Office of Public Sector Information
SCHEDULE 7 continued PART 1 continued
84 (1) This paragraph applies if section 12 of TCGA 1992 (or any corresponding superseded enactment) applied in relation to a gain accruing to an individual in the tax year 2007-08 or any earlier tax year (“the relevant tax year”).
(2) Section 12 of TCGA 1992 (as amended by this Part of this Schedule) applies in relation to that gain as if section 809B of ITA 2007 (claim for remittance basis to apply) applied to the individual for the relevant tax year.
(3) Nothing in section 10A of TCGA 1992 applies in relation to any part of the gain remitted to the United Kingdom in the tax year 2007-08 or any earlier tax year.
85 (1) In section 809E(3)(b) of ITA 2007, the reference to a tax year for which section 809B, 809D or 809E of that Act applies to an individual includes a tax year (not later than the tax year 2007-08) in which the individual—
(a) was UK resident, but
(b) was not domiciled in the United Kingdom or was not ordinarily UK resident.
(2) In relation to such a tax year, the reference there to the individual’s foreign income and gains includes the individual’s relevant foreign income if (and only if)—
(a) the individual made a claim under section 831 of ITTOIA 2005 for the 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(b) section 65(5) of ICTA (or any earlier superseded enactment corresponding to that provision) applied in relation to the individual for the year.
86 (1) Section 809L of ITA 2007 (meaning of “remitted to the United Kingdom”) has effect subject to this paragraph.
(2) If, before 6 April 2008, property (including money) consisting of or deriving from an individual’s relevant foreign income was brought to or received or used in the United Kingdom by or for the benefit of a relevant person, treat the relevant foreign income as not remitted to the United Kingdom on or after that date (if it otherwise would be regarded as so remitted).
(3) If, before 12 March 2008, property (other than money) consisting of or deriving from an individual’s relevant foreign income was acquired by a relevant person, treat the relevant foreign income as not remitted to the United Kingdom on or after 6 April 2008 (if it otherwise would be regarded as so remitted).
(4) Subject to sub-paragraphs (2) and (3), in relation to an individual’s income and chargeable gains for the tax year 2007-08 or any earlier tax year, section 809L has effect as if the references to a relevant person were to the individual.
(5) “Money” has the same meaning as in section 809Y of ITA 2007.
87 Section 809N of ITA 2007 (section 809L: gift recipients, qualifying property and enjoyment) has effect in relation to an individual’s income and chargeable gains for the tax year 2007-08 or any earlier tax year as if—
(a) the reference in subsection (2) to a relevant person were to the individual,
(b) subsections (3) and (4) were omitted, and
(c) the references in subsection (9) to a relevant person, all relevant persons, or relevant persons were to the individual.
88 Section 809O of ITA 2007 (section 809L: dealings where there is a connected operation) has effect in relation to an individual’s income and chargeable gains for the tax year 2007-08 or any earlier tax year as if—
(a) subsection (2) were omitted, and
(b) the references in subsections (4) and (6) to a relevant person, all relevant persons, or relevant persons were to the individual.
89 Sections 809Q to 809S of ITA 2007 (transfers from mixed funds) do not apply for the purposes of determining whether income or chargeable gains for the tax year 2007-08 or any earlier tax year are remitted to the United Kingdom (or the amount of any such income or chargeable gains so remitted).
90 (1) This paragraph applies if—
(a) before 12 March 2008, money was lent to an individual outside the United Kingdom,
(b) the loan was made for the purpose of enabling the individual to acquire an interest in residential property in the United Kingdom (and for no other purpose), and
(c) before 6 April 2008—
(i) the money was received in the United Kingdom,
(ii) the individual used the money to acquire an interest in residential property in the United Kingdom (“the interest”), and
(iii) repayment of the debt for the money (“the debt”), or of payments made under a guarantee of that repayment (“the guarantee”), was secured on the interest.
(2) Relevant foreign income of the individual used outside the United Kingdom before 6 April 2028 to pay interest on the debt is treated as not remitted to the United Kingdom.
(3) If, at any time on or after 12 March 2008—
(a) any term upon which the loan was made, or any term of the guarantee, is varied or waived,
(b) repayment of the debt, or of payments made under the guarantee, ceases to be secured on the interest,
(c) repayment of any other debt is secured on the interest or is guaranteed by the guarantee, or
(d) the interest ceases to be owned by the individual,
sub-paragraph (2) does not apply in relation to relevant foreign income used as mentioned there after that time.
(4) If—
(a) before 12 March 2008, money was lent to the individual outside the United Kingdom (“the subsequent loan”),
(b) the subsequent loan was made for the purpose of enabling the individual to repay—
(i) the loan mentioned in sub-paragraph (1), or
(ii) another loan in relation to which sub-paragraphs (2) and (3) apply (by virtue of this sub-paragraph),
and for no other purpose, and
(c) before 6 April 2008—
(i) the individual used the money to repay the loan referred to in paragraph (b)(i) or (ii), and
(ii) repayment of the subsequent loan, or of payments made under a guarantee of that repayment, was secured on the interest,
sub-paragraphs (2) and (3) apply in relation to the subsequent loan (and for this purpose references there to the debt or the loan are to be read as references to the subsequent loan).
(5) In this paragraph “residential property” has the same meaning as in Part 4 of FA 2003 (see section 116 of that Act).
(6) In this paragraph “guarantee” includes an indemnity, and “guaranteed” is to be read accordingly.
91 (1) This paragraph applies in relation to employment-related securities if—
(a) the date of the acquisition is on or after 6 April 2008 and on or before 31 July 2008, and
(b) Chapter 2 of Part 7 of ITEPA 2003 (restricted securities) applies in relation to the securities by virtue only of amendments made by this Schedule.
(2) Section 431 of ITEPA 2003 (election for full or partial disapplication of Chapter) has effect in relation to the employment-related securities as if in subsection (5)(b) for “more than 14 days after the acquisition” there were substituted “after 14 August 2008”.
92 (1) Section 761 of ICTA (charge to income tax or corporation tax of offshore income gain) is amended as follows.
(2) For subsection (5) substitute—
“(5) Subsections (1)(b) and (1A) are subject to section 762ZB (income treated as arising: non-UK domiciled individuals to whom remittance basis applies).”
(3) After subsection (7) insert—
“(8) Nothing in subsection (7) affects the application of this section in relation to an offshore income gain treated as arising by virtue of section 762(3).”
93 (1) Section 762 of that Act (offshore income gains accruing to persons resident or domiciled abroad) is amended as follows.
(2) In subsection (1), after paragraph (a) insert—
“(aa) any reference to anything accruing is to be read as a reference to it arising (and similar references are to be read accordingly);”.
(3) For subsections (2) to (5) substitute—
“(2) If—
(a) offshore income gains arise to the trustees of a settlement in a tax year, and
(b) section 87 of the 1992 Act (gains of non-resident settlements) applies to the settlement for that year,
the OIG amount for the settlement for that year is the amount of the offshore income gains.
(3) Sections 87, 87A, 87C to 90 and 96 to 98 of, and Schedule 4C to, the 1992 Act apply in relation to OIG amounts as if—
(a) references to section 2(2) amounts (except those in paragraph 7B(2)(b) and (4) of Schedule 4C) were to OIG amounts,
(b) references to chargeable gains (except the one in paragraph 1(5) of Schedule 4C) were to offshore income gains,
(c) references to anything accruing were to it arising (and similar references, except the one in paragraph 1(5) of Schedule 4C, were read accordingly), and
(d) sections 87(4), 88(2) to (5), 89(4) and 97(6) and paragraphs 1(3A), 3 to 7, 8AA, 12 and 13 of Schedule 4C were omitted.
(4) Section 87A of the 1992 Act applies for a tax year by virtue of subsection (3) before it applies for that year otherwise than by virtue of that subsection.
(5) If, by virtue of subsection (1) or (3), offshore income gains are treated as arising to a person, for the purposes of section 761 as it applies in relation to the offshore income gains treat the person as having made the disposal in question.”
(4) In subsection (6)—
(a) for “subsection (2) above” substitute “(3)”,
(b) for “accrued” substitute “arisen”, and
(c) omit “Chapter 2 of Part 13 of ITA 2007 or”.
94 After that section insert—
(1) Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad) applies in relation to an offshore income gain arising to a person resident or domiciled outside the United Kingdom as if the offshore income gain were income becoming payable to the person.
(2) Income treated as arising under that Chapter by virtue of subsection (1) is regarded as “foreign” for the purposes of section 726, 730 or 735 of that Act.
(3) Subsection (1) does not apply in relation to an offshore income gain if (and to the extent that) it is treated, by virtue of section 762(1), as arising to a person resident or ordinarily resident in the United Kingdom.
(4) The following provisions apply if section 762(2) applies in relation to an offshore income gain (“the relevant offshore income gain”).
(5) If—
(a) by virtue of section 762(3) an offshore income gain is treated as arising in a tax year to a person resident or ordinarily resident in the United Kingdom, and
(b) it is so treated by reason of the relevant offshore income gain (or part of it),
for that and subsequent tax years subsection (1) does not apply in relation to the relevant offshore income gain (or that part).
(6) If, by virtue of subsection (1) as it applies in relation to the relevant offshore income gain, income is treated under Chapter 2 of Part 13 of ITA 2007 as arising in a tax year, reduce (with effect from the following tax year) the OIG amount in question by the amount of the income.
(1) This section applies to income treated as arising under section 761(1) to an individual in a tax year 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) Treat the income as relevant foreign income of the individual.
(3) For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis)—
(a) treat any consideration obtained on the disposal of the asset as deriving from the income, and
(b) unless the consideration so obtained is of an amount equal to the market value of the asset, treat the asset as deriving from the income.
(4) In subsection (3)—
(a) “the asset” means the asset the disposal of which causes the income to be treated as arising, and
(b) “the disposal” means the disposal mentioned in paragraph (a).”
95 In Schedule 10 to TCGA 1992 (consequential amendments), omit paragraph 14(47)(c) and (48)(b) to (d).
96 In section 830(4) of ITTOIA 2005 (meaning of “relevant foreign income”), after paragraph (a) insert—
“(aa) section 762ZB(2) of ICTA (offshore income gains),”.
97 In section 734 of ITA 2007 (reduction in amount charged: previous capital gains tax charge), after subsection (4) insert—
“(5) References in this section to chargeable gains treated as accruing to an individual include offshore income gains treated as arising to the individual (see section 762 of ICTA).”
98 The amendments made by paragraphs 92 to 97 have effect for the tax year 2008-09 and subsequent tax years.
99 Paragraphs 120 and 121 apply in relation to offshore income gains as if—
(a) references to section 2(2) amounts were to OIG amounts,
(b) references to chargeable gains were to offshore income gains, and
(c) Step 1 of paragraph 120(2) provided that OIG amounts are to be calculated in accordance with—
(i) section 762(2) of ICTA (the reference in the second sentence of that Step to section 87(4) of TCGA 1992 being read as a reference to section 762(2) of ICTA), or
(ii) section 87(5) of TCGA 1992 as applied by section 762(3) of ICTA.
100 (1) This paragraph applies if—
(a) by virtue of section 87 or 89(2) of, or Schedule 4C to, TCGA 1992 as applied by section 762 of ICTA, income is treated under section 761 of ICTA as arising to an individual in the tax year 2008-09 or any subsequent tax year, and
(b) the individual is not domiciled in the United Kingdom in that year.
(2) The individual is not charged to income tax on the income if and to the extent that it is treated as arising by reason of—
(a) a capital payment received (or treated as received) by the individual before 6 April 2008, or
(b) the matching of any capital payment with the OIG amount for the tax year 2007-08 or any earlier tax year.
101 (1) This paragraph applies if—
(a) the trustees of a settlement have made an election under paragraph 126(1) (re-basing election),
(b) income is treated under section 761 of ICTA as arising to an individual in the tax year 2008-09 or any subsequent tax year (“the relevant tax year”) by reason of the matching, under section 87A of TCGA 1992 as applied by section 762 of ICTA, of an OIG amount with a capital payment received by the individual from the trustees, and
(c) the individual is resident or ordinarily resident, but not domiciled, in the United Kingdom in the relevant tax year.
(2) The individual is not charged to income tax on so much of the income as exceeds the relevant proportion of that income.
(3) Sub-paragraphs (9) to (18) of paragraph 126 (meaning of “the relevant proportion”) apply for the purposes of sub-paragraph (2) above as if—
(a) references to section 2(2) amounts were to OIG amounts,
(b) references to chargeable gains were to offshore income gains,
(c) references to allowable losses were omitted, and
(d) references to anything accruing were to it arising (and similar references were read accordingly).
102 (1) This paragraph applies if—
(a) in the tax year 2008-09 or any subsequent tax year, the trustees of a settlement (“the transferor settlement”) transfer all or part of the settled property to the trustees of another settlement (“the transferee settlement”),
(b) section 90 of TCGA 1992 applies in relation to the transfer,
(c) the trustees of the transferor settlement have made an election under paragraph 126(1),
(d) by virtue of the matching (under section 87A of TCGA 1992 as applied by section 762 of ICTA) of a capital payment with an OIG amount of the transferee settlement, income is treated under section 761 of ICTA as arising to an individual in a tax year (“the relevant tax year”), and
(e) the individual is resident or ordinarily resident, but not domiciled, in the United Kingdom in the relevant tax year.
(2) If paragraph 101 applies in relation to the transferee settlement, paragraph 126(9) as applied by paragraph 101(3) has effect as if the reference there to relevant assets included relevant assets within the meaning of paragraph 127(4) (as modified by sub-paragraph (4)(b) below).
(3) If paragraph 101 does not apply in relation to the transferee settlement, the individual is not charged to income tax on so much of the income mentioned in sub-paragraph (1)(d) above as exceeds the relevant proportion of that income.
(4) Sub-paragraphs (4) to (7) of paragraph 127 (meaning of “the relevant proportion”) apply for the purposes of sub-paragraph (3) above as if—
(a) references section 2(2) amounts were to OIG amounts,
(b) references to chargeable gains were to offshore income gains, and
(c) references to anything accruing were to it arising.
103 In section 13(2) of TCGA 1992 (attribution of gains to members of non-resident companies), for the words from “, who, if” to “and who” substitute “and”.
104 After section 14 of that Act insert—
(1) This section applies if—
(a) by virtue of section 13, part of a chargeable gain that accrues to a company on the disposal of an asset is treated as accruing to an individual in a tax year, and
(b) the individual is not domiciled in the United Kingdom in that year.
(2) The part of the chargeable gain treated as accruing to the individual (“the deemed chargeable gain”) is a foreign chargeable gain within the meaning of section 12 if (and only if) the asset is situated outside the United Kingdom.
(3) For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis)—
(a) treat any consideration obtained by the company on the disposal of the asset as deriving from the deemed chargeable gain, and
(b) unless the consideration so obtained is of an amount equal to the market value of the asset, treat the asset as deriving from the deemed chargeable gain.
(4) If—
(a) the deemed chargeable gain is a foreign chargeable gain (within the meaning of section 12),
(b) section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for the year mentioned in subsection (1), and
(c) any of the deemed chargeable gain is remitted to the United Kingdom in a tax year after that year,
the chargeable gain treated under section 12(2) as accruing may not be reduced or extinguished under section 13(8).”
105 The amendments made by paragraphs 103 and 104 have effect in relation to chargeable gains accruing on or after 6 April 2008.
106 TCGA 1992 is amended as follows.
107 In section 85(11) (disposal of interests in non-resident settlements), for the words from “there would” to the end substitute “chargeable gains would be treated under section 89(2) or paragraph 8 of Schedule 4C as accruing in the following year of assessment to a beneficiary who received a capital payment from the trustees of the settlement in that year.”
108 For section 87 substitute—
(1) This section applies to a settlement for a tax year (“the relevant tax year”) if the trustees are neither resident nor ordinarily resident in the United Kingdom in that year.
(2) Chargeable gains are treated as accruing in the relevant tax year to a beneficiary of the settlement who has received a capital payment from the trustees in the relevant tax year or any earlier tax year if all or part of the capital payment is matched (under section 87A as it applies for the relevant tax year) with the section 2(2) amount for the relevant tax year or any earlier tax year.
(3) The amount of chargeable gains treated as accruing is equal to—
(a) the amount of the capital payment, or
(b) if only part of the capital payment is matched, the amount of that part.
(4) The section 2(2) amount for a settlement for a tax year for which this section applies to the settlement is—
(a) the amount upon which the trustees of the settlement would be chargeable to tax under section 2(2) for that year if they were resident and ordinarily resident in the United Kingdom in that year, or
(b) if section 86 applies to the settlement for that year, the amount mentioned in paragraph (a) minus the total amount of chargeable gains treated under that section as accruing in that year.
(5) The section 2(2) amount for a settlement for a tax year for which this section does not apply to the settlement is nil.
(6) For the purposes of this section a settlement arising under a will or intestacy is treated as made by the testator or intestate at the time of death.
(1) This section supplements section 87.
(2) The following steps are to be taken for the purposes of matching capital payments with section 2(2) amounts.
Step 1
Find the section 2(2) amount for the relevant tax year.
Step 2
Find the total amount of capital payments received by the beneficiaries from the trustees in the relevant tax year.
Step 3
The section 2(2) amount for the relevant tax year is matched with—
if the total amount of capital payments received in the relevant tax year does not exceed the section 2(2) amount for the relevant tax year, each capital payment so received, and
otherwise, the relevant proportion of each of those capital payments.
“The relevant proportion” is the section 2(2) amount for the relevant tax year divided by the total amount of capital payments received in the relevant tax year.
Step 4
If paragraph (a) of Step 3 applies—
reduce the section 2(2) amount for the relevant tax year by the total amount of capital payments referred to there, and
reduce the amount of those capital payments to nil.
If paragraph (b) of that Step applies—
reduce the section 2(2) amount for the relevant tax year to nil, and
reduce the amount of each of the capital payments referred to there by the relevant proportion of that capital payment.
Step 5
Start again at Step 1 (unless subsection (3) applies).
If the section 2(2) amount for the relevant tax year (as reduced under Step 4) is not nil, read references to capital payments received in the relevant tax year as references to capital payments received in the latest tax year which—
is before the last tax year for which Steps 1 to 4 have been undertaken, and
is a tax year in which capital payments (the amounts of which have not been reduced to nil) were received by beneficiaries.
If the section 2(2) amount for the relevant tax year (as so reduced) is nil, read references to the section 2(2) amount for the relevant tax year as the section 2(2) amount for the latest tax year—
which is before the last tax year for which Steps 1 to 4 have been undertaken, and
for which the section 2(2) amount is not nil.
(3) This subsection applies if—
(a) all of the capital payments received by beneficiaries from the trustees in the relevant tax year or any earlier tax year have been reduced to nil, or
(b) the section 2(2) amounts for the relevant tax year and all earlier tax years have been reduced to nil.
(4) The effect of any reduction under Step 4 of subsection (2) is to be taken into account in any subsequent application of this section.
(1) This section applies if—
(a) chargeable gains are treated under section 87 as accruing to an individual in a tax year,
(b) section 809B, 809D or 809E (remittance basis) applies to the individual for that year, and
(c) the individual is not domiciled in the United Kingdom in that year.
(2) The chargeable gains are foreign chargeable gains within the meaning of section 12 (non-UK domiciled beneficiaries to whom remittance basis applies).
(3) For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis) treat relevant property or benefits as deriving from the chargeable gains.
(4) For the purposes of subsection (3) property or a benefit is “relevant” if the capital payment by reason of which the chargeable gains are treated as accruing consists of—
(a) the payment or transfer of the property or its becoming property to which section 60 applies, or
(b) the conferring of the benefit.
(1) For the purposes of sections 87 and 87A as they apply in relation to a settlement, no account is to be taken of a capital payment (or a part of a capital payment) within subsection (2).
(2) A capital payment is within this subsection if (and to the extent that) it is received (or treated as received) in a tax year from the trustees of the settlement by a company that—
(a) is not resident in the United Kingdom in that year, and
(b) would be a close company if it were resident in the United Kingdom,
(and is not treated under any of subsections (3) to (5) of section 96 as received by another person).”
109 (1) Section 88 (gains of dual resident settlements) is amended as follows.
(2) For subsection (2) substitute—
“(2) The section 2(2) amount for a tax year for which section 87 applies by virtue of this section is what it would be if the amount mentioned in section 87(4)(a) were the assumed chargeable amount.”
(3) Omit subsection (7).
110 (1) Section 89 (migrant settlements) is amended as follows.
(2) In subsection (1), for “section 87 if” substitute “sections 87 and 87A if”.
(3) For subsections (2) and (3) substitute—
“(1A) Subsection (2) applies to a settlement if—
(a) a non-resident period is succeeded by a resident period, and
(b) in relation to the last tax year in the non-resident period (“the last non-resident tax year”), section 87A(3) applied by virtue of paragraph (a) of that provision (exhaustion of capital payments).
(2) Chargeable gains are treated as accruing in a tax year (in the resident period) to a beneficiary of the settlement who receives a capital payment from the trustees in that year if all or part of the capital payment is matched (under section 87A as it applies for that year) with the section 2(2) amount for the last non-resident tax year or any earlier tax year.
Finance Act 2008