Office of Public Sector Information
PART 3 continued
(9) In Schedule 2 (supplementary provision), in paragraph 1(b) (definition of “relevant arrangements”), after “section” insert “48A,”.
(10) In section 117 of TCGA 1992 (qualifying corporate bonds), after subsection (6C) insert—
“(6D) Section 48B(4) of the Finance Act 2005 (alternative finance arrangements) provides for certain arrangements falling within section 48A to be a corporate bond for the purposes of this section.”
(11) In section 127(1)(ca) of FA 1995 (persons not treated as UK representatives), for “subsection (5) of section 47” substitute “Chapter 5 of Part 2”.
(12) In section 148(5A) of FA 2003 (meaning of “permanent establishment”), for “subsection (5) of section 47” substitute “Chapter 5 of Part 2”.
(13) Section 56 of FA 2005 (commencement and transitional) shall have effect in relation to the commencement of this section—
(a) as if references to Chapter 5 of Part 2 of that Act were references to this section,
(b) as if references to 6th April 2005 were references to—
(i) 1st April 2007 in relation to corporation tax, and
(ii) 6th April 2007 in relation to income tax and capital gains tax, and
(c) as if references to section 49 were references to sections 48A and 48B.
(14) But—
(a) for the purposes of income tax and capital gains tax in relation to the disposal after 6th April 2007 of arrangements to which new section 48A applies (whenever entered into) that section and new section 48B shall be treated as always having had effect, and
(b) an order made after the passing of this Act under section 1005 of ITA 2007 (recognised stock exchanges: designation) and by virtue of new section 48A(3) may be expressed—
(i) to have effect as from 1st April 2007 for the purposes of arrangements entered into on or after that date, and
(ii) for the purposes mentioned in paragraph (a), as always having had effect.
In section 49A(3) of FA 2005 (profit share agency: principal not treated as entitled to agent’s share of profits), insert at the end “(and the agent is treated as entitled to the profits specified in subsection (1)(c) and (d))”.
(1) In section 686A(2)(a) of ICTA (receipts to be treated as income subject to special rate of tax: payment by company), after “made” insert “by way of qualifying distribution”.
(2) In Type 1(b) in section 482 of ITA 2007 (types of amount to be charged at special rates for trustees), after “made” insert “by way of qualifying distribution”.
(3) The amendments made by this section have effect in respect of payments made to the trustees of a settlement on or after 6th April 2006.
(1) Section 498 of ITA 2007 (trustees' tax pool) is amended as follows.
(2) In subsection (1)—
(a) in Type 1, for “2 or 3” substitute “2, 3 or 3A”, and
(b) after Type 3 insert—
“Type 3A
The amount of tax at the nominal rate on any amount in respect of which—
the trustees are liable to income tax under section 467 of ITTOIA 2005 (gains from contracts for life insurance etc),
the trustees are liable to income tax at the trust rate by virtue of section 482 above, and
tax at the savings rate is treated as having been paid by virtue of section 530 of ITTOIA 2005 (life insurance).”
(3) After subsection (2) insert—
“(2A) In relation to Type 3A, the reference to the nominal rate is a reference to a rate equal to the difference between the trust rate and the savings rate.”
(4) The amendments made by this section have effect in relation to gains arising to the trustees of a settlement on or after 6th April 2007.
(1) In section 396 of ICTA (corporation tax: setting off of Case VI losses), in subsection (2) (losses to which subsection (1) does not apply), insert at the end “or on a disposal to which Chapter 5 of Part 17 applies.”
(2) In section 756A of ICTA (definition of “offshore fund”), for subsection (3) substitute—
“(3) In this section “collective investment scheme” means any arrangements which are a collective investment scheme for the purposes of Part 17 of the Financial Services and Markets Act 2000 (see section 235 of that Act and orders made under subsection (5) of that section) or would be if the words “, within a period appearing to him to be reasonable,” were omitted from section 236(3)(a) of that Act.
(4) But the reference to offshore funds in section 760(3)(a) does not include any arrangements which are not a collective investment scheme for the purposes of that Part of that Act.”
(3) In section 842 of ICTA (investment trusts), after subsection (3) insert—
“(3A) References in this section to income do not include income treated as arising under section 761(1)(a).”
(4) In Schedule 27 to ICTA (distributing funds), in sub-paragraph (1)(c) of paragraph 6 (investments of offshore fund in other offshore funds which could, apart from that paragraph, be certified as distributing funds not to count towards limit in section 760(3)(a)), omit “without regard to the provisions of this paragraph,”.
(5) In section 152 of ITA 2007 (losses from miscellaneous transactions), in subsection (8), insert at the end “except that income on which income tax is charged under section 761(1)(b)(i) of ICTA is not “section 1016 income” for the purposes of subsection (2)(a)”.
(6) The amendment made by subsection (1) has effect in relation to disposals on or after 1st April 2007.
(7) The amendment made by subsection (3) has effect in relation to accounting periods beginning on or after the day on which this Act is passed.
(8) The amendment made by subsection (4) has effect in relation to account periods (within the meaning of Chapter 5 of Part 17 of ICTA) beginning on or after 1st January 2007.
(9) The amendment made by subsection (5) has effect in relation to transactions on or after 6th April 2007.
(1) In section 32 of FA 2006 (meaning of “film production company”), insert at the end—
“(7) A company may elect to be regarded as a company which does not meet the description in subsection (3) or (4).
(8) The election—
(a) must be made by the company by being included in its company tax return for an accounting period (and may be included in the return originally made or by amendment), and
(b) may be withdrawn by the company only by amending its company tax return for that accounting period.
(9) The election has effect in relation to films which commence principal photography in that or any subsequent accounting period.
(10) “Company tax return” has the same meaning as in Schedule 18 to FA 1998 (see paragraph 3(1)).”
(2) In paragraph 10 of Schedule 18 to FA 1998 (other claims and elections to be included in company tax return), insert at the end—
“(5) An election under section 32(7) of the Finance Act 2006 (election not to be a film production company) can only be made by being included in a company tax return (see section 32(8)(a) of that Act).”
(1) Section 83 of FA 2005 (continued application of old UK GAAP to securitisation companies during transitional period) is amended as follows.
(2) In subsection (1)(b) (old UK GAAP to apply to periods of account ending before 1st January 2008), insert at the beginning “(subject to subsection (7A)(a))”.
(3) After subsection (7) insert—
“(7A) The Treasury may by regulations—
(a) make provision for subsection (1) to apply in relation to periods of account ending on or after 1st January 2008 but before a date specified by the regulations, and
(b) make provision modifying any provision of, or made under, the Corporation Tax Acts in relation to the first period of account of securitisation companies in the case of which subsection (1) does not apply (whether by virtue of that subsection itself or regulations under paragraph (a)).
(7B) Regulations under subsection (7A)(a) may, in particular—
(a) specify a date only in relation to specified descriptions of company,
(b) specify different dates in relation to different descriptions of company, and
(c) include provision for a company to elect that the regulations are to apply to it or provision for a company to elect that they are not to apply to it.”
(4) Section 84 of FA 2005 (power to make provision as to application of Corporation Tax Acts in relation to securitisation companies) is amended as follows.
(5) In subsection (3)(d), for “to that effect is made,” substitute “that they are to apply is made or that the regulations do not apply to a company if an election that they are not to apply is made,”.
(6) For subsection (5) substitute—
“(5) The regulations—
(a) may make incidental, supplementary, consequential or transitional provision or savings (including provision amending any provision of, or made under, the Taxes Acts (within the meaning of section 118(1) of TMA 1970)), and
(b) may include provision having effect (in the case of provision relating to corporation tax) from the beginning of periods of account current when the regulations are made or (in the case of provision relating to income tax or capital gains tax) in relation to times before the regulations are made.”
(1) In section 418 of ITA 2007 (donations to charity by individuals: limits)—
(a) in subsection (2)(c), for “2.5%” substitute “5%”, and
(b) in subsection (3), for “£250” substitute “£500”.
(2) In section 339 of ICTA (donations to charity)—
(a) in subsection (3B)(b), for “£250” substitute “£500”, and
(b) in subsection (3DA)(c), for “2.5 per cent” substitute “5 per cent”.
(3) The amendment made by subsection (1) has effect in relation to gifts made on or after 6th April 2007.
(4) The amendment made by subsection (2) has effect in relation to gifts made in an accounting period ending on or after 6th April 2007.
(1) In Part 3 of Schedule 5 to ITEPA 2003 (enterprise management incentives: qualifying companies), in paragraph 19 (excluded activities: receipt of royalties or licence fees)—
(a) in sub-paragraph (4), for paragraphs (a) and (b) substitute—
“(a) by the relevant company, or
(b) by a company which was a qualifying subsidiary of the relevant company throughout a period during which it created the whole or greater part (in terms of value) of the intangible asset.”, and
(b) after sub-paragraph (7) insert—
“(8) If—
(a) the relevant company acquired all the shares (“old shares”) in another company (“the old company”) at a time when the only shares issued in the relevant company were subscriber shares, and
(b) the consideration for the old shares consisted wholly of the issue of shares in the relevant company,
references in sub-paragraph (4) to the relevant company include the old company.”
(2) The amendments made by subsection (1) have effect in relation to options granted on or after 6th April 2007.
(3) They also have effect in relation to a qualifying option within subsection (4), for the purpose of determining at any time on or after that date whether an activity is an excluded activity.
(4) An option is within this subsection if it was granted before 6th April 2007 and, immediately before that date—
(a) it had not been exercised, and
(b) no disqualifying event had occurred in relation to it.
(5) Subsection (6) applies in respect of an option within subsection (4) if—
(a) immediately before 6th April 2007—
(i) the right to exploit an intangible asset (“the asset”) was vested in the relevant company or a subsidiary of it (in either case, alone or jointly with others), and
(ii) the asset was a relevant intangible asset,
(b) at any time on or after that date, an activity carried on by the relevant company or a subsidiary of it would be an excluded activity by reason only of the receipt of royalties or licence fees attributable to the exploitation of the asset, and
(c) the activity would not be an excluded activity if the amendments made by subsection (1) had not been made.
(6) The activity is to be treated, in relation to the option, as not being an excluded activity at that time.
(1) In section 219 of ITEPA 2003 (exclusion of lower-paid employments from parts of benefits code: extra amounts to be added in connection with a car), omit subsections (5) and (6).
(2) The repeal made by subsection (1) has effect for the tax year 2007-08 and subsequent tax years.
(1) In section 411 of ITEPA 2003 (exception for payments and benefits for forces), the existing provision becomes subsection (1) and after that subsection insert—
“(2) This Chapter does not apply to a payment or other benefit provided under a scheme established by an order under section 1(1) of the Armed Forces (Pensions and Compensation) Act 2004.”
(2) The amendments made by subsection (1) have effect for the tax year 2006-07 and subsequent tax years.
(1) In ITEPA 2003, after section 297 insert—
(1) No liability to income tax arises in respect of payments to members of the armed forces of the Crown of the Operational Allowance.
(2) The Operational Allowance is an allowance designated as such by the Secretary of State.”
(2) The amendment made by subsection (1) has effect in relation to payments whenever made.
(1) Section 480 of ITA 2007 (meaning of “accumulated or discretionary income”) is amended as follows.
(2) In subsection (3)(c) (income from service charges held on trust by relevant housing body), for the words after “charges” substitute “which are paid in respect of dwellings in the United Kingdom and are held on trust.”
(3) For subsections (5) and (6) substitute—
“(5) In subsection (3)(c) “service charges” has the meaning given by section 18 of the Landlord and Tenant Act 1985 (but as if that section also applied in relation to dwellings in Scotland and Northern Ireland).”
(4) The amendments made by this section have effect for the tax year 2007-08 and subsequent tax years.
(1) In paragraph 23 of Schedule 15 to FA 2004 (charge to income tax on benefits received by former owner of property), for sub-paragraphs (3) and (4) substitute—
“(3) The election must be made on or before—
(a) the relevant filing date, or
(b) such later date as an officer of Revenue and Customs may, in a particular case, allow.”
(2) The amendment made by subsection (1) is deemed to have come into force on 21st March 2007.
(1) Section 31 of ITTOIA 2005 (relationship between rules prohibiting and allowing deductions: trading income) is amended as follows.
(2) In subsection (1) (priority of relevant permissive rules over relevant prohibitive rules), in paragraph (b) (sections to which that priority rule is subject), for “sections 48 (car or motor cycle hire) and” substitute “section 36 (unpaid remuneration), section 38 (employee benefit contributions), section 48 (car or motor cycle hire) and section”.
(3) In subsection (3) (meaning of “relevant prohibitive rule”), after “sections” insert “36, 38,”.
(4) Section 274 of ITTOIA 2005 (provision corresponding to section 31 of that Act in case of property income) is amended as follows.
(5) In subsection (1)(b), for “sections 48 (car or motor cycle hire) and” substitute “section 36 (unpaid remuneration), section 38 (employee benefit contributions), section 48 (car or motor cycle hire) and section”.
(6) In subsection (3), after “sections” insert “36, 38,”.
(7) The amendments made by this section have effect for the tax year 2007-08 and subsequent tax years.
Finance Act 2007