Office of Public Sector Information
SCHEDULE 1 continued PART 2 continued
(3) In subsection (2)—
(a) in the entry for “basic rate”, in the second column, for “section 832(1) of ICTA” substitute “section 6(2) of ITA 2007 (as applied by section 989 of that Act)”,
(b) in the entry for “basic rate limit”, in the second column, for “section 832(1) of ICTA” substitute “section 20(2) of ITA 2007 (as applied by section 989 of that Act)”,
(c) in the entry for “chargeable gain”, in the second column, for “section 832(1) of ICTA” substitute “section 989 of ITA 2007”,
(d) in the entry for “charity”, in the second column, for “section 279(1)” substitute “section 989 of ITA 2007”,
(e) in the entry for “company”, in the second column, for “section 832(1) of ICTA” substitute “section 992 of ITA 2007”,
(f) in the entry for “higher rate”, in the second column, for “section 832(1) of ICTA” substitute “section 6(2) of ITA 2007 (as applied by section 989 of that Act)”,
(g) after the entry for “money purchase benefits” insert—
| “net income | section 23 of ITA 2007 (as applied by section 989 of that Act),” |
(h) in the entry for “period of account”, in the second column, for “section 832(1) of ICTA” substitute “section 989 of ITA 2007”,
(i) in the entry for “personal representatives”, in the second column, for “section 279(1)” substitute “section 989 of ITA 2007”,
(j) in the entry for “property investment LLP”, in the second column, for “section 842B of ICTA” substitute “section 1004 of ITA 2007”,
(k) in the entry for “retail prices index”, in the second column, for “section 279(1)” substitute “section 989 of ITA 2007”,
(l) in the entry for “tax year”, in the second column, for “section 279(1)” substitute “section 4(2) of ITA 2007 (as applied by section 989 of that Act)”,
(m) in the entry for “the tax year 2006-07 etc”, in the second column, for “section 279(1)” substitute “section 4(4) of ITA 2007 (as applied by section 989 of that Act)”, and
(n) in the entry for “total income” for “section 835 of ICTA” substitute “section 23 of ITA 2007 (as applied by section 989 of that Act)”.
482 (1) Amend Schedule 15 (charge to income tax on benefits received by former owner of property) as follows.
(2) For paragraph 2 substitute—
“2 (1) For the purposes of this Schedule whether a person is connected with another person is determined in accordance with section 993 of the Income Tax Act 2007.
(2) But for those purposes sections 993 and 994 of that Act are to be read as if in those sections—
(a) “relative” included uncle, aunt, nephew and niece, and
(b) “settlement”, “settlor” and “trustee” had the same meanings as in IHTA 1984.”
(3) In paragraph 9(1) for paragraph (c) substitute—
“(c) sections 720 to 730 of the Income Tax Act 2007,”.
483 In paragraph 4 of Schedule 27 (meaning of “offshore installation”) for “sections 573 and 574” substitute “section 573”.
484 In paragraph 4 of Schedule 29A (investment-regulated pension schemes) for sub-paragraph (2) substitute—
“(2) For the purposes of sub-paragraph (1) whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.”
485 In paragraph 11D of Schedule 36 (transitional provisions) for sub-paragraph (5) substitute—
“(5) For the purposes of this paragraph whether a person is connected with another person is determined in accordance with section 993 of ITA 2007.”
486 The Pensions Act 2004 is amended as follows.
487 In Schedule 3 (restricted information held by the Regulator: certain permitted disclosures to facilitate exercise of functions), in the entry relating to the Commissioners of Inland Revenue or their officers—
(a) omit the “or” immediately after paragraph (f), and
(b) in the second column after paragraph (g) insert “or—
(h) the Income Tax Act 2007 (so far as relating to functions previously exercised under the Income and Corporation Taxes Act 1988).”
488 In Schedule 8 (restricted information held by the Board: certain permitted disclosures to facilitate exercise of functions), in the entry relating to the Commissioners of Inland Revenue or their officers—
(a) omit the “or” immediately after paragraph (e), and
(b) in the second column after paragraph (f) insert “or—
(g) the Income Tax Act 2007 (so far as relating to functions previously exercised under the Income and Corporation Taxes Act 1988).”
489 The Constitutional Reform Act 2005 is amended as follows.
490 In paragraph 4 of Schedule 7 (protected functions of the Lord Chancellor) at the end of Part A (general) insert—
“Income Tax Act 2007
Section 704(1)”.
491 In the table in Part 3 of Schedule 14 (appointments by the Lord Chancellor: offices to which paragraph 2(2)(d) of Schedule 12 to the Act applies) at the end add—
| “Chairman of section 704 tribunal | Section 704(1) of the Income Tax Act 2007 |
| Member of section 704 tribunal” |
492 The Income Tax (Trading and Other Income) Act 2005 is amended as follows.
493 In section 1 (overview of Act) omit subsection (2).
494 In section 12(3) (profits of mines etc) for “Chapter 1 of Part 10 of ICTA” substitute “Part 4 of ITA 2007”.
495 (1) Amend section 13 (visiting performers) as follows.
(2) In subsection (8) omit the definitions of “payment” and “transfer”.
(3) After that subsection insert—
“(9) In this section and section 14—
(a) references to a payment include references to a payment by way of loan of money, and
(b) references to a transfer do not include references to a transfer of money but, subject to that, include references to—
(i) a temporary transfer (as by way of loan), and
(ii) a transfer of a right (whether or not a right to receive money).
(10) This section does not apply to payments or transfers of a kind prescribed in regulations under section 966(6) of ITA 2007.”
496 In section 17(3) (effect of becoming or ceasing to be a UK resident) for “set off under section 385 of ICTA against” substitute “deducted under section 83 of ITA 2007 from”.
497 Omit section 51 (patent royalties).
498 (1) Amend section 52 (exclusion of double relief for interest) as follows.
(2) In subsections (1), (5) and (6) for “section 353 of ICTA” substitute “section 383 of ITA 2007”.
(3) In subsection (6) for “section 368(3) of ICTA” substitute “section 387(2) and (3) of that Act”.
499 In section 87(5) (expenses of research and development) for “section 837A of ICTA” substitute “section 1006 of ITA 2007”.
500 In section 108(4) (gifts of trading stock etc to charities) omit paragraphs (c) and (d).
501 In section 179(a) (connected persons) for “section 839 of ICTA” substitute “section 993 of ITA 2007”.
502 (1) Amend section 232 (treatment of trading adjustment income) as follows.
(2) In subsection (3) for “Chapter 1 of Part 10 of ICTA” substitute “Part 4 of ITA 2007”.
(3) In subsection (4) for the words from “the trade” to the end substitute “the trade is relevant UK earnings within section 189(2)(b) of FA 2004, adjustment income is similarly relevant UK earnings.”
503 In section 248(3) (debts paid after cessation)—
(a) for “section 109A(4) or (4A) of ICTA” substitute “section 96 of ITA 2007”, and
(b) after “expenditure)” insert “as a result of subsection (1)(b) of that section”.
504 (1) Amend section 250 (receipts relating to post-cessation expenditure) as follows.
(2) In subsection (1) for “section 109A of ICTA” substitute “section 96 of ITA 2007”.
(3) In subsection (2)—
(a) in paragraph (a) for “section 109A(2)(a) or (b) of ICTA” substitute “section 97(2) or (3) of ITA 2007”,
(b) in paragraph (b) for “section 109A(2)(c) of ICTA” substitute “section 97(4) of ITA 2007”, and
(c) in paragraph (c) for “section 109A(2)(d) of ICTA” substitute “section 97(5) of ITA 2007”.
505 In section 254(3)(b) (allowable deductions) for “section 90(4) of FA 1995” substitute “section 261D of TCGA 1992”.
506 (1) Amend section 256 (treatment of post-cessation receipts) as follows.
(2) In subsection (1)(b) omit “earned income within section 833(4)(c) of ICTA or”.
(3) In subsection (2) omit “earned income or”.
507 In section 272(2) (profits of a property business: application of trading income rules), omit the entry in the table relating to section 51.
508 In section 322(2) (commercial letting of furnished holiday accommodation)—
(a) omit paragraphs (b) and (c), and
(b) for paragraph (f) and the “and” immediately before that paragraph substitute—
“(f) section 189(2)(ba) of FA 2004 (meaning of “relevant UK earnings” for pension purposes),
(g) Part 4 of ITA 2007 (loss relief: see section 127 of that Act), and
(h) section 836(3) of ITA 2007 (jointly held property: see exception D).”
509 In section 327(2)(b) (capital allowances and loss relief) for “Chapter 1 of Part 10 of ICTA” substitute “Part 4 of ITA 2007”.
510 (1) Amend section 328 (earned income and relevant UK earnings for pension purposes) as follows.
(2) In subsection (2) for “treated as” to the end substitute “relevant UK earnings within section 189(2)(ba) of FA 2004.”
(3) In the sidenote omit “Earned income and”.
511 In section 333(3) (treatment of property business adjustment income) for “Chapter 1 of Part 10 of ICTA” substitute “Part 4 of ITA 2007”.
512 In section 354(2) (other rules about what counts as a “post-cessation receipt”)—
(a) after “section 248 (debts paid after cessation)” insert “(reading the reference in subsection (3) to section 96 of ITA 2007 as a reference to section 125 of that Act)”, and
(b) after “section 250 (receipts relating to post-cessation expenditure)” insert “(reading the reference in subsection (1) to section 96 of ITA 2007 as a reference to section 125 of that Act)”.
513 In section 369(4) (charge to tax on interest) for the words from “sections 714(5)” to the end substitute “Chapter 3 of Part 12 of ITA 2007 (exemption for interest on securities to which Chapter 2 of that Part applies)”.
514 In section 372(2) (building society dividends) for the words from “has” to the end substitute “includes any distribution (whether or not described as a dividend)”.
515 (1) Amend section 397 (tax credits for qualifying distributions: UK residents and eligible non-UK residents) as follows.
(2) In subsection (2) omit paragraph (b) and the “or” immediately before it.
(3) In subsection (4) after “ICTA” insert “or section 56(3) of ITA 2007”.
(4) In subsection (6) for the words from “section 231AA” to “umbrella scheme),” substitute—
“section 504(4) of ITA 2007 (disapplication of certain provisions for income of unauthorised unit trusts),
section 592 of ITA 2007 (no tax credits for borrower under stock lending arrangement),
section 593 of ITA 2007 (no tax credits for interim holder under repo),
section 594 of ITA 2007 (no tax credits for original owner under repo),”.
516 (1) Amend section 399 (qualifying distributions received by persons not entitled to tax credits) as follows.
(2) In subsection (4) for the words from “and the distribution” to “treated” substitute “, the amount or value of the distribution is treated for the purposes of Chapters 3, 4 and 6 of Part 9 of ITA 2007 (special rates for trustees' income)”.
(3) In subsection (7) for the words from “section 231AA(1A)” to the end substitute—
“section 504(4) of ITA 2007 (disapplication of certain provisions for income of unauthorised unit trusts),
section 592 of ITA 2007 (no tax credits for borrower under stock lending arrangement),
section 593 of ITA 2007 (no tax credits for interim holder under repo), and
section 594 of ITA 2007 (no tax credits for original owner under repo).”
517 (1) Amend section 400 (non-qualifying distributions) as follows.
(2) In subsection (4) for the words from “income to which” to the end substitute “assessed (in whole or in part) at the dividend trust rate by virtue of Chapter 3 of Part 9 of ITA 2007 (trustees' accumulated or discretionary income to be charged at special rates), the trustees' liability for income tax at that rate is reduced”.
(3) After subsection (6) insert—
“(7) Subsection (2) is subject to section 504(4) of ITA 2007 (disapplication of certain provisions for income of unauthorised unit trusts).”
518 In section 401 (relief: qualifying distribution after linked non-qualifying distribution) after subsection (6) insert—
“(6A) The reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.”
519 In section 410(3)(b) (stock dividend income arising to trustees) for the words from “income” to the end substitute “accumulated or discretionary income (as defined in section 480 of ITA 2007 but excluding income arising under a trust established for charitable purposes only or an unauthorised unit trust in relation to which section 504 of that Act applies)”.
520 (1) Amend section 414 (stock dividends from UK resident companies: income tax to be treated as paid) as follows.
(2) In subsection (1) for “income to which section 686 of ICTA applies” substitute “accumulated or discretionary income (as defined in section 480 of ITA 2007)”.
(3) In subsection (4) after “fall to be made” insert “at Step 2 or 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability)”.
521 In section 418(5) (loans to participator in close company: relief where borrowers liable as settlors) for “rate applicable to trusts” substitute “trust rate”.
522 In section 421(4) (loans to participator in close company: income tax treated as paid) after “fall to be made” insert “at Step 2 or 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability)”.
523 (1) Amend section 426 (annuity payments received after deduction of tax) as follows.
(2) For “Income tax deducted under either of the following sections” substitute “In accordance with section 848 of ITA 2007 a sum representing income tax deducted under section 901 of that Act”.
(3) Omit the words after “recipient”.
524 In section 446 (strips of government securities: relief for losses) for subsection (2) substitute—
“(2) If a person makes a claim under this section, the relief is given by deducting the loss in calculating the person’s net income for the tax year in which the disposal occurs (see Step 2 of the calculation in section 23 of ITA 2007).”
525 In section 454 (listed securities held since 26th March 2003: relief for losses) for subsection (4) substitute—
“(4) If a claim under this section is made by a person other than a trustee, the relief is given by deducting the loss in calculating the person’s net income for the tax year in which the disposal occurs (see Step 2 of the calculation in section 23 of ITA 2007).”
526 (1) Amend section 457 (disposal of deeply discounted securities by trustees) as follows.
(2) Omit subsection (3).
(3) For subsection (5) substitute—
“(5) If the trustees are trustees of a scheme in relation to which section 504 of ITA 2007 applies, subsection (2) does not apply to profits which are shown in the scheme’s accounts as income available for payment to unit holders or for investment.”
527 In section 459(2) (profits from deeply discounted securities: transfer of assets abroad) for “sections 739 and 740 of ICTA (transfer of assets abroad) have” substitute “Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) has”.
528 In section 460(2) (profits from deeply discounted securities: minor definitions) for “section 709(1)” substitute “section 840ZA”.
529 After section 465 insert—
(1) This section applies if—
(a) an individual is liable for tax under this Chapter in respect of an amount, and
(b) the individual is treated by section 530 as having paid income tax at the savings rate on the amount.
(2) The amount is treated as the highest part of the individual’s total income.
(3) Subsection (2) has effect for all income tax purposes except the purposes of sections 535 to 537 (gains from contracts for life insurance etc: top slicing relief).
(4) See section 1012 of ITA 2007 (relationship between highest part rules) for the relationship between—
(a) the rule in subsection (2), and
(b) other rules requiring particular income to be treated as the highest part of a person’s total income.”
530 In section 466(2) (person liable: personal representatives) for “lower rate” substitute “savings rate”.
531 (1) Amend section 467 (liability of trustees for tax on gains from contracts for life insurance etc) as follows.
(2) After subsection (1) insert—
“(1A) If trustees are liable for tax under this Chapter, the gain is treated for income tax purposes as income of the trustees.”
(3) For subsection (7) substitute—
“(7) If trustees are liable for tax under this Chapter, it is charged at the savings rate if—
(a) condition A is met, or
(b) condition D is met and the trustees are trustees of a charitable trust.”
532 In section 468 (gains from contracts for life insurance etc: non-UK resident trustees and foreign institutions)—
(a) in subsection (2) for “Sections 739 and 740”, “prevent” and “apply” substitute “Chapter 2 of Part 13 of ITA 2007”, “prevents” and “applies” respectively, and
(b) in subsections (3) and (4) for “sections 739 and 740 apply” substitute “Chapter 2 of Part 13 of ITA 2007 applies”.
533 In section 482 (excepted group life policies: conditions about persons intended to benefit)—
(a) in subsection (6) omit the definition of “tax advantage”, and
(b) after that subsection insert—
“(7) In this section “tax advantage” has the meaning given by section 840ZA of ICTA.”
534 In section 520(4) (the property categories) after the definition of “internal linked fund” insert—
““investment trust” has the meaning given by section 842 of ICTA,”.
535 (1) Amend section 530 (income tax treated as paid) as follows.
(2) In subsection (1) for “lower rate” substitute “savings rate”.
(3) In subsection (4) after “fall to be made” insert “at Step 2 or 3 of the calculation in section 23 of ITA 2007 (calculation of income tax liability)”.
536 (1) Amend section 535 (top slicing relief) as follows.
(2) After subsection (2) insert—
“(2A) If the relief is given by a reduction in income tax, it is given effect at Step 6 of the calculation in section 23 of ITA 2007.”
(3) In subsection (3)—
(a) for “LRL”, in both places where it occurs, substitute “SRL”, and
(b) for “lower rate” substitute “savings rate”.
(4) After subsection (6) insert—
“(7) For the purposes of the calculations mentioned in subsection (1) any relief under Chapter 2 or 3 of Part 8 of ITA 2007 (which relate to gift aid and other gifts to charities) is ignored.”
537 In section 536(1) (top slicing relieved liability: one chargeable event) in paragraph (b) of Step 2 for “lower rate” substitute “savings rate”.
538 In section 537 (top slicing relieved liability: two or more chargeable events) in paragraph (b) of Step 2 for “lower rate” substitute “savings rate”.
539 For section 539 (relief for deficiencies) substitute—
(1) An individual is entitled to a tax reduction for a tax year in which a deficiency arises from a policy or contract on a chargeable event if—
(a) the condition in subsection (2) is met,
(b) the individual would (apart from this section) be liable to income tax at the higher rate or the dividend upper rate (or both) for the tax year, and
(c) the individual makes a claim.
(2) The condition is that, if a gain had arisen instead on the chargeable event—
(a) the individual would have been liable to income tax on the gain for the year, or
(b) the individual would have been so liable apart from the requirement in section 465(1) that the individual must be UK resident in the tax year in which the gain arises.
(3) The tax reduction is given effect at Step 6 of the calculation in section 23 of ITA 2007.
(4) See section 540 for the cases in which a deficiency is treated as arising from a policy or contract on a chargeable event, section 541 for how the deficiency is calculated and section 469(5) for the apportionment of deficiencies in cases where two or more persons are interested in a policy or contract.
(5) The amount of the tax reduction is calculated as follows.
Step 1
Attribute to the amount of the deficiency an amount of the individual’s income for the tax year which is liable at the dividend upper rate, so far as is possible.
Step 2
If there is an amount of the deficiency remaining after Step 1, attribute to the remaining amount of the deficiency an amount of the individual’s savings income for the tax year which is liable at the higher rate, so far as is possible.
Step 3
If there is an amount of the deficiency remaining after Step 2, attribute to the remaining amount of the deficiency an amount of the individual’s other income for the tax year which is liable at the higher rate, so far as is possible.
Step 4
Calculate the amount of the individual’s preliminary income tax liability for the tax year (see subsection (6)).
Step 5
Calculate the amount of the individual’s preliminary income tax liability for the tax year again, on these assumptions—
Assume that any income attributed to the deficiency at Step 1 is liable at the dividend ordinary rate.
Assume that any income attributed to the deficiency at Step 2 is liable at the savings rate.
Assume that any income attributed to the deficiency at Step 3 is liable at the basic rate.
Step 6
Deduct the amount found at Step 5 from the amount found at Step 4.
The result is the amount of the tax reduction.
(6) The individual’s preliminary income tax liability is the amount found by calculating the individual’s income tax liability in accordance with section 23 of ITA 2007, ignoring Steps 6 and 7 of that calculation.”
540 In section 546(4) (table of provisions subject to special rules for older policies and contracts), in the first column of the table, for “Section 539(3)” substitute “Section 539”.
541 (1) Amend section 547 (income tax chargeable on income treated as received from unauthorised unit trust) as follows.
(2) In subsection (1) for the words from “scheme” to the end substitute “unit trust scheme to which this section applies”.
(3) After subsection (2) insert—
“(3) This section applies to a unit trust scheme if—
(a) the scheme is an unauthorised unit trust, and
(b) the trustees of the scheme are UK resident.”
542 For section 550 substitute—
In accordance with section 848 of ITA 2007, a sum representing income tax treated as deducted from income within this Chapter as a result of section 941 of that Act (deemed deduction from unit holder’s income) is treated as income tax paid by the unit holder.”
543 In section 567(2) (disposals of futures and options involving guaranteed returns: losses) for “section 392 of ICTA” substitute “section 152 of ITA 2007”.
544 In section 569(2) (disposal of futures and options involving guaranteed returns: anti-avoidance: transfer of assets abroad) for “sections 739 and 740 of ICTA (transfer of assets abroad) have” substitute “Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) has”.
545 In section 570(5) (charge to tax under Chapter 13: sales of foreign dividend coupons) for “section 840A of ICTA” substitute “section 991 of ITA 2007”.
546 (1) Amend section 595 (deduction of tax from payments to non-UK residents) as follows.
(2) In subsection (2) for the words after “which” substitute “is to be deducted under section 910 of ITA 2007”.
(3) In subsection (3) for the words after “which” substitute “is to be deducted under section 910 of ITA 2007”.
Income Tax Act 2007