Office of Public Sector Information
SCHEDULE 1 continued PART 2 continued
“(5) If—
(a) any person is charged to income tax under section 755 of ITA 2007 (charge to tax from transactions in land) on the realisation of a gain because the condition in section 756(3)(d) is met, and
(b) the gain is calculated on the basis that any property was appropriated as trading stock,
the property shall be treated on that basis also for the purposes of this section.”
322 In section 169D(1) (gifts to settlor-interested settlements: exceptions) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property)”.
323 In section 226B(1) (private residence relief: special cases) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property)”.
324 In section 231(1) and (3) (shares: special provision) after “Taxes Act” insert “or Part 5 of ITA 2007”.
325 In section 241(3)(a) (furnished holiday lettings) for the words from “the Taxes Act)” to “that Act)” substitute “the Income Tax Acts), or any Schedule A business (within the meaning of the Taxes Act)”.
326 (1) Amend section 256 (charities) as follows.
(2) In subsection (1) for the words “subsection (2) below” substitute “the following provisions of this section”.
(3) After subsection (2) insert—
“(3) Subsection (4) below applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.
(4) Gains accruing to the charitable trust in the year of assessment are treated as being, and always having been, chargeable gains so far as they are attributed under section 256A to the non-exempt amount.
(5) For restrictions on exemptions under Part 10 of ITA 2007 (special rules about charitable trusts etc) see section 539 of that Act.”
327 After section 256 insert—
(1) This section applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.
(2) Attributable gains of the charitable trust for the year of assessment may be attributed to the non-exempt amount but only so far as the non-exempt amount has not been used up.
(3) The non-exempt amount can be used up (in whole or in part) by—
(a) attributable gains being attributed to it under this section, or
(b) attributable income being attributed to it under section 541 of ITA 2007.
(4) The whole of the non-exempt amount must be used up by—
(a) attributable gains being attributed to the whole of it under this section,
(b) attributable income being attributed to the whole of it under section 541 of ITA 2007, or
(c) a combination of attributable gains being attributed to some of it under this section and attributable income being attributed to the rest of it under section 541 of ITA 2007.
(5) See section 256B for the way in which gains are to be attributed to the non-exempt amount under this section.
(6) In this section and section 256B a charitable trust’s “attributable income”, and “attributable gains”, for a tax year have the same meaning as in Part 10 of ITA 2007 (see section 540 of that Act).
(1) This section is about the ways in which attributable gains can be attributed to a non-exempt amount under section 256A.
(2) The trustees of the charitable trust may specify the attributable gains that are to be attributed to the non-exempt amount.
(3) A specification under subsection (2) is made by notice to an officer of Revenue and Customs.
(4) Subsection (6) applies if—
(a) an officer of Revenue and Customs requires the trustees of a charitable trust to make a specification under this section, and
(b) the trustees have not given notice under subsection (3) of the specification before the end of the required period.
(5) The required period is 30 days beginning with the day on which the officer made the requirement.
(6) An officer of Revenue and Customs may determine the attributable gains that are to be attributed to the non-exempt amount.”
328 In section 257 (gifts to charities etc) after subsection (2) insert—
“(2A) Subsection (2B) applies if relief is available under Chapter 3 of Part 8 of ITA 2007 or section 587B of the Taxes Act (gifts of shares, securities and real property to charities) in relation to the disposal of a qualifying investment to a charity (whether or not a claim for relief is actually made).
(2B) The consideration for which the charity’s acquisition of the qualifying investment is treated by virtue of subsection (2) above as having been made—
(a) is reduced by the relievable amount if relief in relation to the disposal is available only under Chapter 3 of Part 8 of ITA 2007,
(b) is reduced by the relevant amount if relief in relation to the disposal is available only under section 587B of the Taxes Act,
(c) is reduced by the relievable amount if relief in relation to the disposal is available both under that Chapter and that section as a result of section 442 of ITA 2007 and section 587BA of the Taxes Act, or
(d) is reduced to nil if that consideration is less than the amount referred to in paragraph (a), (b) or (c) (as the case may be).
(2C) In subsections (2A) and (2B)—
“qualifying investment” has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 432 of that Act),
“relevant amount” has the same meaning as in section 587B of the Taxes Act, and
“relievable amount” has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 434 of that Act).”
329 After section 261A insert—
(1) A person may make a claim under this section if—
(a) relief is available to the person under section 64 or 128 of ITA 2007 (trade or employment loss relief against general income) for a tax year in relation to an amount of loss, and
(b) the person makes a claim under that section for the amount to be deducted in calculating the person’s net income for the tax year.
(2) A person may also make a claim under this section if—
(a) relief is available to the person as mentioned in subsection (1)(a) for a tax year in relation to an amount of loss, but
(b) the person’s total income for the tax year is nil or does not include any income from which the amount can be deducted.
(3) A claim under this section is for determining so much of the amount of the loss (“the relevant amount”) as—
(a) is not deducted in calculating the person’s net income for the tax year, and
(b) has not already been taken into account for the purposes of any relief for any other tax year or any year of assessment (whether under ITA 2007, this section or otherwise).
(4) When the relevant amount can no longer be varied—
(a) by the Commissioners on appeal, or
(b) on the order of a court,
it is treated for the purposes of capital gains tax as an allowable loss accruing to the person in the year of assessment corresponding to the tax year.
(5) But so much of the relevant amount as exceeds the maximum amount (see section 261C) is not to be treated for the purposes of capital gains tax as an allowable loss.
(6) The excess may, however, be used in giving effect to any other loss relief under Part 4 of ITA 2007 (depending on the terms of the relief).
(7) The amount treated as an allowable loss under this section—
(a) is no longer to be regarded as an amount available for income tax relief, and
(b) is not to be deductible from chargeable gains accruing to a person in any year of assessment that begins after the person has permanently ceased to carry on the trade, profession, vocation, employment or office in which the loss was made.
(8) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year in which the loss was made in the trade, profession, vocation, employment or office.
(9) In this section “normal self-assessment filing date”, “tax year” and “total income” have the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).
(1) For the purposes of section 261B “the maximum amount” is the amount on which the person would be chargeable to capital gains tax for the year of assessment if—
(a) the provisions mentioned below were ignored, and
(b) no account were taken of the event mentioned below.
(2) The provisions are—
(a) section 2A (taper relief),
(b) section 3(1) (annual exempt amount), and
(c) section 261B.
(3) The event is any event—
(a) which occurs after the date on which the relevant amount (see section 261B(3)) can no longer be varied by the Commissioners on appeal or on the order of a court, and
(b) in consequence of which the amount chargeable to capital gains tax is reduced as a result of an enactment relating to capital gains tax.
(1) A person may make a claim under this section if—
(a) relief is available to the person under section 96 or 125 of ITA 2007 (post-cessation trade or property relief) for a tax year in relation to an amount, and
(b) the person makes a claim under that section to deduct the amount in calculating the person’s net income for the tax year.
(2) A person may also make a claim under this section if—
(a) relief is available to the person as mentioned in subsection (1)(a) for a tax year in relation to an amount, but
(b) the person’s total income for the tax year is nil.
(3) A claim under this section is for treating for the purposes of capital gains tax so much of the amount as is not deducted in calculating the person’s net income for the tax year (“the relevant amount”) as an allowable loss accruing to the person in the year of assessment corresponding to the tax year.
(4) But so much of the relevant amount as exceeds the maximum amount (see section 261E) is not to be treated for the purposes of capital gains tax as an allowable loss.
(5) The relevant amount is no longer to be regarded as an amount available for income tax relief.
(6) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year mentioned in subsection (1) or (2) (as the case may be).
(7) In this section “normal self-assessment filing date”, “tax year” and “total income” have the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).
(1) For the purposes of section 261D “the maximum amount” is the amount on which the person would be chargeable to capital gains tax for the year of assessment if the following were ignored.
(2) The matters to be ignored are—
(a) any allowable losses falling to be carried forward to that year from a previous year for the purposes of section 2(2),
(b) section 3(1) (annual exempt amount), and
(c) any relief under section 261B or 261D.”
330 After section 261E insert—
(1) This section applies if —
(a) the repurchase price of UK shares, UK securities or overseas securities is treated by section 604(2), (4) or (5) of ITA 2007 (deemed increase in repurchase price: repos and options) as increased for the purposes of section 607 of that Act (treatment of price differences under repos),
(b) condition A or B is met, and
(c) section 263A does not apply.
(2) Condition A is that, as a result of the increase, there is no difference for the purposes of section 607 of that Act between the sale price and the repurchase price.
(3) Condition B is that, as a result of an exception in section 608 of that Act, section 607 of that Act does not apply.
(4) The deemed increase of the repurchase price also has effect for capital gains tax purposes.
(5) Expressions used in this section and in section 605 of ITA 2007 (deemed increase in repurchase price: other income tax purposes) have the same meanings in this section as in that section.”
331 After section 261F insert—
(1) Subsections (2) and (3) apply if—
(a) section 607 of ITA 2007 (treatment of price differences under repos) applies,
(b) an amount is treated under that section as a payment of interest, and
(c) section 263A does not apply.
(2) If the repurchase price is more than the sale price, the repurchase price is treated for capital gains tax purposes as reduced by the amount of the payment of interest.
(3) If the sale price is more than the repurchase price, the repurchase price is treated for capital gains tax purposes as increased by the amount of the payment of interest.
(4) Expressions used in this section and in section 609 of ITA 2007 (additional income tax consequences of price differences under repos) have the same meanings in this section as in that section.”
332 After section 261G insert—
(1) The Treasury may by regulations provide for section 261G to apply with modifications if the exception in section 608(2) of ITA 2007 (agreement not at arm’s length) would otherwise prevent it from applying.
(2) Regulations under this section may make different provision for different cases.
(3) Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings.
(4) The incidental, supplemental, and consequential provision may include modifications of section 261F (deemed manufactured payments: effect on repurchase price).
(5) In this section “modifications” includes exceptions and omissions.
(6) Accordingly, the power in subsection (1) includes power to provide for any provision of section 261G not to apply in relation to the case mentioned in that subsection.”
333 (1) Amend section 263ZA (former employees: employment-related liabilities) as follows.
(2) In subsection (1)(a)—
(a) for “from total income” substitute “in calculating net income”, and
(b) for “when computing a former employee’s total income” substitute “in calculating a former employee’s net income”.
(3) In subsection (1)(b) for “the total income” substitute “the remaining total income”.
(4) In subsection (2)(b) for “the total income” substitute “the remaining total income”.
(5) After subsection (2) insert—
“(2A) In this section “the remaining total income”, in relation to a tax year, means the former employee’s total income for the tax year less reliefs already deducted for the tax year at Step 2 of the calculation in section 23 of ITA 2007 for the purpose of calculating the former employee’s income tax liability.”
(6) In subsection (5)—
(a) in paragraph (d) for “against capital gains tax under section 72 of the Finance Act 1991” substitute “under section 261B”, and
(b) in paragraph (e) for “against capital gains tax under section 90(4) of the Finance Act 1995” substitute “under section 261D”.
334 (1) Amend section 263A (agreements for sale and repurchase of securities) as follows.
(2) In subsection (1)—
(a) after “Taxes Act” insert “or section 607(1) of ITA 2007”, and
(b) for “that subsection” substitute “section 730A(1) of the Taxes Act”.
(3) In subsection (5) at the beginning insert “For corporation tax purposes,”.
(4) After subsection (5) insert—
“(6) For capital gains tax purposes, expressions used in this section and section 607 of ITA 2007 have the same meanings in this section as in that section.”
335 (1) Amend section 263D (gains accruing to persons paying manufactured dividends) as follows.
(2) In subsection (2)(b) and (d) for “United Kingdom equities” substitute “UK shares”.
(3) In subsection (3)(b) and (d) for “United Kingdom equities” substitute “UK shares”.
(4) In subsection (4)(a), (b) and (d) for “United Kingdom equities” substitute “UK shares”.
(5) In subsection (7) for “paragraph 2A of Schedule 23A to the Taxes Act” substitute “sections 574 and 575 of ITA 2007 (manufactured dividends: allowable deductions)”.
(6) In subsection (9)—
(a) for “paragraph 2 of Schedule 23A to the Taxes Act” substitute “Chapter 2 of Part 11 of ITA 2007 (manufactured payments)”,
(b) in paragraph (a)—
(i) for “section 737A(5) of that Act” substitute “section 602(1) of that Act (deemed manufactured payments: repos)”, and
(ii) for “Schedule 23A” substitute “that Chapter of that Part of that Act”, and
(c) in paragraph (b)—
(i) for “section 736B(2) of that Act” substitute “section 596(2) of that Act (deemed manufactured payments: stock lending arrangements)”, and
(ii) for “that Schedule” substitute “that Chapter of that Part of that Act”.
(7) In subsection (10) for the words from “the following” to “and, in any such case,” substitute “those in which there is a repo for the purposes of Part 11 of ITA 2007 (see section 569 of that Act); and, in any such case,”.
(8) In subsection (12)—
(a) for “United Kingdom equities” substitute “UK shares”, and
(b) for “paragraph 1(1) of Schedule 23A to the Taxes Act” substitute “section 566(2) of ITA 2007”.
336 After section 263E insert—
(1) The Treasury may by regulations provide for—
(a) section 261F (deemed manufactured payments: effect on repurchase price),
(b) section 261G (price differences under repos: effect on repurchase price),
(c) section 263A (agreements for sale and repurchase of securities),
(d) section 263D (gains accruing to persons paying manufactured dividends), or
(e) any of those sections,
to apply with modifications in relation to non-standard repo cases.
(2) The power in subsection (1) to make provision for section 263A or 263D to apply with modifications is exercisable only so far as the section applies to cases falling within section 607 of ITA 2007 (treatment of price differences under repos).
(3) A case is a non-standard repo case if—
(a) there is a repo in respect of securities,
(b) under the repo there has been a sale (“the original sale”) of the securities by the original owner to the interim holder, and
(c) any of conditions A to E is met in relation to the repo.
(4) Condition A is that—
(a) the obligation to buy back the securities is not performed, or
(b) the option to buy them back is not exercised.
(5) Condition B is that provision is made by or under an agreement for different or additional UK shares, UK securities or overseas securities to be treated as (or as included with) representative securities.
(6) Condition C is that provision is made by or under an agreement for any UK shares, UK securities or overseas securities to be treated as not included with representative securities.
(7) Condition D is that provision is made by or under an agreement for the sale price or repurchase price to be decided or varied wholly or partly by reference to post-agreement fluctuations.
(8) Condition E is that provision is made by or under an agreement for a person to be required, in a case where there are post-agreement fluctuations, to make a payment in the period—
(a) beginning immediately after the making of the agreement for the original sale, and
(b) ending when the repurchase price becomes due.
(9) Expressions used in this section and in section 612 of ITA 2007 (powers to modify repo provisions: non-standard repo cases) have the same meanings in this section as in that section.”
337 After section 263F insert—
(1) The Treasury may by regulations provide for—
(a) section 261F (deemed manufactured payments: effect on repurchase price),
(b) section 261G (price differences under repos: effect on repurchase price),
(c) section 263A (agreements for sale and repurchase of securities),
(d) section 263D (gains accruing to persons paying manufactured dividends), or
(e) any of those sections,
to apply with modifications in relation to cases involving redemption arrangements.
(2) The power in subsection (1) to make provision for section 263A or 263D to apply with modifications is exercisable only so far as the section applies to cases falling within section 607 of ITA 2007 (treatment of price differences under repos).
(3) A case involves redemption arrangements if—
(a) arrangements, corresponding to those made in cases where there is a repo, are made by an agreement, or one or more related agreements, in relation to securities that are to be redeemed in the period after their sale,
(b) the securities are UK shares, UK securities or overseas securities, and
(c) the arrangements are such that the seller or a person connected with the seller (instead of being required to repurchase the securities or acquiring an option to do so) is granted rights in respect of the benefits that will result from the redemption.
(4) Expressions used in this section and in section 613 of ITA 2007 (powers to modify repo provisions: redemption arrangements) have the same meanings in this section as in that section.”
338 After section 263G insert—
(1) Regulations under section 263F or 263G may make different provision for different cases.
(2) Regulations under either section may contain incidental, supplemental, consequential and transitional provision and savings.
(3) The incidental, supplemental and consequential provision may include—
(a) in the case of regulations about section 261G, modifications of section 261F, and
(b) in the case of regulations about section 263A or 263D, modifications of the operation of this Act in relation to cases where, by virtue of the regulations, any acquisition or disposal is excluded from those which are to be ignored for the purposes of capital gains tax.
(4) In this section and sections 263F and 263G “modifications” includes exceptions and omissions.
(5) Accordingly, a power in sections 263F and 263G to provide for a provision to apply with modifications in relation to a particular case includes power to provide for the provision not to apply in relation to that case.”
339 After section 263H insert—
(1) The Treasury may by regulations make provision as mentioned in subsection (2) about prescribed cases where a person—
(a) pays or receives a manufactured overseas dividend as mentioned in section 581(1) of ITA 2007 (manufactured overseas dividends), or
(b) is treated as doing so for any purposes of Chapter 2 of Part 11 of that Act or regulations made under it (manufactured payments).
(2) The regulations may provide for adjusting a relevant amount by reference to a provision which has effect under the law of a territory outside the United Kingdom.
(3) A “relevant amount” is an amount which is treated for prescribed capital gains tax purposes as the amount paid or payable to a person in respect of a relevant transaction.
(4) A “relevant transaction” is a sale, repurchase or other transfer of the overseas securities to which the manufactured overseas dividend relates.
(5) In this section “prescribed” means prescribed in regulations under this section.
(6) Subject to that, expressions used in this section and in section 582 of ITA 2007 (manufactured payments: powers about manufactured overseas dividends) have the same meanings in this section as in that section.”
340 (1) Amend section 271 (miscellaneous exemptions) as follows.
(2) In subsection (3) for the words from “In this subsection” to the end substitute—
“In this subsection—
“health service body” has the meaning given by section 519A of the Taxes Act, and
“local authority association” has the meaning given by section 1000 of ITA 2007.”
(3) After subsection (7) insert—
“(7A) Chargeable gains are exempt from tax if they accrue to a bank, or issue department of a bank, to which this subsection applies for the time being.
(7B) Her Majesty may by Order in Council direct that subsection (7A) applies to a bank or its issue department if it appears to Her Majesty that the bank—
(a) is not resident in the United Kingdom, and
(b) is entrusted by the government of a territory outside the United Kingdom with the custody of the territory’s principal foreign exchange reserves.
Income Tax Act 2007