673 Successive interests: payments in respect of limited interests followed by absolute interests
(1) This section applies if—
(a) two or more interests in the whole or part of the residue of an estate are held successively during the administration period by different persons,
(b) each later interest arises or is created on the cessation of the previous interest otherwise than by death,
(c) at least one of the interests is an absolute interest, and
(d) at least one of the interests preceding that interest is a limited interest.
(2) A sum to which a person (“P”) with such an absolute interest is entitled in respect of any such limited interest which is paid while P has the absolute interest is treated as paid in respect of the absolute interest (and not the limited interest).
(3) Subsection (4) applies if—
(a) P's absolute interest ceases during the administration period, and
(b) a sum to which P is entitled in respect of any such limited interest—
(i) is paid after the absolute interest ceases but before the end of the administration period, or
(ii) remains payable at the end of it.
(4) This Chapter applies as respects any such sum as if the limited interest had continued to subsist while that absolute interest subsisted and had been held by P.
(5) Subsection (4) is subject to subsection (6).
(6) For the purposes only of section 668 (reduction in share of residuary income of estate), any such sum is treated as paid or payable in respect of the absolute interest.
674 Successive interests: holders of limited interests
(1) This section applies if—
(a) two or more interests in the whole or part of the residue of an estate are held successively during the administration period by different persons,
(b) the earlier or, if there are more than two, the earliest of the interests is a limited interest, and
(c) each later interest arises or is created on the cessation of the previous interest otherwise than by death.
(2) Income is treated as arising from a limited interest in the whole or part of the residue of the estate in a tax year in cases A, B and C.
(3) Case A is where—
(a) one of the successive interests subsists at the beginning of the tax year,
(b) a sum is paid in respect of one of the interests in that year and before the end of the administration period, and
(c) a person who has or has had one of the interests which is a limited interest (“a limited holder”) is entitled to receive the payment.
(4) Case B is where—
(a) the tax year is the final tax year,
(b) one of the successive interests subsists at the beginning of that year,
(c) a sum remains payable in respect of one of the interests at the end of the administration period, and
(d) a limited holder is entitled to receive the payment.
(5) Case C is where—
(a) the tax year is a year before the final tax year,
(b) the last of the successive interests ceases in the tax year,
(c) a sum is either—
(i) paid in respect of one of the interests in a later tax year but before the end of the administration period, or
(ii) remains payable in respect of it at the end of that period, and
(d) a limited holder is entitled to receive the payment.
675 Basic amount of estate income: successive limited interests
The basic amount of estate income relating to a limited interest within section 674 for a tax year is the total of the sums within section 674(3)(b), (4)(c) and (5)(c) for that year.
(1) Such apportionments as are just and reasonable are to be made for the purposes of this Chapter if—
(a) the part of a residuary estate in which an interest within any of the provisions specified in subsection (2) subsists does not wholly correspond with the part in which another such interest held successively subsists, or
(b) one of those interests is in the whole of the residuary estate and the other is only in part of it.
(2) The provisions are—
section 671 (successive absolute interests),
section 672 (successive interests: assumed income entitlement of holder of absolute interest following limited interest),
section 673 (successive interests: payments in respect of limited interests followed by absolute interests),
section 674 (successive interests: holders of limited interest), and
section 675 (basic amount of estate income: successive limited interests).
677 Relief where UK income tax borne by foreign estate: absolute interests
(1) This section applies if—
(a) an estate is a foreign estate in relation to a tax year,
(b) United Kingdom income tax has been charged on a person for the tax year on estate income treated as arising from the estate under section 652 (estate income: absolute interests in residue), and
(c) United Kingdom income tax has already been borne by part of the aggregate income of the estate for the tax year.
(2) If the person makes a claim under this section, the income tax charged on the person on that estate income is to be reduced by an amount equal to—
T
×
A
B
where—
T is the income tax charged on the person,
A is so much of the aggregate income of the estate as has already borne United Kingdom income tax for the tax year, and
B is the aggregate income of the estate for the tax year.
(3) The tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
678 Relief where UK income tax borne by foreign estate: limited and discretionary interests
(1) This section applies if—
(a) an estate is a foreign estate in relation to a tax year,
(b) United Kingdom income tax has been charged on a person for the tax year on estate income from the estate treated as arising under—
(i) section 654 (estate income: limited interests in residue), or
(ii) section 655 (estate income: discretionary interests in residue), and
(c) United Kingdom income tax has already been borne by part of the aggregate income of the estate for the tax year.
(2) If the person makes a claim under this section, the income tax charged on the person on that estate income is to be reduced by an amount equal to—
T
×
A
-
C
B
-
C
where—
T is the income tax charged on the person,
A is so much of the aggregate income of the estate as has already borne United Kingdom income tax for the tax year,
B is the aggregate income of the estate for the tax year, and
C is the amount of United Kingdom income tax already borne by the aggregate income of the estate for the tax year.
(3) The tax reduction under this section is given effect at Step 6 of the calculation in section 23 of ITA 2007.
679 Income from which basic amounts are treated as paid
(1) The part of the aggregate income of the estate from which a basic amount is treated as paid is determined by applying assumptions A and B in that order.
(2) Assumption A is that if there are different persons with interests in the residue of the estate, payments in respect of their basic amounts are paid out of the different parts of the aggregate income of the estate in such proportions as are just and reasonable for their different interests.
(3) Assumption B is that payments are made from those parts in descending order, starting with the income bearing income tax at the highest rate and ending with the income bearing income tax at the lowest rate (subject to subsection (3A)).
(3A) For the purposes of assumption B, where those parts include—
(a) income bearing income tax at 0% by virtue of section 680(1A), and
(b) other income bearing income tax at 0%,
payments are to be made from income within paragraph (a) after income within paragraph (b).
(4) If some, but not all, of the aggregate income of the estate is income within section 680, assumption C is applied before assumptions A and B.
(5) Assumption C is that the basic amount is paid from income that is not within section 680 before it is paid from income within that section.
(6) Assumptions A and B then apply—
(a) first to determine the part of the income not within that section from which the basic amount is paid, and
(b) then to determine the part of the income within that section from which the basic amount is paid.
679A Income from which sums within section 668(1)(b) are treated as paid
(1) The part of the aggregate income of the estate from which a sum within section 668(1)(b) is treated as paid is determined by applying assumptions A and B in that order.
(2) Assumption A is that if there are different persons with an absolute interest in the residue of the estate, such apportionments of the aggregate income of the estate in respect of those interests are to be made as are just and reasonable for the different interests.
(3) Assumption B is that sums are paid from the income to which a person’s share of the residuary estate relates in descending order, starting with the income bearing income tax at the highest rate and ending with the income bearing income tax at the lowest rate (subject to subsection (3A)).
(3A) For the purposes of assumption B, where that income includes—
(a) income bearing income tax at 0% by virtue of section 680(1A), and
(b) other income bearing income tax at 0%,
sums are to be paid from income within paragraph (a) after income within paragraph (b).
(4) If some, but not all, of the aggregate income of the estate is income within section 680, assumption C is applied before assumptions A and B.
(5) Assumption C is that the basic amount is paid from income that is not within section 680 before it is paid from income within that section.
(6) Assumptions A and B then apply—
(a) first to determine the part of the income not within that section from which the basic amount is paid, and
(b) then to determine the part of the income within that section from which the basic amount is paid.
(1) This section has effect for the purposes of—
section 663 (the applicable rate for grossing up basic amounts of estate income),
section 670 (applicable rate for determining assumed income entitlement (UK estates)), ...
section 679 (income from which basic amounts are treated as paid) , and
section 679A (income from which sums within section 668(1)(b) are treated as paid).
(1A) If, in the case of a UK estate, the aggregate income of the estate for a tax year is equal to or less than the de minimis estates amount (within the meaning of section 24B of ITA 2007), the aggregate income of the estate for that tax year is treated as bearing income tax at 0%.
(2) If—
(a) subsection (1A) does not apply to treat the aggregate income of the estate for a tax year as bearing income tax at 0%, and
(b) the aggregate income of the estate for that tax year includes a sum within subsection (2A) or (4),
the sum is treated as bearing income tax at the rate specified for it in that subsection.
(2A) A sum that is part of the aggregate income of the estate because of falling within section 664(2)(c) (stock dividends) or (d) (release of loans to participator in close company: loans and advances to persons who die) is treated as bearing income tax at 0%.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) A sum that is part of the aggregate income of the estate because of falling within section 664(2)(e) (gains from life insurance contracts etc.) is treated as bearing income tax at the savings basic rate.
(5) Income tax treated as borne under section 656(3) or 657(4) (gross amount of estate income treated as bearing tax at the applicable rate) is not repayable so far as the basic amount of the estate income in question is paid from sums within this section or from aggregate income treated as bearing income tax at 0% by virtue of subsection (1A).
(1) This section applies to estate income that—
(a) by virtue of section 663 (applicable rate for grossing up basic amounts of estate income) is treated as bearing income tax at the ordinary dividend rate, or
(b) by virtue of that section and section 680(2A) (income treated as bearing income tax: dividends and loans to a participator in close company) is treated as bearing income tax at 0%.
(2) The income is treated as being dividend income.
(1) This section applies to estate income relating to a person’s interest in the residue of an estate so far as that interest relates to income that—
(a) falls within section 664(2)(a) (income of personal representatives charged to UK income tax), and
(b) is savings income (see section 18 of ITA 2007).
(2) The income is treated as being savings income.
(1) This section applies to estate income relating to a person’s interest in the residue of an estate so far as that interest relates to income that—
(a) falls within section 664(2)(a) (income of personal representatives charged to UK income tax), and
(b) is property income (see section 17A of ITA 2007).
(2) The income is treated as being property income.
(1) For the purposes of this Chapter—
(a) a transfer of assets, or
(b) the appropriation of assets by personal representatives to themselves,
is treated as the payment of an amount equal to the assets' value at the date of transfer or appropriation.
(2) The set off or release of a debt is treated for the purposes of this Chapter as the payment of an amount equal to it.
(3) If at the end of the administration period—
(a) there is an obligation to transfer assets to any person, or
(b) personal representatives are entitled to appropriate assets to themselves,
an amount equal to the assets' value at that time is treated as payable then for the purposes of this Chapter.
(4) If at the end of the administration period—
(a) there is an obligation to release or set off a debt owed by any person, or
(b) personal representatives are entitled to release or set off a debt in their own favour,
a sum equal to the debt is treated as payable then for the purposes of this Chapter.
682 Assessments, adjustments and claims after the administration period
(1) This subsection applies if after the administration period ends it is apparent that a person is liable for income tax on estate income for any tax year who previously appeared not to be so liable or to be liable for tax on a lesser amount.
(2) If subsection (1) applies—
(a) the person may be assessed and taxed for the tax year, and
(b) any relief or additional relief to which the person may be entitled for the tax year is to be allowed if a claim is made.
(3) This subsection applies if after the administration period ends it is apparent that a person who previously appeared to be liable for income tax on estate income for any tax year is not so liable or is liable for tax on a lesser amount.
(4) If subsection (3) applies—
(a) all necessary adjustments and repayments of income tax for the tax year are to be made, and
(b) if the person has been allowed relief which exceeds the relief that could have been given by reference to the amount actually charged for the tax year, income tax is charged on the person for that year under this subsection on the excess.
(4A) The excess charged under subsection (4)(b) is treated as an amount of income for income tax purposes, except so far as it represents a tax reduction given effect at Step 6 of the calculation in section 23 of ITA 2007.
(5) An assessment or adjustment made for the purposes of this Chapter or a claim made as a result of this Chapter may be made after the end of the period otherwise allowed if it is made on or before the third anniversary of the normal self-assessment filing date for the tax year in which the administration period ends.
(1) If a person within subsection (2) requests it in writing, a personal representative of a deceased person must provide the person with a statement showing—
(a) the amount treated as estate income arising from the person's interest in the whole or part of the deceased person's estate for which the person is liable to income tax for a tax year, and
(b) the amount of any tax at the applicable rate which any such amount is treated as having borne.
(2) A person is within this subsection if—
(a) the person has or has had an absolute or limited interest in the whole or part of the residue of the estate, or
(b) estate income has arisen to the person from a discretionary interest the person has or has had in the whole or part of the residue of the estate.
(3) A statement under subsection (1) must be in writing.
(4) The duty to comply with a request under this section is enforceable by the person who made it.
683 Charge to tax on annual payments not otherwise charged
(1) Income tax is charged under this Chapter on annual payments that are not charged to income tax under or as a result of any other provision of this Act or any other Act.
(2) Subsection (1) does not apply to annual payments that would be charged to income tax under or as a result of another provision but for an exemption.
(3) The frequency with which payments are made is ignored in determining whether they are annual payments for the purposes of this Chapter.
(4) For exemptions, see in particular—
(a) sections 727 to 730 (certain annual payments by individuals),
(b) section 731 (periodical payments of personal injury damages),
(c) section 732 (compensation awards),
(d) section 734 (payments from trusts for injured persons),
(e) sections 735 to 743 (health and employment insurance payments),
(f) sections 744 to 747 (payments to adopters),
(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i) section 776 (scholarship income).
(1) Tax is charged under this Chapter on the full amount of the annual payments arising in the tax year.
(2) Subsection (1) is subject to Part 8 (foreign income: special rules).
(3) The amount charged under this Chapter in the case of certain payments made by trustees in the exercise of a discretion is subject to section 494 of ITA 2007(grossing up of discretionary payments from trusts).
(1) This section applies if—
(a) a person receives an annual payment in respect of income from the trustees of a settlement,
(b) the payment is made in the exercise of a discretion (whether of the trustees of the settlement or any other person), and
(c) a settlor is charged to tax under section 619(1) on the income arising to the trustees of the settlement (whether in the current year of assessment or in a previous year of assessment) out of which the annual payment is made.
(2) This section applies only in respect of that proportion of the annual payment which corresponds to the proportion of the total income arising to the trustees of the settlement in respect of which a settlor is chargeable to tax under section 619(1).
(3) If and in so far as this section applies, the recipient of the annual payment shall be treated for the purposes of this Chapter as having paid income tax at the applicable rate in respect of the annual payment.
(3A) For the purposes of subsection (3), the “applicable rate” means—
(a) in the case of a Scottish taxpayer, the highest Scottish rate,
(b) in the case of a Welsh taxpayer, the Welsh additional rate, or
(c) in any other case, the additional rate.
(4) But—
(a) tax which the recipient is treated by virtue of this section as having paid is not repayable,
(b) tax which the recipient is treated by virtue of this section as having paid may not be taken into account in relation to a tax liability of the recipient in respect of any other income of his, . . .
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) If the recipient of the annual payment is a settlor in relation to the settlement, if and in so far as this section applies the annual payment shall not be treated as his income for the purposes of the Income Tax Acts (and subsection (3) does not apply).
(5A) If the recipient of the annual payment is treated by subsection (3) as having paid income tax in respect of the annual payment, the amount of the payment is treated as the highest part of the recipient's total income for all income tax purposes except the purposes of sections 535 to 537 (gains from contracts for life insurance etc: top slicing relief).
(5B) See section 1012 of ITA 2007 (relationship between highest part rules) for the relationship between—
(a) the rule in subsection (5A), and
(b) other rules requiring particular income to be treated as the highest part of a person's income.
(6) Sections 494 and 495 of ITA 2007 shall not apply in relation to an annual payment if and in so far as this section applies.
(1) In accordance with section 848 of ITA 2007, a sum representing income tax deducted under Chapter 6 of Part 15 of that Act from an annual payment within this Chapter is treated as income tax paid by the recipient . . .
(2) See also section 494(3) of ITA 2007(sum treated as deducted from payments made under a discretionary trust treated as income tax paid by the person to whom the payment is made or the settlor).
(1) Income tax is charged under this Chapter on income from any source that is not charged to income tax under or as a result of any other provision of this Act or any other Act.
(2) Subsection (1) does not apply to annual payments or to income falling within Chapter 2A of Part 4.
(3) Subsection (1) does not apply to income that would be charged to income tax under or as a result of another provision but for an exemption.
(4) The definition of “income” in section 878(1) does not apply for the purposes of this section.
(5) For exemptions from the charge under this Chapter, see in particular—
section 768 (commercial occupation of woodlands), and
section 779 (gains on commodity and financial futures).
(1) Tax is charged under this Chapter on the ... amount of the income arising in the tax year.
(2) Subsection (1) is subject to—
(za) Chapter 1 of Part 6A (which gives relief on relevant income which may consist of or include income chargeable under this Chapter: see, in particular, sections 783AB, 783AC, 783AG and 783AJ),
(a) Chapter 1 of Part 7 (which provides relief on income from the use of furnished accommodation in an individual's only or main residence: see, in particular, sections 794 and 798),
(b) Chapter 2 of that Part (which provides relief on income from the provision by an individual of qualifying care: see, in particular, sections 814 and 817), and
(c) Part 8 (foreign income: special rules).
(1) This section applies if an individual is temporarily non-resident.
(2) Distributions within subsection (3) are to be treated for the purposes of this Chapter as if they had been received by the individual, or as if the individual had become entitled to them, in the period of return.
(3) A distribution is within this subsection if—
(a) the individual receives or becomes entitled to it in the temporary period of non-residence,
(b) it is a distribution of a company that is a close company or that would be a close company if the company were UK resident,
(c) the individual receives or becomes entitled to the distribution by virtue of being at a relevant time—
(i) a material participator in the company, or
(ii) an associate of a material participator in the company, and
(d) ignoring this section, the individual—
(i) is not liable for tax under this Chapter in respect of the distribution, but
(ii) would have been so liable if the individual had received the distribution, or become entitled to it, in the period of return.
(4) For the purposes of subsection (3)—
(a) “associate” and “participator” have the same meanings as in Part 10 of CTA 2010 (see sections 448 and 454),
(b) a “material participator” is a participator who has a material interest in the company, as defined in section 457 of that Act,
(c) “relevant time” means—
(i) any time in the year of departure or, if the year of departure is a split year as respects the individual, the UK part of that year, or
(ii) any time in one or more of the 3 tax years preceding that year, and
(d) paragraph (d)(i) includes a case where the individual could be relieved of liability on the making of a claim under section 6 of TIOPA 2010 (double taxation relief), even if no claim is in fact made.
(5) If section 809B, 809D or 809E of ITA 2007 (remittance basis) applies to the individual for the year of return, any distribution within subsection (3) that is relevant foreign income and is remitted to the United Kingdom in the temporary period of non-residence is to be treated as remitted to the United Kingdom in the period of return.
(6) In this section, “remitted to the United Kingdom” has the meaning given in Chapter A1 of Part 14 of ITA 2007.
(1) This Part provides for certain exemptions from charges to income tax under this Act.
(2) The exemptions are dealt with in—
(a) Chapter 2 (national savings income),
(b) Chapter 3 (income from individual investment plans),
(c) Chapter 4 (SAYE interest),
(d) Chapter 5 (venture capital trust dividends),
(e) Chapter 6 (income from FOTRA securities),
(f) Chapter 7 (purchased life annuity payments),
(g) Chapter 8 (other annual payments), and
(h) Chapter 9 (other income).
(3) Chapter 10 explains that, in general, the effect of the exemptions is that the exempt amounts are ignored for other income tax purposes.
(4) Other exemptions, such as exemptions relating to particular categories of persons, may also be relevant to the charges to income tax under this Act.
(5) And the exemptions dealt with in this Part may themselves be relevant to charges to income tax outside this Act.
(1) No liability to income tax arises in respect of income from authorised savings certificates.
(2) A savings certificate is authorised so far as its acquisition was not prohibited by regulations made by the Treasury limiting a person's holding.
(3) In this section “savings certificates” means—
(a) savings certificates issued under—
(i) section 12 of the National Loans Act 1968 (c. 13) (power of Treasury to borrow),
(ii) section 7 of the National Debt Act 1958 (c. 6) (power of Treasury to issue national savings certificates), or
(iii) section 59 of FA 1920 (power to borrow on national savings certificates),
(b) war savings certificates, as defined in section 9(3) of the National Debt Act 1972 (c. 65), or
(c) savings certificates issued under any enactment forming part of the law of Northern Ireland and corresponding to section 12 of the National Loans Act 1968.
(4) But subsection (3)(c) does not include Ulster Savings Certificates (for which there are special rules in section 693).
(1) No liability to income tax arises in respect of income from authorised Ulster Savings Certificates if condition A, B or C is met.
(2) Condition A is that —
(a) the holder purchased them, and
(b) at the time of the purchase the holder was resident and ordinarily resident in Northern Ireland.
(3) Condition B is that the holder is so resident and ordinarily resident when they are repaid.
(4) Condition C is that—
(a) they are repaid after the holder's death, and
(b) at the time of the purchase the holder was so resident and ordinarily resident.
(5) An Ulster Savings Certificate is authorised so far as its acquisition was not prohibited by regulations made by the Department of Finance and Personnel limiting a person's holding.
(6) The exemption under this section requires a claim.
(7) In this Act “Ulster Savings Certificates” means savings certificates issued or treated as issued under section 15 of the Exchequer and Financial Provisions Act (Northern Ireland) 1950 (c. 3 (N.I.)).
(1) The Treasury may by regulations provide that income of an individual from investments under a plan—
(a) is exempt from income tax, or
(b) is exempt from income tax to such extent as is specified in the regulations.
(1A) In subsection (1) “income of an individual from investments under a plan” includes income from investments which is treated as the individual's income by virtue of section 629 (income paid to relevant children of settlor).
(2) In this Chapter such regulations are referred to as “investment plan regulations”.
(3) Investment plan regulations may, in particular, specify—
(a) the description of individuals who may invest, and
(b) maximum investment limits.
(4) They may provide for investment by an individual under more than one plan in the same tax year.
(5) They must set out conditions subject to which plans are to operate.
(6) The following provisions of this Chapter contain more particular provisions about the scope of investment plan regulations.
(1) In section 694(1) “income of an individual from investments under a plan” includes—
(a) income (of any person) from administration-period investments under a plan, and
(b) income (of any person) from the estate of a deceased person (“D”) where the whole or any part of the income of D's personal representatives is income from administration-period investments under a plan.
(2) For the purposes of sections 694(3)(a) and (4) and 695(1) “individual”, in relation to investments that are administration-period investments, includes—
(a) the personal representatives of the deceased individual concerned, and
(b) any other person on whose directions plan managers agree to act in relation to the investments.
(3) In sections 699 and 701 “investor” includes a person entitled to an exemption given by investment plan regulations by virtue of subsection (1) of this section.
(4) Investments are “administration-period investments” if—
(a) an individual dies, and
(b) immediately before the individual's death—
(i) the investments were held under a plan,
(ii) the individual was entitled to the income from the investments, and
(iii) as a result of investment plan regulations, the individual's income from investments under the plan was exempt from income tax (either wholly or to an extent specified in the regulations).
(5) Investments are also “administration-period investments” if (directly or indirectly) they represent investments that are administration-period investments as a result of subsection (4).
(6) Investment plan regulations may provide that investments are administration-period investments as a result of subsection (4) or (5) only at times specified in, or ascertained in accordance with, the regulations.
(7) Provision under subsection (6) may (in particular) be framed by reference to the completion of the administration of a deceased individual's estate.
(8) In the application of subsection (7) in relation to Scotland, the reference to the completion of the administration is to be read in accordance with section 653(2).
(1) Investment plan regulations may specify the kind of investments which may be made under a plan or which may be made by particular descriptions of individuals under a plan.
(2) They may—
(a) provide for a plan in the form of an account, and
(b) authorise the ways in which the subscriptions to an account are to be invested.
(3) They may—
(a) provide that plans are to be such as are approved by the the Commissioners for Her Majesty’s Revenue and Customs, and
(b) specify the circumstances in which approval may be granted and withdrawn.
(4) They may—
(a) provide for plans to be treated as being of different kinds, according to criteria set out in the regulations,
(b) provide for the Commissioners to register a plan as being of a particular kind, and
(c) make different provision about different kinds of plan.
(1) This section applies where investment plan regulations provide that income of a child from investments under a plan (a “child plan”) is exempt from income tax (either wholly or to such extent as is specified in the regulations).
(2) In addition to any provision which may be made by virtue of any other provision of this Chapter, investment plan regulations may—
(a) specify descriptions of persons by whom investments may be made for a child,
(b) provide that withdrawals may be made only in the circumstances specified in the regulations, and
(c) provide that, in the case of a child who is under 16, the plan managers may act only on the direction of a person of a description specified in the regulations.
(3) They may also provide—
(a) that any assignment of, or agreement to assign, investments under a child plan, and any charge on or agreement to charge any such investments, is void,
(b) that, on the bankruptcy of a child with investments under a child plan, the entitlement to those investments does not pass to any trustee or other person acting on behalf of the child's creditors, and
(c) that, where a contract is entered into by or on behalf of a child who is 16 or over in connection with a child plan under which investments are held—
(i) by the child, or
(ii) by another child in relation to whom the child has parental responsibility,
the contract has effect as if the child had been 18 or over when it was entered into.
(4) Where, by virtue of provision made in investment plan regulations under subsection (2)(a), investments are made for a child under a child plan, for the purposes of this Chapter the child is treated as having made those investments.
(5) In this section—
“assignment” includes assignation, and “assign” is to be construed accordingly;
“bankruptcy”, in relation to a child, includes the sequestration of the child's estate;
“charge on or agreement to charge” includes a right in security over or an agreement to create a right in security over;
“child” means an individual under 18;
“parental responsibility” means—
parental responsibility within the meaning of the Children Act 1989 or the Children (Northern Ireland) Order 1995, or
parental responsibilities within the meaning of the Children (Scotland) Act 1995;
and any reference to investments being held by a child includes a reference to investments being held by plan managers on behalf of the child by virtue of section 696(1).
(1) Investment plan regulations may provide that investments are to be held by persons on behalf of investors.
(2) In this Chapter those persons, including the managers of any such account as is specified in section 695(2), are referred to as “plan managers”, and references to “plan managers” in any other enactment are to be read accordingly.
(3) Investment plan regulations may—
(a) provide that plan managers are to be such as are approved by the Commissioners for Her Majesty’s Revenue and Customs , and
(b) specify the circumstances in which approval may be granted and withdrawn.
697 Special requirements for certain foreign managers
(1) Investment plan regulations may provide that a foreign institution may only be a plan manager if one of the requirements set out in section 698(2), (3) and (4) about the discharge of such of the institution's duties as are specified in the regulations is met.
(2) In this section “foreign institution” means—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) an insurance company which is non-UK resident.
(3) Different duties may be specified under subsection (1) for different institutions or different descriptions of institution.
(4) In this section—
“insurance company” means an undertaking carrying on the business of effecting or carrying out contracts of insurance, and
“contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544).
698 Requirements for discharge of foreign institution's duties
(1) The requirements about the discharge of an institution's duties which are referred to in section 697(1) (one of which may be imposed in the case of certain foreign managers) are requirements A, B and C.
(2) Requirement A is that—
(a) a person is currently appointed by the institution to be responsible for securing the discharge of the duties,
(b) that person either—
(i) is an individual who is a UK resident, or
(ii) is not an individual and has a business establishment in the United Kingdom, and
(c) the institution has notified the Commissioners for Her Majesty’s Revenue and Customs of that person's identity and appointment.
(3) Requirement B is that there are other current arrangements with the Commissioners for a person other than the institution to secure the discharge of the duties.
(4) Requirement C is that there are other current arrangements with the Commissioners designed to secure the discharge of the duties.
(5) Investment plan regulations may provide—
(a) that requirement A or B is only met if the person concerned is of a description specified in the regulations as respects that requirement,
(b) that appointments made for the purposes of requirement A or arrangements made for the purposes of requirement B are treated as terminated in circumstances specified in the regulations as respects that requirement.
(6) Investment plan regulations may provide that a person currently appointed as mentioned in subsection (2) or as to whom there is a current arrangement within subsection (3)—
(a) may act on the institution's behalf for any of the purposes of the provisions relating to the duties,
(b) is to secure the institution's compliance with, and discharge of, the duties, where appropriate by acting on its behalf,
(c) is personally liable for the institution's failure to comply with or discharge any of the duties, as if they were imposed on the person and the institution jointly and severally.
(1) Investment plan regulations may—
(a) provide that in circumstances specified in the regulations an investor ceases to be entitled to the exemption given by regulations made under section 694(1) and is treated as not having been entitled to it,
(b) adapt or modify the effect of any enactment relating to income tax for that purpose, and
(c) provide that in those circumstances the investor or the plan manager (depending on the terms of the regulations) is to account to the Commissioners for Her Majesty’s Revenue and Customs for income tax from which exemption has already been given on the basis that the investor was entitled to the exemption.
(2) They may provide that an investor or the plan manager (depending on the terms of the regulations) is to account to the Commissioners—
(a) for income tax from which the exemption has been given in circumstances where the investor was not entitled to it, or
(b) for an amount determined in accordance with the regulations to be the amount to be taken as representing that tax.
(3) They may modify the effect of or adapt any enactment relating to income tax for the purposes of securing that investors or plan managers account for the tax and other amounts mentioned in subsections (1) and (2).
(4) They may also modify the provisions of or adapt Chapter 9 of Part 4 of this Act (gains from contracts for life insurance etc.) or Chapter 2 of Part 13 of ICTA (life policies, life annuities and capital redemption policies) for cases where an investor—
(a) ceases to be entitled to the exemption given by regulations made under section 694(1) and is treated as not having been entitled to it, or
(b) has been given the exemption on the basis of an entitlement to it when there was no such entitlement.
(5) They may provide for plan managers (as well as investors) to be liable to account for amounts becoming due from investors as a result of regulations made under subsection (4).
(6) They may provide that, instead of having to account as mentioned in subsection (2) or (5), an investor or a plan manager is liable to a penalty of an amount specified in the regulations if—
(a) an exemption has been given to which there was no entitlement, and
(b) the circumstances are such as are specified in the regulations.
(7) They may provide that liabilities are imposed in cases which—
(a) are not cases in which liabilities may be imposed under subsections (1) to (6) where relief has been given to which there was no entitlement, but
(b) are cases where—
(i) a contravention or failure to comply with investment plan regulations that is specified in the regulations, or
(ii) the existence of such other circumstances as are so specified,
would have the effect of excluding or limiting an entitlement to exemption, apart from the regulations under this subsection.
(8) Regulations under subsection (7)—
(a) may only provide for the imposition of liabilities equivalent to those which may be imposed under subsections (1) to (6), and
(b) must provide for those liabilities to replace the liabilities to tax which would otherwise arise.
(9) In this section references to an investor include an individual entitled to an exemption given by investment plan regulations by virtue of section 694(1A).
(1) Investment plan regulations may make provision generally for the purpose of—
(a) the establishment and administration of plans, and
(b) the administration of income tax in relation to them.
(2) They may adapt or modify the effect of any enactment relating to income tax for the purpose of securing that investors are entitled to exemption from income tax in respect of investments.
(3) They may specify how exemption from tax is to be claimed by, and granted to, investors or plan managers on behalf of investors.
(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.
(6) In this section references to an investor include an individual entitled to an exemption given by investment plan regulations by virtue of section 694(1A).
702 Interest under certified SAYE savings arrangements
(1) No liability to income tax arises in respect of interest payable under a certified SAYE savings arrangement.
(2) In this section “certified SAYE savings arrangement” has the meaning given in section 703(1).
(3) Subsection (1) is subject to—
(a) section 707(1) (which requires the providers of certain arrangements to be authorised), and
(b) paragraph 7 of Schedule 12 to FA 1988 (application of exemption on change of status of building society).
(4) In this Chapter “interest” includes any bonus.
703 Meaning of “certified SAYE savings arrangement”
(1) In this Chapter “certified SAYE savings arrangement” means a linked savings arrangement which is certified under section 705.
(2) In this Chapter “linked savings arrangement” means an arrangement—
(a) which is of a kind specified in section 704(1), and
(b) under which an individual who is eligible to participate in a Schedule 3 SAYE option scheme enters into a contract to make periodical contributions for a specified period for the purpose of being able to participate in that scheme.
(3) In subsection (2)—
“to participate” means to obtain and exercise rights under the scheme, and
“Schedule 3 SAYE option scheme” has the meaning given in Schedule 3 to ITEPA 2003.