Office of Public Sector Information
SCHEDULE 7 continued PART 1 continued
38 After that section insert—
(1) This section applies if—
(a) section 698 or 700 applies, and
(b) part or all of the amount that counts as employment income is foreign securities income or is likely to be foreign securities income.
(2) The amount of the payment treated under section 696 as made is limited to—
(a) the amount that, on the basis of the best estimate that can reasonably be made, is likely to count as employment income, minus
(b) the amount that, on the basis of such an estimate, is likely to be foreign securities income.
(3) References in this section to “foreign securities income” are to income that is foreign securities income for the purposes of section 41A.”
39 In section 721(1) (other definitions), for the definition of “foreign employer” substitute—
““foreign employer” means an individual, partnership or body of persons resident outside, and not resident in, the United Kingdom,”.
40 In Schedule 1 (index of defined expressions), omit the entries relating to—
(a) receipt of money earnings (in Chapter 5 of Part 2), and
(b) receipt of non-money earnings (in Chapter 5 of Part 2).
41 In paragraph 8 of Schedule 2 (approved share incentive plans: all-employee nature of plan), for sub-paragraph (2) substitute—
“(2) An employee is a UK resident taxpayer if—
(a) the employee’s earnings from the employment by reference to which the employee meets the employment requirement are (or would be if there were any) general earnings to which section 15 applies (earnings for year when employee UK resident), and
(b) those general earnings are (or would be if there were any) earnings for a tax year in which the employee is ordinarily resident in the United Kingdom.”
42 In paragraph 6(2) of Schedule 3 (approved SAYE option schemes: all-employee nature of scheme), for paragraph (c) substitute—
“(c) E’s earnings from the office or employment within paragraph (a) are (or would be if there were any) general earnings to which section 15 applies (earnings for year when employee UK resident),
(ca) those general earnings are (or would be if there were any) earnings for a tax year in which E is ordinarily resident in the United Kingdom, and”.
43 In paragraph 27(2) of Schedule 5 (enterprise management incentives: meaning of “working time”)—
(a) in paragraph (a), for the words from “or 21” to “Kingdom)” substitute “applies (earnings for year when employee UK resident)”, and
(b) in paragraph (b), for the words from “resident and” to the end substitute “UK resident (and none of sections 809B, 809D and 809E of ITA 2007 (remittance basis) applied to the employee).”
44 In Schedule 7 (transitionals and savings), omit paragraphs 9 to 12.
45 In section 575 of ITEPA 2003 (foreign pensions: taxable pension income), omit subsection (4).
46 ITTOIA 2005 is amended as follows.
47 In section 260(1) (overview of Part 3)—
(a) at the end of paragraph (d) insert “and”, and
(b) omit paragraph (f) (and the “and” before it).
48 In section 269 (territorial scope of charge to tax), omit subsections (3) and (4).
49 Omit Chapter 11 of Part 3 (overseas property income).
50 In section 829 (overview of Part 8), for paragraph (a) substitute—
“(a) the charging of relevant foreign income of a person to whom section 809B, 809D or 809E of ITA 2007 applies (remittance basis),”.
51 (1) Section 830 (meaning of “relevant foreign income”) is amended as follows.
(2) In subsection (1), for the words from “which” to the end substitute “which—
(a) arises from a source outside the United Kingdom, and
(b) is chargeable under any of the provisions specified in subsection (2) (or would be so chargeable if section 832 did not apply to it).”
(3) In subsection (2), omit paragraph (d).
52 Omit section 831 (claims for relevant foreign income to be charged on remittance basis).
53 For section 832 substitute—
(1) This section applies to an individual’s relevant foreign income for a tax year (“the relevant foreign income”) if section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for that year.
(2) For any tax year in which—
(a) the individual is UK resident, and
(b) any of the relevant foreign income is remitted to the United Kingdom,
income tax is charged on the full amount of the relevant foreign income so remitted in that year.
(3) Subsection (2) applies whether or not the source of the income exists when the income is remitted.
(4) See Chapter A1 of Part 14 of ITA 2007 for the meaning of “remitted to the United Kingdom” etc.
(1) This section applies if—
(a) an individual satisfies the residence requirements for any tax year (“the year of return”),
(b) the individual did not satisfy those requirements for one or more tax years immediately before the year of return but did satisfy those requirements for an earlier tax year,
(c) there are fewer than 5 tax years between—
(i) the last tax year before the year of return for which the individual satisfied those requirements (“the year of departure”), and
(ii) the year of return, and
(d) the individual satisfied those requirements for at least 4 out of the 7 tax years immediately before the year of departure.
(2) Treat any of the individual’s relevant foreign income within subsection (3) which is remitted to the United Kingdom after the year of departure and before the year of return as remitted to the United Kingdom in the year of return.
(3) Relevant foreign income is within this subsection if—
(a) it is for the year of departure or any earlier tax year, and
(b) section 832 applies to it.
(4) For the purposes of subsection (1) an individual “satisfies the residence requirements” for a tax year if—
(a) at any time in that year, the individual is UK resident and not Treaty non-resident, or
(b) the individual is ordinarily UK resident, and is not Treaty non-resident, for that year.
(5) For the purposes of subsection (4) an individual is “Treaty non-resident” at any time if, at that time, he is regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief arrangements having effect at that time.
(6) In subsection (5) “double taxation relief arrangements” means arrangements specified in an Order in Council making any such provisions as are referred to in section 788 of ICTA.
(1) The only case in which deductions are allowed from the income mentioned in section 832(2) is where the income is from a trade, profession or vocation carried on outside the United Kingdom.
(2) In that case the same deductions are allowed as are allowed under the Income Tax Acts where the trade, profession or vocation is carried on in the United Kingdom.”
54 Omit sections 833 to 837.
55 TCGA 1992 is amended as follows.
56 (1) Section 3 (annual exempt amount) is amended as follows.
(2) After subsection (1) insert—
“(1A) Subsection (1) does not apply to an individual for a tax year if section 809B of ITA 2007 (claim for remittance basis to apply) applies to the individual for that year.”
(3) In subsection (5C)—
(a) after paragraph (a) insert—
“(aa) if section 16ZB (certain chargeable gains charged on remittance basis) applies for that year, deducting the amount of the relevant gains (within the meaning of that section),” and
(b) in paragraph (b), after “deducting” insert “(from the amount mentioned in paragraph (a), as reduced under paragraph (aa))”.
57 In section 3A (reporting limits), after subsection (5) insert—
“(5A) Subsection (1) does not apply to an individual for a tax year if—
(a) section 809B of ITA 2007 (claim for remittance basis to apply), or
(b) section 16ZB below (certain chargeable gains charged on remittance basis),
applies to the individual for that year.”
58 In section 9 (residence etc), omit subsection (2).
59 In section 10A (temporary non-residents), after subsection (9) insert—
“(9ZA) If—
(a) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the taxpayer for the year of return, and
(b) the taxpayer is not domiciled in the United Kingdom in that year,
any foreign chargeable gains falling within subsection (2)(a) which were remitted in an intervening year are treated as remitted in the year of return.
For this purpose “foreign chargeable gains” has the meaning given by section 12(4).”
60 For section 12 substitute—
(1) This section applies to foreign chargeable gains accruing to an individual in a tax year (“the foreign chargeable gains”) if—
(a) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for that year, and
(b) the individual is not domiciled in the United Kingdom in that year.
(2) Chargeable gains are treated as accruing to the individual in any tax year in which any of the foreign chargeable gains are remitted to the United Kingdom.
(3) The amount of chargeable gains treated as accruing is equal to the full amount of the foreign chargeable gains so remitted in that year.
(4) In this section “foreign chargeable gains” means chargeable gains accruing from the disposal of an asset which is situated outside the United Kingdom.
(5) See Chapter A1 of Part 14 of ITA 2007 for the meaning of “remitted to the United Kingdom” etc.”
61 In section 16 (computation of losses), omit subsection (4).
62 After that section insert—
(1) In this section “the relevant tax year”, in relation to an individual, means the first tax year for which—
(a) section 809B of ITA 2007 (claim for remittance basis) applies to the individual, and
(b) the individual is not domiciled in the United Kingdom.
(2) An individual may make an election under this section for the relevant tax year (in which case sections 16ZB and 16ZC have effect in relation to the individual for the relevant tax year and all subsequent tax years).
(3) If an individual does not make such an election, foreign losses accruing to the individual in—
(a) the relevant tax year, or
(b) any subsequent tax year except one in which the individual is domiciled in the United Kingdom,
are not allowable losses.
(4) Sections 42 and 43 of the Management Act (procedure and time limit for making claims), except section 42(1A) of that Act, apply in relation to an election under this section as they apply in relation to a claim for relief.
(5) An election under this section is irrevocable.
(6) In this section “foreign loss” means a loss accruing from the disposal of an asset situated outside the United Kingdom.
(1) This section applies to an individual for a tax year (“the applicable tax year”) if—
(a) the individual has made an election under section 16ZA,
(b) foreign chargeable gains accrued to the individual in or after the relevant tax year (within the meaning of section 16ZA) but before the applicable tax year, and
(c) by reason of the remission of any of the foreign chargeable gains to the United Kingdom, chargeable gains are treated under section 12 as accruing to the individual in the applicable tax year (“the relevant gains”).
(2) Section 2(2) or (4) has effect for the applicable tax year as if the relevant gains had not accrued.
(3) The amount on which the individual is charged to capital gains tax for the applicable tax year is (instead of the amount given by section 2(2) or (4)(b), as reduced under section 3) the sum of—
(a) the adjusted taxable amount, and
(b) the amount of the relevant gains.
(4) “The adjusted taxable amount” is—
(a) if section 3(1) (annual exempt amount) does not apply to the individual for the applicable tax year, the amount given by section 2(2) or (4)(b) as it has effect by virtue of subsection (2), and
(b) otherwise, so much of that amount as exceeds the exempt amount for the applicable tax year (within the meaning of section 3).
(5) In subsection (1) “foreign chargeable gains” has the meaning given by section 12(4).
(6) For the purposes of subsection (1)(c) foreign chargeable gains are remitted to the United Kingdom if they are regarded as so remitted for the purposes of section 12.
(1) This section applies to an individual for a tax year if—
(a) the individual has made an election under section 16ZA for the tax year or any earlier tax year,
(b) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for the tax year, and
(c) the individual is not domiciled in the United Kingdom in the tax year.
(2) The following steps apply for the purpose of calculating the amount on which the individual is to be charged to capital gains tax for the tax year.
Step 1
Deduct any relevant allowable losses from the chargeable gains referred to in subsection (3) in the order in which they appear there (starting with paragraph (a) of that subsection).
If allowable losses are deductible from the chargeable gains referred to in subsection (3)(b) but are not enough to exhaust them all—
those chargeable gains are to be ordered according to the day on which they accrued,
the losses are to be deducted from those gains in reverse chronological order (starting with the last chargeable gain to accrue), and
if allowable losses are deductible from chargeable gains that accrued on a particular day but are not enough to exhaust all of the chargeable gains that accrued on that day, the amount deducted from each of those chargeable gains is the appropriate proportion of the losses.
In paragraph (c) “the appropriate proportion”, in relation to a chargeable gain, is the amount of that gain divided by the total amount of the chargeable gains that accrued on the day in question.
Step 2
Treat the amount referred to in section 2(2) or (4)(a) or 16ZB(3)(a) as being equal to—
the amount it would be if there were no relevant allowable losses, minus
the total amount deducted under Step 1 from chargeable gains within subsection (3)(a) or (c).
(3) The chargeable gains are—
(a) foreign chargeable gains accruing to the individual in the tax year, to the extent that they are remitted to the United Kingdom in that year,
(b) foreign chargeable gains accruing to the individual in that year, to the extent that they are not so remitted in that year, and
(c) chargeable gains accruing to the individual in that year (other than foreign chargeable gains).
(4) Chargeable gains treated as accruing under section 87 or 89(2) (read, where appropriate, with section 10A) are not within any paragraph of subsection (3).
(5) Chargeable gains treated as accruing under section 12 are not within subsection (3)(c).
(6) For the purposes of subsection (3) foreign chargeable gains are remitted to the United Kingdom if they are regarded as so remitted for the purposes of section 12.
(7) In this section—
“relevant allowable losses” means the allowable losses that section 2(2) provides may be deducted from chargeable gains accruing to the individual in the tax year, and
“foreign chargeable gains” has the meaning given by section 12(4).
(1) This section applies if section 16ZC applies to an individual for a tax year.
(2) Any allowable loss deducted under step 1 of section 16ZC(2) is to be regarded (for the purposes of section 2(2)(b)) as allowed as a deduction from chargeable gains accruing to the individual in the tax year.
(3) If a deduction is made under step 1 of section 16ZC(2) from a foreign chargeable gain within section 16ZC(3)(b), the amount of the foreign chargeable gain is reduced by the amount deducted.”
63 In section 119A (increase in expenditure by reference to tax charged in relation to employment-related securities), after subsection (5) insert—
“(5A) See also section 119B (unremitted foreign securities income).”
64 After that section insert—
(1) For the purposes of section 119A reduce the amount that counts as employment income by so much of that amount (if any) as is unremitted foreign securities income.
(2) In this section “unremitted foreign securities income” means income that—
(a) is foreign securities income for the purposes of section 41A of ITEPA 2003 (employment income from ERS charged on remittance basis), and
(b) has not been remitted to the United Kingdom by the end of the tax year in which the disposal mentioned in section 119A(1) occurs.
(3) The following provisions apply if any of the unremitted foreign securities income is remitted to the United Kingdom after the end of the tax year referred to in subsection (2)(b).
(4) The person liable for the capital gains tax on any chargeable gains arising on the disposal may make a claim for section 119A(2) to have effect as if the remitted income had been remitted before the end of that tax year.
(5) All adjustments (by way of repayment of tax, assessment or otherwise) are to be made which are necessary to give effect to a claim under subsection (4).
(6) Those adjustments may be made at any time, despite anything to the contrary in any enactment relating to capital gains tax.”
65 In section 33(2A) of TMA 1970 (error or mistake)—
(a) omit the “or” at the end of paragraph (a), and
(b) at the end of paragraph (b) insert “, or
(c) an error or mistake consisting of the making of a claim under section 809B of ITA 2007 (claim for remittance basis).”
66 ITTOIA 2005 is amended as follows.
67 In section 839 (annual payments payable out of relevant foreign income), omit subsection (6).
68 In section 840 (relief for backdated pensions charged on arising basis), omit subsection (4) (application of section 837).
69 After that section insert—
(1) A claim under section 840 must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year for which the relief is claimed.
(2) All adjustments (by way of repayment of tax, assessment or otherwise) are to be made which are necessary to give effect to section 840.
(3) Those adjustments may be made at any time, despite anything to the contrary in the Income Tax Acts.
(4) A person’s personal representatives may make any claim under section 840 which the person might have made.
(5) If a person dies—
(a) any tax paid by the person and repayable because of a claim under section 840 is to be repaid to the personal representatives, and
(b) the person’s personal representatives are liable for any additional tax which arises because of a claim under that section.
(6) If subsection (5)(b) applies, the additional tax—
(a) is to be assessed on the personal representatives, and
(b) is a debt due and payable out of the estate.”
70 (1) Section 857 (partners to whom the remittance basis may apply) is amended as follows.
(2) In subsection (1), for paragraph (c) substitute—
“(c) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to a partner for a tax year.”
(3) In subsection (3), omit “for the purposes of this Act (see Part 8)”.
(4) Accordingly, in the heading, for “may apply” substitute “applies”.
71 In section 878 (definitions), omit subsection (2).
72 In Schedule 2 (transitional provision etc), omit paragraphs 150 and 151.
73 In Part 2 of Schedule 4 (index of defined expressions), omit the entry for “person to whom the remittance basis applies”.
74 ITA 2007 is amended as follows.
75 In section 2(14) (overview of Act), before paragraph (a) insert—
“(za) an alternative basis for charge (the remittance basis) for certain income and gains of certain individuals (Chapter A1),”.
76 In section 34 (personal allowances etc: introduction), after subsection (2) insert—
“(3) For the effect of section 809B (claim for remittance basis to apply) applying to an individual for a tax year, see section 809G (no entitlement to personal allowance or blind person’s allowance).”
77 In section 42 (tax reductions for married couples etc: introduction), after subsection (4) insert—
“(5) For the effect of section 809B (claim for remittance basis to apply) applying to an individual for a tax year, see section 809G (no entitlement to tax reduction).”
78 In section 460 (residence etc of claimants for relief for life insurance payments etc), after subsection (3) insert—
“(4) For the effect of section 809B (claim for remittance basis to apply) applying to an individual for a tax year, see section 809G (no entitlement under section 457, 458 or 459).”
79 In consequence of the amendments made by this Part of this Schedule, omit—
(a) in ITEPA 2003, paragraph 208 of Schedule 6,
(b) in ITTOIA 2005, paragraph 429 of Schedule 1, and
(c) in CRCA 2005, paragraphs 102(3)(b) to (d) and 104 of Schedule 4.
80 The amendments made by paragraphs 3(3), 4(3), 5(2), 22, 31 to 33, 38 and 64 have effect in relation to employment-related securities and employment-related securities options where the date of the acquisition is on or after 6 April 2008 (except employment-related securities acquired pursuant to a securities option acquired before 6 April 2008).
81 The other amendments made by this Part of this Schedule have effect for the tax year 2008-09 and subsequent tax years.
82 (1) This paragraph applies in relation to an individual’s general earnings for the tax year 2007-08 or any earlier tax year (“the relevant tax year”) if the individual—
(a) was UK resident in that year, but
(b) was not domiciled in the United Kingdom, or was not ordinarily UK resident, in that year.
(2) Section 22 or 26 of ITEPA 2003 (as amended by this Part of this Schedule) applies in relation to the general earnings as if—
(a) section 809B of ITA 2007 (claim for remittance basis to apply) applied to the individual for the relevant tax year, and
(b) section 22(7) or 26(6) of ITEPA 2003 were omitted.
(3) In relation to the general earnings, the definition of “foreign employer” in section 721(1) of ITEPA 2003 has effect as if at the end there were inserted “and not resident in the Republic of Ireland”.
83 (1) This paragraph applies to an individual’s relevant foreign income for the tax year 2007-08 or any earlier tax year (“the relevant tax year”) if—
(a) the individual made a claim under section 831 of ITTOIA 2005 for the relevant tax year, or
(b) section 65(5) of ICTA (or any earlier superseded enactment corresponding to that provision) applied in relation to the individual for the relevant tax year.
(2) Section 832 of ITTOIA 2005 (as amended by this Part of this Schedule) applies in relation to the relevant foreign income as if section 809B of ITA 2007 (claim for remittance basis to apply) applied to the individual for the relevant tax year.
(3) But nothing in section 832 of ITTOIA 2005 applies in relation to any of the relevant foreign income that arose in the Republic of Ireland.
(4) Nothing in section 832A of that Act applies in relation to anything remitted to the United Kingdom in the tax year 2007-08 or any earlier tax year.
Finance Act 2008