Office of Public Sector Information
(1) Section 831 of ITA 2007 (foreign income of individuals in United Kingdom for temporary purpose) is amended as follows.
(2) In subsection (1), for paragraph (b) substitute—
“(b) during the tax year in question the individual spends (in total) less than 183 days in the United Kingdom.”
(3) After that subsection insert—
“(1A) In determining whether an individual is within subsection (1)(b) treat a day as a day spent by the individual in the United Kingdom if (and only if) the individual is present in the United Kingdom at the end of the day.
(1B) But in determining that issue do not treat as a day spent by the individual in the United Kingdom any day on which the individual arrives in the United Kingdom as a passenger if—
(a) the individual departs from the United Kingdom on the next day, and
(b) during the time between arrival and departure the individual does not engage in activities that are to a substantial extent unrelated to the individual’s passage through the United Kingdom.”
(4) In section 832 of that Act (employment income of individuals in United Kingdom for temporary purpose), after subsection (1) insert—
“(1A) In determining whether an individual is within subsection (1)(b) treat a day as a day spent by the individual in the United Kingdom if (and only if) the individual is present in the United Kingdom at the end of the day.
(1B) But in determining that issue do not treat as a day spent by the individual in the United Kingdom any day on which the individual arrives in the United Kingdom as a passenger if—
(a) the individual departs from the United Kingdom on the next day, and
(b) during the time between arrival and departure the individual does not engage in activities that are to a substantial extent unrelated to the individual’s passage through the United Kingdom.”
(5) Section 9 of TCGA 1992 (residence, including temporary residence) is amended as follows.
(6) In subsection (3), for the words after “if and only if” substitute “the individual spends (in total) at least 183 days in the United Kingdom.”
(7) Insert at the end—
“(5) In determining for the purposes of subsection (3) above whether an individual spends (in total) at least 183 days in the United Kingdom treat a day as a day spent by the individual in the United Kingdom if (and only if) the individual is present in the United Kingdom at the end of the day.
(6) But in determining that issue for those purposes do not treat as a day spent by the individual in the United Kingdom any day on which the individual arrives in the United Kingdom as a passenger if—
(a) the individual departs from the United Kingdom on the next day, and
(b) during the time between arrival and departure the individual does not engage in activities that are to a substantial extent unrelated to the individual’s passage through the United Kingdom.”
(8) The amendments made by this section have effect for the tax year 2008-09 and subsequent tax years.
Schedule 7 contains provision for and in connection with the revision of the remittance basis.
Schedule 8 contains provision about the rates of research and development relief and vaccine research relief.
(1) Paragraph 5 of Schedule 20 to FA 2000 (R&D tax relief: staffing costs) is amended as follows.
(2) In sub-paragraph (1)(b), after “company;” insert—
“(ba) the compulsory contributions paid by the company in respect of benefits for directors or employees of the company under the social security legislation of an EEA State (other than the United Kingdom) or Switzerland;”.
(3) Before sub-paragraph (1A) insert—
“(1ZB) In sub-paragraph (1)(ba) “social security legislation” means legislation relating to any of the branches of social security listed in Article 3(1) of Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the co-ordination of social security systems (as amended from time to time).”
(4) Schedule 13 to FA 2002 (vaccine research relief) is amended as follows.
(5) In paragraph 2 (qualifying expenditure)—
(a) in sub-paragraph (1)(a), at the end insert “or”,
(b) omit sub-paragraph (1)(c) (and the “or” before it), and
(c) omit sub-paragraph (4).
(6) In paragraph 6 (qualifying expenditure on sub-contracted research and development), omit—
(a) in sub-paragraph (1), the second sentence, and
(b) sub-paragraph (3) (expenditure on research sub-contracted to a charity, a university or a scientific research organisation).
(7) Omit paragraph 12 (qualifying expenditure on contributions to independent research and development).
(8) Omit paragraph 25 (refunds of qualifying expenditure on contributions to independent research and development).
(9) Accordingly, in paragraph 3 of Schedule 8 to this Act (changes to rates of vaccine research relief), omit sub-paragraphs (2)(e) and (3)(d).
(10) The amendments made by this section have effect in relation to expenditure incurred on or after such day as the Treasury may by order appoint.
(11) Paragraph 10(4) of Schedule 13 to FA 2002 (time limit for giving notice of election for connected persons treatment) does not apply to a notice of an election under that paragraph in relation to sub-contractor payments if—
(a) the sub-contractor falls within paragraph 6(3) of that Schedule (repealed by this section) (charity, university or scientific research organisation), and
(b) the notice is given before the end of the period of 12 months beginning with the day appointed under subsection (10).
Schedule 9 contains provision preventing a company from claiming research and development relief and vaccine research relief if it is not a going concern.
(1) A company is only entitled to R&D relief in respect of expenditure attributable to a research and development project if, or to the extent that, at that time, the total R&D aid in respect of expenditure by the company attributable to the project would not exceed 7.5 million euros.
(2) In subsection (1)—
“R&D relief” means any relief or tax credit under—
Schedule 20 to FA 2000 (tax relief for expenditure by SMEs on research and development), or
Schedule 13 to FA 2002 (tax relief for expenditure on vaccine research etc), and
“total R&D aid” means the total R&D aid calculated—
in accordance with Part 1 of Schedule 10, and
as if a claim or election had been made for the R&D relief mentioned in subsection (1).
(3) The Treasury may by regulations—
(a) increase the amount specified in subsection (1), and
(b) amend Part 1 of Schedule 10.
(4) Part 2 of Schedule 10 contains amendments consequential on this section.
(5) Subsections (1) to (4) and that Schedule come into force on such day as the Treasury may by order appoint.
(1) In paragraph 21 of Schedule 13 to FA 2002 (tax relief for expenditure by large companies on vaccine research etc), after sub-paragraph (3) insert—
“(3A) A claim under this paragraph must include a declaration that the availability of the relief claimed has resulted in an increase in—
(a) the amount, scope or speed of the research and development undertaken by the company, or
(b) the company’s expenditure on research and development.”
(2) The amendment made by subsection (1) has effect in relation to claims made on or after such day as the Treasury may by order appoint.
(1) In section 158(2)(b) of ITA 2007 (form and amount of EIS relief), for “£400,000” substitute “£500,000”.
(2) The amendment made by subsection (1) has effect for—
(a) such tax year as the Treasury may by order specify, and
(b) all tax years subsequent to the specified tax year.
(3) An order under subsection (2) may specify the tax year in which it is made.
(4) Section 1014(4) of ITA 2007 (orders etc subject to annulment) does not apply in relation to an order under subsection (2).
Schedule 11 contains provision about venture capital schemes.
(1) Part 3 of Schedule 5 to ITEPA 2003 (enterprise management incentives: qualifying companies) is amended as follows.
(2) In paragraph 8 (qualifying companies: introduction), omit the “and” at the end of the entry relating to paragraph 12, and after that entry insert—
“number of employees (see paragraph 12A), and”.
(3) After paragraph 12 insert—
12A (1) The number of employees requirement in the case of a single company is that the full-time equivalent employee number for it is less than 250.
(2) The number of employees requirement in the case of a parent company is that the sum of—
(a) the full-time equivalent employee number for it, and
(b) the full-time equivalent employee numbers for each of its qualifying subsidiaries,
is less than 250.
(3) The full-time equivalent employee number for a company is calculated as follows—
Step 1
Find the number of full-time employees of the company.
Step 2
Add, for each employee of the company who is not a full-time employee, such fraction as is just and reasonable.
The result is the full-time equivalent employee number.
(4) In this paragraph references to an employee—
(a) include a director, but
(b) do not include—
(i) an employee on maternity or paternity leave, or
(ii) a student on vocational training.”
(4) In paragraph 16 (excluded activities), after paragraph (i) insert—
“(ia) shipbuilding (see also paragraph 20A);
(ib) producing coal (see also paragraph 20B);
(ic) producing steel (see also paragraph 20C);”.
(5) After paragraph 20 insert—
20A In paragraph 16(ia) “shipbuilding” has the same meaning as in the Framework on state aid to shipbuilding (2003/C 317/06), published in the Official Journal on 30 December 2003.
20B (1) This paragraph supplements paragraph 16(ib).
(2) “Coal” has the meaning given by Article 2 of Council Regulation (EC) No. 1407/2002 (state aid to coal industry).
(3) The production of coal includes the extraction of it.
20C In paragraph 16(ic) “steel” means any of the steel products listed in Annex 1 to the Guidelines on national regional aid (2006/C 54/08), published in the Official Journal on 4 March 2006.”
(6) The amendments made by this section have effect in relation to options granted on or after the day on which this Act is passed.
(1) Schedule 12 contains provision about tax credits for certain foreign distributions.
(2) The amendments made by that Schedule have effect for the tax year 2008-09 and subsequent tax years.
(1) Section 13 of ICTA (small companies' relief) is amended as follows.
(2) In the second sentence of subsection (4) (meaning of “control” for purposes of definition of “associated company”), insert at the end “except that, in the application of subsection (6) of that section in relation to the company (“the taxpayer company”) and another company or companies for the purposes of this section, the references to an associate of a person (“P”) include a partner of the person only if the condition in subsection (4A) below is met.”
(3) After that subsection insert—
“(4A) The condition referred to in subsection (4) above is that relevant tax planning arrangements have at any time had effect in relation to the taxpayer company (whether in connection with its formation or otherwise).
(4B) In subsection (4A) above “relevant tax planning arrangements” means arrangements which—
(a) involve P and the partner, and
(b) secure a relevant tax advantage.
(4C) In subsection (4B) above—
“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), other than any guarantee, security or charge given to or taken by a bank, and
“relevant tax advantage” means a reduction of the taxpayer company’s liability to corporation tax by virtue of an increase in relief under this section.”
(4) The amendments made by this section are treated as having come into force on 1 April 2008.
(1) Schedule 13 contains provisions about company gains from investment life insurance contracts.
(2) Schedule 14 contains amendments and repeals consequential on that Schedule etc.
(1) Schedule 15 contains provision about the effect of certain changes in trading stock on the calculation of profits of trades for the purposes of income tax or corporation tax.
(2) The amendments made by that Schedule have effect in relation to changes in trading stock occurring on or after 12 March 2008.
(3) In subsection (2) “change in trading stock” means—
(a) in relation to new section 172B of ITTOIA 2005, or paragraph 6 of Schedule 15, an appropriation of trading stock,
(b) in relation to new section 172C of ITTOIA 2005, or paragraph 7 of Schedule 15, a thing becoming trading stock,
(c) in relation to new section 172D of ITTOIA 2005, or paragraph 8 of Schedule 15, a disposal of trading stock, and
(d) in relation to new section 172E of ITTOIA 2005, or paragraph 9 of Schedule 15, an acquisition of trading stock.
Schedule 16 contains provision about—
(a) the eligibility of an investment manager to be the UK representative of a non-resident, or an agent of independent status in relation to a non-resident, and
(b) profits or income of non-residents that are to be disregarded if derived from certain investment transactions carried out by investment managers.
(1) The Commissioners for Her Majesty’s Revenue and Customs may by regulations—
(a) modify section 17 of TMA 1970 (banks etc required to report interest payments) in relation to interest paid or credited in respect of a relevant dormant account,
(b) modify Chapters 2 and 3 of Part 15 of ITA 2007 (deduction of income tax on interest payments at source) in relation to such interest, and
(c) provide that, for the purposes of Chapter 2 of Part 4 of ITTOIA 2005 (charge to income tax on interest), such interest is to be treated as not being paid until the time (if any) at which the balance of the dormant account is paid out following a claim made by virtue of section 1(2)(b) or 2(2)(b) of the 2008 Act.
(2) A relevant dormant account is a dormant account the balance of which is to be, or has been, transferred—
(a) to an authorised reclaim fund, with the result that section 1 of the 2008 Act will apply, or applies, in relation to the account, or
(b) to an authorised reclaim fund and one or more charities, with the result that section 2 of the 2008 Act will apply, or applies, in relation to the account.
(3) Interest paid or credited in respect of a relevant dormant account includes interest paid or credited by a person who administers the account on behalf of an authorised reclaim fund after the balance has been transferred.
(4) “The 2008 Act” means the Dormant Bank and Building Society Accounts Act 2008; and terms used in this section and in that Act have the same meaning in this section as in that Act.
(5) Regulations under subsection (1) are to be made by statutory instrument.
(6) A statutory instrument containing regulations under that subsection is subject to annulment in pursuance of a resolution of the House of Commons.
(7) In TCGA 1992, after section 26 insert—
(1) This section applies where the balance of a dormant account held by a person with a bank or building society is transferred—
(a) to an authorised reclaim fund, with the result that section 1 of the Dormant Bank and Building Society Accounts Act 2008 applies in relation to the account, or
(b) to an authorised reclaim fund and one or more charities, with the result that section 2 of that Act applies in relation to the account.
(2) For the purposes of this Act—
(a) the transfer is not to be treated as involving any acquisition or disposal of an asset, and
(b) the person’s rights under Part 1 of that Act are to be treated as the same asset as the original rights, acquired as the original rights were acquired and having the same characteristics as those rights.
(3) “The original rights” are the person’s rights against the bank or building society immediately before the transfer.
(4) Terms used in this section and in the Dormant Bank and Building Society Accounts Act 2008 have the same meaning in this section as in that Act.”
(8) Subsection (7) comes into force in accordance with provision made by order made by the Treasury.
In section 701 of ITTOIA 2005 (investment plan regulations: general and supplementary), insert at the end—
“(4) They may include provision having effect in relation to times before they are made if the provision does not impose or increase any liability to tax.
(5) They may make different provision for different cases or circumstances.”
(1) The Treasury may by regulations make provision about the treatment of participants in an offshore fund for the purposes of enactments relating to income tax, capital gains tax or corporation tax.
(2) In subsection (1)—
“enactment” includes subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)), and
“offshore fund” has the same meaning as in Chapter 5 of Part 17 of ICTA (see sections 756A to 756C of that Act).
(3) Regulations under subsection (1) are to be made by statutory instrument.
(4) The first regulations under subsection (1) may not be made unless a draft of the instrument containing them has been laid before, and approved by a resolution of, the House of Commons.
(5) Any other statutory instrument containing regulations under subsection (1) is subject to annulment in pursuance of a resolution of the House of Commons.
(6) In Chapter 5 of Part 17 of ICTA (offshore funds)—
(a) in section 756A (general definition of offshore fund), omit subsection (4),
(b) in section 756B (treatment of umbrella funds)—
(i) in subsection (1), omit the words following paragraph (b), and
(ii) omit subsection (3),
(c) in section 756C (treatment of funds comprising more than one class of interest)—
(i) in subsection (2), omit paragraph (b) (and the “or” before it), and
(ii) omit subsection (3),
(d) omit sections 757 to 763 (further provision about offshore funds), and
(e) omit Schedules 27 and 28 (distributing funds and computation of offshore gains).
(7) In consequence of subsection (6), omit—
(a) paragraph 12 of Schedule 13 to FA 1988,
(b) paragraphs 10 and 11 of Schedule 14 to FA 1990,
(c) paragraph 14(43) to (45), (47) to (49) and (63) of Schedule 10 to TCGA 1992,
(d) section 134(4) of FA 1995,
(e) in paragraph 6 of Schedule 28 to FA 1996, “and in paragraph 5(5) of Schedule 27 to that Act”,
(f) paragraph 4(5) and (6) of Schedule 9 to FA 2002,
(g) paragraphs 1(1), 2(1), 4, 5, 6(3) to (6), 7 to 9, 14(2), (3), (5)(b) and (7), 15 and 16(1) of Schedule 26 to FA 2004,
(h) paragraphs 308, 309 and 350(4) of Schedule 1 to ITTOIA 2005,
(i) section 23 of F(No.2)A 2005,
(j) paragraph 47(1) of Schedule 12 to FA 2006,
(k) paragraphs 179(2)(a) and (b), 180 and 181 of Schedule 1 to ITA 2007, and
(l) in this Act, paragraphs 92 to 94 of Schedule 7 and paragraph 30 of Schedule 17.
(8) Subsections (6) and (7) come into force on such day as the Treasury may appoint by order made by statutory instrument.
(9) An order under subsection (8)—
(a) may appoint different days for different purposes, and
(b) may include savings.
(1) Regulations under section 41 may, in particular—
(a) make provision for an offshore fund, or a trustee or officer of an offshore fund, to make elections relating to the treatment of participants in the offshore fund for the purposes of income tax, capital gains tax or corporation tax,
(b) make provision about—
(i) the provision of information to Her Majesty’s Revenue and Customs,
(ii) the provision of information to participants,
(iii) the preparation of accounts, and
(iv) the keeping of records,
by offshore funds or trustees or officers of offshore funds, and
(c) make other provision about the administration of offshore funds.
(2) Regulations under section 41 may, in particular, make special provision about the treatment of participants in—
(a) an umbrella fund (within the meaning of section 756B of ICTA), and
(b) an offshore fund which comprises a class of interest in another fund (within the meaning of section 756C of ICTA).
(3) Regulations under section 41 may include provision consequential on the repeals made by that section.
(4) Regulations under section 41 may, in particular—
(a) provide for Her Majesty’s Revenue and Customs to exercise a discretion in dealing with any matter,
(b) make provision by reference to standards or other documents issued by any person,
(c) modify an enactment (whenever passed or made),
(d) make different provision for different cases or different purposes, and
(e) make incidental, consequential, supplementary or transitional provision.
(5) Regulations under section 41 may, in particular, make provision having effect—
(a) in the case of provision relating to income tax or capital gains tax, in relation to the tax year current on the day on which the regulations are made, and
(b) in the case of provision relating to corporation tax, in relation to accounting periods current on that day.
(6) In this section—
“enactment” and “offshore fund” have the same meaning as in section 41, and
“modify” includes amend, repeal or revoke.
Schedule 17 contains provisions relating to insurance companies etc.
Schedule 18 contains provision relating to friendly societies.
(1) In ITEPA 2003, after section 100 insert—
(1) This Chapter does not apply to living accommodation outside the United Kingdom provided by a company for a director or other officer of the company (“D”) or a member of D’s family or household if—
(a) the company is wholly owned by D or D and other individuals (and no interest in the company is partnership property), and
(b) the company has been the holding company of the property at all times after the relevant time.
Finance Act 2008