-takers).

90 (1) Amend section 486 (industrial and provident societies and co-operative associations) as follows.

(2) Omit subsections (2), (3) and (6).

(3) In subsection (7) for “subsection (6)” substitute “section 887(2) of ITA 2007”.

91 In section 487(2) (credit unions) for “section 486(6)” substitute “section 887(2) of ITA 2007”.

92 (1) Amend section 492 (treatment of oil extraction activities etc for tax purposes) as follows.

(2) Omit subsection (2).

(3) For subsection (4) substitute—

“(4) In any case where—

(a) in any accounting period a company incurs a loss in activities (“separate activities”) which, for that or any subsequent accounting period, are treated by virtue of subsection (1) above as a separate trade for the purposes specified in that subsection, and

(b) in any subsequent accounting period any of its trading income is derived from activities (“related activities”) which are not part of the separate activities but which, apart from subsection (1) above, would together with those activities constitute a single trade,

then, notwithstanding anything in subsection (1) above, the amount of the loss may be set off, in accordance with section 393(1), against so much of its trading income in any subsequent accounting period as is derived from the related activities.”

93 Omit section 504A (letting of furnished holiday accommodation treated as trade for certain income tax purposes).

94 (1) Amend section 505 (charities: general) as follows.

(2) In subsection (1)—

(a) in paragraph (a) omit “, or under Parts 2 and 3 of ITTOIA 2005,”,

(b) in paragraph (c)—

(i) in sub-paragraph (ii) omit the words from “or under Chapter 2, 7, 8 or 10” to the end of the sub-paragraph,

(ii) omit sub-paragraphs (iiaa) and (iii), and

(iii) for “charity” substitute “charitable company”,

(c) in paragraph (d) omit “or Chapter 2 of Part 4 of ITTOIA 2005 (interest)”,

(d) in paragraph (e)—

(i) omit “or Part 2 of ITTOIA 2005 (trading income)”, and

(ii) for “charity”, in each place where it occurs, substitute “charitable company”, and

(e) in paragraph (f)—

(i) omit “or Part 2 or 5 of ITTOIA 2005 (trading and miscellaneous income)”,

(ii) for “charity” substitute “charitable company”, and

(iii) in sub-paragraph (ii) for “charity's” substitute “charitable company's”.

(3) In subsection (1AA) for “(1)(c)(iiaa) and (iib)” substitute “(1)(c)(iib)”.

(4) In subsection (1B) for “charity” substitute “charitable company”.

(5) In subsection (2)—

(a) in paragraph (a), for “a charity” substitute “a charitable company”,

(b) in paragraph (c) for “tax” substitute “corporation tax”, and

(c) omit the words from “chargeable to income tax” to “and shall be”.

(6) In subsection (4)—

(a) for “charity” substitute “charitable company”, and

(b) for “a chargeable” substitute “an accounting”.

(7) In subsection (5)—

(a) for “a chargeable” substitute “an accounting”, and

(b) for “charity's” substitute “charitable company's”.

(8) In subsection (6) for “a chargeable” in both places where it occurs substitute “an accounting”.

(9) In subsection (7)—

(a) for “charity's” substitute “charitable company's”, and

(b) for “charity” in each place where it occurs substitute “charitable company”.

(10) In the sidenote for “Charities” substitute “Charitable companies”.

95 (1) Amend section 506 (charitable and non-charitable expenditure) as follows.

(2) In subsection (1) in the appropriate place insert—

““charitable company” means any body of persons established for charitable purposes only;”.

(3) In subsection (2)—

(a) for “chargeable”, in both places where it occurs, substitute “accounting”, and

(b) for “charity” substitute “charitable company”.

(4) In subsection (3) for “charity” substitute “charitable company”.

(5) In subsection (4)—

(a) for “chargeable” substitute “accounting”, and

(b) for “charity”, in both places where it occurs, substitute “charitable company”.

(6) In subsection (5)—

(a) for “chargeable” substitute “accounting”, and

(b) for “charity” substitute “charitable company”.

96 (1) Amend section 506A (transactions with substantial donors) as follows.

(2) For “charity” in each place where it occurs substitute “charitable company”.

(3) In subsection (2)—

(a) for “a chargeable” in both places where it occurs substitute “an accounting”,

(b) for “the chargeable” in both places where it occurs substitute “the accounting”, and

(c) for “five chargeable” substitute “five accounting”.

97 (1) Amend section 506B (section 506A: exceptions) as follows.

(2) In subsections (1) to (4), (7) and (9), for “charity” in each place where it occurs substitute “charitable company”.

(3) In subsection (5) for “to which section 587B applies” substitute “in respect of which relief is available under section 587B of this Act or section 431 of ITA 2007 (gifts of shares, securities and real property to charities etc)”.

(4) In subsection (7) for the words after “so far as” substitute “they relate to a donation by the donor, and—

(a) if the donation is made by a company, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 339 because of subsection (3B)(b) of that section (restrictions on associated benefits), or

(b) if the donation is made by an individual, the payments or benefits do not prevent the donation being a qualifying donation for the purposes of section 416 of ITA 2007 because of subsection (7)(b) of that section (restrictions on associated benefits).”

(5) In subsection (8) for the words from “the charity” to the end substitute “a charitable company which owns it (or any part of it)”.

98 (1) Amend section 506C (sections 506A and 506B: supplemental) as follows.

(2) In subsection (1)—

(a) omit paragraph (d),

(b) omit the “or” at the end of paragraph (h),

(c) insert “or” at the end of paragraph (i), and

(d) after that paragraph insert—

“(j) Chapters 2 and 3 of Part 8 of ITA 2007 (gift aid and gifts of shares, securities and real property).”

(3) In subsections (2) and (4) for “charity” substitute “charitable company”.

(4) In subsection (3) for “a chargeable” substitute “an accounting”.

(5) In subsection (5) for the words from the beginning to “single charity” substitute “A charitable company and any other charities with which it is connected are to be treated as a single charitable company”.

99 In section 507(1) (the National Heritage Memorial fund etc) for “charity” substitute “charitable company”.

100 In section 508(1) (scientific research organisations) for “charity” substitute “charitable company”.

101 (1) Amend section 510A (tax treatment of European Economic Interest Groupings) as follows.

(2) In subsection (2) for “tax in respect of income and gains” substitute “corporation tax”.

(3) In subsection (3) omit paragraph (b) and the “and” immediately before it.

(4) In subsection (6) for “tax in respect of income and gains” substitute “corporation tax”.

102 Omit section 515 (exemption for signatories to Operating Agreement for INMARSAT).

103 Omit section 516 (Government securities held by non-resident central banks).

104 In section 517 (exemption for Reserve Bank of India and State Bank of Pakistan) after “exempt from” insert “corporation”.

105 In section 519 (exemption for local authorities and local authority associations) for subsection (1) substitute—

“(1) A local authority in the United Kingdom shall be exempt from corporation tax.”

106 (1) Amend section 519A (exemption for Health Service bodies) as follows.

(2) For subsection (1) substitute—

“(1) A health service body shall be exempt from corporation tax.”

(3) In subsections (3) and (4) for “subsection (1)(b)” substitute “subsection (1)”.

107 (1) Amend section 524 (taxation of receipts from sale of patent rights) as follows.

(2) In subsection (3)—

(a) omit the “and” immediately after paragraph (a), and

(b) omit paragraphs (b) and (c).

(3) For subsection (9) substitute—

“(9) If a company is chargeable to corporation tax under subsection (3) above, nothing in subsections (7) and (8) above shall affect the sum representing income tax which is to be deducted under section 910 of ITA 2007 (payments to non-UK residents) from payments of, or of instalments of, the proceeds of the sale.

(9A) If any sum representing income tax is deducted under section 910 of ITA 2007, any adjustment necessary to give effect to the provisions of subsection (9) above shall be made by way of repayment of tax.”

108 (1) Amend section 527 (spreading of royalties over several years) as follows.

(2) For subsection (1) substitute—

“(1) Where—

(a) a royalty or other sum is paid to a company in respect of the user of a patent,

(b) the user extended over a period of six complete years or more, and

(c) the payment is one from which a sum representing income tax must be deducted under section 903 of ITA 2007,

the company may on the making of a claim require that the corporation tax payable by it by reason of the receipt of that sum shall be reduced so as not to exceed the total amount of corporation tax which would have been payable by it if that royalty or sum had been paid in six equal instalments at yearly intervals, the last of which was paid on the date on which the payment was in fact made.”

(3) Omit subsection (4).

109 In section 532 (application of Capital Allowances Act) for “Tax Acts” substitute “Corporation Tax Acts”.

110 Omit sections 536 (taxation of royalties where owner abroad), 537 (public lending right) and 537B (taxation of design royalties where owner abroad).

111 In section 539A(8) (conditions for being an excepted group life policy) for paragraph (ii) substitute—

“(ii) “tax advantage” has the meaning given by section 840ZA”.

112 In section 552(5)(f)(i) (information: duty of insurers) for “lower rate” substitute “savings rate”.

113 Omit section 555 (entertainers and sportsmen: payment of tax).

114 (1) Amend section 556 (activity treated as trade etc and attribution of income) as follows.

(2) After subsection (4) insert—

“(4A) In this section “payment” and “transfer” have the same meanings as in section 13 of ITTOIA 2005.”

(3) In subsection (5) omit the words from the beginning to “, and”.

115 In section 558 (supplementary provisions) omit subsections (1) to (4).

116 In section 571 (schemes for rationalising industry: cancellation of certificates) after subsection (1) insert—

“(1A) An amount charged to income tax under subsection (1) above is treated for income tax purposes as an amount of income.”

117 (1) Amend section 573 (relief for companies) as follows.

(2) In subsection (4) omit the words from “and where” to “chargeable gains”.

(3) Transpose section 573 as so amended to the beginning of a new Chapter of Part 13 that follows Chapter 5 as Chapter 5A and is entitled “Share loss relief”.