Office of Public Sector Information
SCHEDULE 1 continued PART 1 continued
(8) Omit subsection (9).
(9) In subsection (10) for “Sections 775 and 776 have” substitute “Section 776 has”.
(10) In subsection (11) for “person” substitute “company”.
(11) For subsection (12) substitute—
“(12) Where under section 776(8) the company charged to corporation tax is not the person (“P”) by whom the gain was realised and the tax has been paid, then for the purposes of sections 37 and 39 of the 1992 Act (profits taxable as income excluded from tax on chargeable gains) P shall be regarded as having been charged to that tax.”
(12) In subsection (13)—
(a) for “the relevant provisions” substitute “section 776 and this section”,
(b) for ““capital amount”” to “accordingly” substitute—
““capital”, in relation to a gain, means that, apart from section 776, the gain does not fall to be included in any calculation of income for corporation tax purposes;”, and
(c) omit the words from “and any” to the end.
(13) In the sidenote for “sections 775 and 776” substitute “section 776”.
186 In section 778 (power to obtain information)—
(a) in subsection (1) for “sections 775 and 776” substitute “section 776”.
(b) in subsection (2)(b)—
(i) for “sections 775 and 776” substitute “section 776”, and
(ii) for “those sections” substitute “that section”.
187 In section 779(13)(ca) (sale and lease-back: limitation on tax reliefs)—
(a) for “section 836B” substitute “section 1016 of ITA 2007”, and
(b) for “section 392” substitute “section 152 of ITA 2007”.
188 In section 780 (sale and lease-back: taxation of consideration received) after subsection (3B) insert—
“(3C) An amount charged to income tax by virtue of subsection (3A)(a) above is treated for income tax purposes as an amount of income.”
189 (1) Amend section 781 (assets leased to traders and others) as follows.
(2) 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.”
(3) In subsection (4)(ab)—
(a) for “section 836B” substitute “section 1016 of ITA 2007”, and
(b) for “section 392” substitute “section 152 of ITA 2007”.
190 In section 785 (definitions for the purposes of sections 781 to 784) in the definition of “capital sum” for “section 836B” substitute “section 1016 of ITA 2007”.
191 (1) Amend section 789 (double taxation arrangements made under old law) as follows.
(2) In subsection (2) for paragraph (a) substitute—
“(a) to bear income tax at—
(i) the savings rate, where that income is savings income;
(ii) the dividend ordinary rate, where that income is dividend income; or
(iii) the basic rate, in any other case; and”.
(3) In subsection (2)(b) for the words from “except” to the end substitute “except—
(i) for the purpose of section 274 (limits on relief under sections 266 and 273); and
(ii) for the purpose of calculating “adjusted net income” for the purposes of Chapter 1 of Part 7 of this Act (see section 256A) or Chapters 2 and 3 of Part 3 of ITA 2007 (see section 58 of that Act).”
192 In section 793 (reduction of United Kingdom taxes by amount of credit due) after subsection (2) insert—
“(3) Credit against income tax is given effect at Step 6 of the calculation in section 23 of ITA 2007.”
193 (1) Amend section 796 (limits on credit for foreign tax: income tax) as follows.
(2) In subsection (1) after “Income Tax Acts” insert “, except a reduction under section 26 of FA 2005”.
(3) After subsection (2) insert—
“(2A) See section 29(2) and (3) of ITA 2007 (tax reductions limited by reference to tax liability) for further limits on the total amount of credit for foreign tax to be allowed to a person against income tax.”
(4) Omit subsection (3).
194 In section 798C (disallowed credit: use as deduction) for subsection (2) substitute—
“(2) The taxpayer’s income shall be treated as reduced by the amount of disallowed credit.
(3) Subsection (2) applies only in so far as the amount of disallowed credit does not exceed the amount of any loss attributable to the income or gain in respect of which the foreign tax was paid.
(4) For the purpose of subsection (3), payment of the foreign tax is to be taken into account despite section 795(2).”
195 In section 801A (restriction of relief for underlying tax) for subsection (9) substitute—
“(9) For the purposes of this section, whether a person is connected with another is determined in accordance with section 839.”
196 In section 803(10) (underlying tax reflecting interest on loans) for “section 839” to the end substitute “, for the purposes of that subsection, whether a company is connected with a bank is determined in accordance with section 839.”
197 (1) Amend section 804 (relief against income tax in respect of income arising in years of commencement) as follows.
(2) In subsection (5B)(a) for the words from “be treated” to “excess” substitute “be chargeable for that year to an amount of income tax equal to the excess”.
(3) Omit subsection (6).
198 (1) Amend section 807 (sale of securities with or without accrued interest) as follows.
(2) In subsection (1)(a) for “section 714(2) as receiving annual profits or gains on the day an interest period ends” substitute “section 628(5) of ITA 2007 as making accrued income profits in an interest period”.
(3) In subsection (1)(b) for “chargeable period in which the day falls” substitute “tax year in which the accrued income profits are treated as made by virtue of section 617(2) of that Act”.
(4) In the full-out words of subsection (1)—
(a) for “profits or gains”, in each place where it occurs, substitute “accrued income profits”, and
(b) omit “or corporation tax”.
(5) In subsection (2)(b) for “which is treated as reduced by virtue of section 714(5)” substitute “as respects which the person is entitled to an exemption from liability to income tax under section 679 of ITA 2007”.
(6) In subsection (2) for “R is the amount by which it is treated as reduced” substitute “R is the amount of the exemption”.
(7) For subsection (5) substitute—
“(5) Expressions used in this section and in Chapter 2 of Part 12 of ITA 2007 (accrued income profits) have the same meaning as in that Chapter.”
(8) Omit subsection (6).
199 In section 809(1)(a) (relief in respect of discretionary trusts) for the words from the beginning to “687(2)” substitute “income tax is treated under section 494 of ITA 2007 as having been paid in relation to a payment made by the trustees of a settlement”.
200 In section 811(2) (deduction for foreign tax where no credit allowable)—
(a) insert “and” immediately after paragraph (a), and
(b) omit paragraph (b) and the “and” immediately after it.
201 In section 812(5) (withdrawal of right to tax credit of certain non-resident companies connected with unitary states) for paragraph (c) substitute—
“(c) whether a person is connected with another is determined in accordance with section 839;”.
202 In section 816 (disclosure of information)—
(a) in subsection (3) after “bank” insert “(within the meaning of that subsection)”, and
(b) omit subsection (3A).
203 Omit section 818 (arrangements for payments of interest less tax or of fixed net amount).
204 Omit section 819 (old references to standard rate tax).
205 In section 821(3) (under-deductions from payments made before passing of annual Act)—
(a) for paragraph (a) substitute—
“(a) any payment to which section 906 of ITA 2007 applies (certain royalties etc where usual place of abode of owner is abroad), and”, and
(b) omit paragraph (aa) and the “and” immediately after it.
206 Omit section 823 (adjustments of reliefs where given at different times).
207 Omit section 827A (territorial scope of charges under certain provisions to which section 836B applies).
208 (1) Amend section 828 (orders and regulations made by the Treasury or the Board) as follows.
(2) In subsection (1) for “other provision of the Tax Acts” substitute “provision of the Corporation Tax Acts not contained in this Act”.
(3) In subsection (2) omit “841(1)(b) or”.
(4) In subsection (3) for “other provision of the Tax Acts” substitute “provision of the Corporation Tax Acts not contained in this Act”.
(5) In subsection (4)—
(a) omit “1(6),”
(b) omit “257C, 582A(1),”, and
(c) omit “or section 82(4)(d) of the Capital Allowances Act”.
(6) In subsection (5)—
(a) before “section 717 of ITEPA 2003” insert “section 570B of the Capital Allowances Act or”,
(b) omit “or section 873 of ITTOIA 2005”,
(c) in paragraph (a) after “regulations under” insert “the Capital Allowances Act or”, and
(d) in paragraph (a) omit “or ITTOIA 2005”.
209 Omit section 829 (application of Income Tax Acts to public departments and avoidance of exempting provisions).
210 In section 830(1) (territorial sea) omit “income tax and”.
211 In section 831(3) (interpretation of ICTA) after the definition of “ITTOIA 2005” insert—
““ITA 2007” means the Income Tax Act 2007;”.
212 (1) Amend section 832 (interpretation of the Tax Acts) as follows.
(2) In subsection (1)—
(a) for “In the Tax Acts, except” substitute “In the Corporation Tax Acts, except”,
(b) omit the definitions of “basic rate” and “basic rate limit”,
(c) omit the definition of “higher rate”,
(d) omit the definition of “industrial assurance business”,
(e) omit the definition of “interest”,
(f) omit the definitions of “investment LLP” and “property investment LLP”,
(g) omit the definition of “lower rate”,
(h) in the definition of “notice” omit “or in a form authorised (in relation to the case in question) by directions under section 118 of the Finance Act 1998”,
(i) in the definition of “overseas property business” omit paragraph (a) and, in paragraph (b), omit “for the purposes of corporation tax,”,
(j) omit the definition of “preference dividend”,
(k) in the appropriate place insert—
““property investment LLP” has the meaning given by section 842B;”,
(l) omit the definition of “the rate applicable to trusts”,
(m) omit the definition of “relevant foreign income”,
(n) omit the definitions of “starting rate” and “starting rate limit”,
(o) omit the definition of “step-child”,
(p) in the definition of “tax credit”, in paragraph (a) omit “for the purposes of corporation tax” and omit paragraph (b),
(q) omit the definitions of “the dividend ordinary rate”, “the dividend trust rate” and “the dividend upper rate”,
(r) omit the definition of “UK property business”, and
(s) for the definition of “unit trust scheme” substitute—
““unit trust scheme” has the same meaning as in the Income Tax Acts (see section 1007 of ITA 2007);”.
(3) After subsection (2) insert—
“(2A) Chapter 2 of Part 9 of ITA 2007 (which relates to settlements and trustees) applies for the purposes of the Corporation Tax Acts as it applies for the purposes of the Income Tax Acts.”
(4) In subsection (4A) for “Tax Acts” substitute “Corporation Tax Acts”.
(5) Omit subsection (5).
(6) In the sidenote for “Tax Acts” substitute “Corporation Tax Acts etc”.
213 Omit section 833 (interpretation of the Income Tax Acts).
214 In section 834(1) (interpretation of the Corporation Tax Acts), at the end insert—
““venture capital trust” has the same meaning as in Part 6 of ITA 2007.”
215 Omit section 835 (“total income” in the Income Tax Acts).
216 Omit section 836 (returns of total income).
217 Omit section 836B (table of provisions to which that section applies).
218 Omit section 837 (“annual value” of land).
219 (1) Amend section 837A (meaning of “research and development”) as follows.
(2) In subsection (1) for “Tax Acts” substitute “Corporation Tax Acts”.
(3) In subsection (2) for “regulations under subsection (3)” substitute “subsections (2A) and (2B)”.
(4) For subsections (3) and (4) substitute—
“(2A) Activities that, as a result of regulations made under section 1006 of ITA 2007, are “research and development” for the purposes of that section are also “research and development” for the purposes of this section.
(2B) And activities that, as a result of any such regulations, are not “research and development” for the purposes of that section are also not “research and development” for the purposes of this section.”
220 In section 837B(1) (meaning of “oil and gas exploration and appraisal”) for “Tax Acts” substitute “Corporation Tax Acts”.
221 In section 837C(1) and (5) (meaning of “offshore installation”) for “Tax Acts” substitute “Corporation Tax Acts”.
222 In section 838(1) (subsidiaries) for “Tax Acts” substitute “Corporation Tax Acts”.
223 (1) Amend section 839 (connected persons) as follows.
(2) In subsection (1) for “Tax Acts” substitute “Corporation Tax Acts”.
(3) In subsection (3B)(b) for the words from “in whom” to “vested” substitute—
“(i) in whom the property comprised in the settlement is for the time being vested, or
(ii) in whom the management of that property is for the time being vested,”.
224 In section 840 (meaning of “control” in certain contexts) for “Tax Acts” substitute “Corporation Tax Acts”.
225 After section 840 insert—
(1) In any provision of the Corporation Tax Acts in relation to which it is provided that “tax advantage” has the meaning given by this section, “tax advantage” means—
(a) a relief from tax or increased relief from tax,
(b) a repayment of tax or increased repayment of tax,
(c) the avoidance or reduction of a charge to tax or an assessment to tax, or
(d) the avoidance of a possible assessment to tax.
(2) For the purposes of subsection (1)(c) and (d) it does not matter whether the avoidance or reduction is effected—
(a) by receipts accruing in such a way that the recipient does not pay or bear tax on them, or
(b) by a deduction in calculating profits or gains.
(3) In this section “relief from tax” includes—
(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.”
226 In section 840A(1) (banks)—
(a) after “In any provision” insert “of the Corporation Tax Acts”, and
(b) after paragraph (c) insert—
“(ca) the European Investment Bank; or”.
227 (1) Amend section 841 (recognised stock exchanges and recognised investment exchanges) as follows.
(2) For subsections (1) and (2) substitute—
“(1) In the Corporation Tax Acts “recognised stock exchange” has the same meaning as in the Income Tax Acts (see section 1005 of ITA 2007).”
(3) In subsection (3) for “Tax Acts” substitute “Corporation Tax Acts”.
228 In section 842(1) (investment trusts) for “Tax Acts” substitute “Corporation Tax Acts”.
229 Omit section 842AA (venture capital trusts).
230 In section 842A(1) (meaning of “local authority”) for “Tax Acts” substitute “Corporation Tax Acts”.
231 (1) Amend section 842B (meaning of “investment LLP” and “property investment LLP”) as follows.
(2) In subsection (1)—
(a) for “this Act” substitute “the Corporation Tax Acts”, and
(b) omit paragraph (a) and the “and” immediately after it.
(3) In subsection (2) omit “an investment LLP or”.
(4) In the sidenote omit ““investment LLP” and”.
232 (1) Amend Schedule 14 (provisions ancillary to section 266) as follows.
(2) In paragraph 2 after sub-paragraph (1) insert—
“(1A) In sub-paragraph (1)(a) “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.”
(3) In paragraph 6(1) for “subsections (6) and (7)” substitute “subsection (7)”.
(4) In paragraph 8 after sub-paragraph (3) insert—
“(3A) In sub-paragraph (3) “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.”
233 In Part 1 of Schedule 15 (qualifying policies for the purposes of section 267) after paragraph 20 insert—
20A In this Part of this Schedule “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.”
234 Omit Part 1 of Schedule 15B (venture capital trusts: relief from income tax).
235 Omit Schedule 16 (collection of income tax on company payments).
236 In paragraph 2(b) of Schedule 19B (petroleum extraction activities: exploration expenditure supplement) after “section 837B” insert “of this Act and section 1003 of ITA 2007”.
237 (1) Amend Schedule 20 (charities: qualifying investments and loans) as follows.
(2) In paragraph 8 for the words from “for corporation tax” to the end substitute “section 56(5)”.
(3) In paragraph 9(1) for “charity”, in both places where it occurs, substitute “charitable company”.
(4) In paragraph 10(1)—
(a) in paragraph (b) for “charity”, in both places where it occurs, substitute “charitable company”, and
(b) in paragraph (d) for “charity”, in both places where it occurs, substitute “charitable company”.
(5) In the heading for “Charities” substitute “Charitable companies”.
238 (1) Amend Schedule 23A (manufactured dividends and interest) as follows.
(2) In paragraph 1(1)—
(a) omit the definition of “interest manufacturer”,
(b) in the definition of “manufactured dividend”, “manufactured interest” and “manufactured overseas dividend” omit “, “manufactured interest”” and “, 3”, and
(c) after that definition insert—
““manufactured interest” means an amount—
(a) which is representative of a periodical payment of interest on United Kingdom securities, and
(b) which, under a contract or other arrangements for the transfer of the securities, one of the parties is required to pay to the other;”.
(3) In paragraph 2 (manufactured dividends on UK equities: general)—
(a) in sub-paragraph (2) before “Tax” insert “Corporation”,
(b) in sub-paragraph (3)(b) before “Tax” insert “Corporation”,
(c) omit sub-paragraph (3)(c) and the “and” immediately before it,
(d) in sub-paragraph (6)(a) omit “to which sub-paragraph (3) above applies”,
(e) in sub-paragraph (6) after paragraph (a) insert “, and
(aa) the dividend manufacturer is a non-UK resident company within the charge to corporation tax,”, and
(f) in sub-paragraph (7)(c) after “sub-paragraph (3)(b) above” insert “or section 573(2) of ITA 2007”.
(4) Omit paragraphs 2A to 3A (deductibility of manufactured payment in case of manufacturer of UK equities; manufactured interest on UK securities: general; and manufactured interest on gilt-edged securities etc).
(5) In paragraph 4 (manufactured overseas dividends)—
(a) omit sub-paragraphs (2) to (3B),
(b) in sub-paragraph (4)—
(i) for “sub-paragraph (2) above” substitute “section 922(2) of ITA 2007 (amount of income tax to be deducted at source)”,
(ii) for “sub-paragraph (3) above” substitute “section 923 of that Act (income tax to be accounted for and paid)”,
(iii) for “Tax Acts” substitute “Corporation Tax Acts”,
(iv) omit the words from “as they apply” to “branch or agency in the United Kingdom”,
(v) in paragraph (a) for “persons” substitute “companies”, for “him” substitute “the recipient” and for “under sub-paragraph (2) above” substitute “under section 922(2) of ITA 2007”, and
(vi) in paragraph (b) for “persons” substitute “companies” and for “him” substitute “the recipient”,
(c) in sub-paragraph (5) omit paragraph (a),
(d) omit sub-paragraph (6),
(e) omit sub-paragraphs (7) and (7AA), and
(f) in sub-paragraph (9) before “Tax” insert “Corporation”.
(6) In paragraph 7 (irregular manufactured payments)—
(a) in sub-paragraph (1)—
(i) omit “manufactured interest or”,
(ii) omit “3 or”,
(iii) omit “interest or”,
(iv) omit “, as the case may be” where it occurs for the first time,
(v) omit “, 3(1)”,
(vi) for “Tax Acts” substitute “Corporation Tax Acts”, and
(vii) for “paragraphs 2 or 3” substitute “paragraph 2”,
(b) in sub-paragraph (1A) omit “manufactured interest or”,
(c) in sub-paragraph (3)—
(i) for “Tax Acts” substitute “Corporation Tax Acts”,
(ii) omit “3(1) or”,
(iii) omit “manufactured interest or”, and
(iv) omit “3 or”, and
(d) in sub-paragraph (4)(b) omit “or set off” and “income or”.
(7) In paragraph 7A(10) for the definition of “tax advantage” substitute—
““tax advantage” has the meaning given by section 840ZA;”.
(8) In paragraph 8 (dividend manufacturing regulations: general)—
(a) in sub-paragraph (1)—
(i) omit “, manufactured interest” in both places where it occurs,
(ii) omit “, interest manufacturers”,
(iii) for “2 to 4” substitute “2 and 4”, and
(iv) before “Tax Acts” insert “Corporation”,
(b) in sub-paragraph (1A)—
(i) before “Tax Acts” insert “Corporation”, and
(ii) omit “or the 1992 Act”,
(c) in sub-paragraph (2)—
(i) omit paragraphs (c) and (d),
(ii) omit “or to”, and
(iii) omit “, manufactured interest or manufactured overseas dividends”,
(d) omit sub-paragraph (2A), and
(e) in sub-paragraph (3)—
(i) in paragraph (a) after “apply” insert “for corporation tax purposes”, and
(ii) omit paragraph (b).
239 In Schedule 28AA (provision not at arm’s length) in paragraph 5(7) for paragraphs (a) and (b) substitute—
“(a) disregarded income within the meaning given by section 813 of ITA 2007 (limits on liability to income tax of non-UK residents), or
(b) disregarded company income within the meaning given by section 816 of that Act.”
240 Omit Schedule 28B (venture capital trusts: meaning of “qualifying holding”).
Income Tax Act 2007