Law

Income Tax (Trading and Other Income) Act 2005

United Kingdom · statute

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In force since 2026-07-15, as the publisher states.

Copy read on 2026-11-08. The page it was read from

Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.

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Contents: 1,235 provisions
  1. Title and introductory text
  2. 1 Overview of Act
  3. 2 Overview of priority rules
  4. 3 Overview of Part 2
  5. 4 Provisions which must be given priority over Part 2
  6. 5 Charge to tax on trade profits
  7. 6 Territorial scope of charge to tax
  8. 6A Arrangements for avoiding tax
  9. 6B Trade of dealing in or developing UK land
  10. 7 Income charged
  11. 7A Apportionment etc of profits to tax year
  12. 7B Rule if trader starts to carry on trade after 31 March
  13. 7C Rule if there is a late accounting date
  14. 7D Election to disapply late accounting date rules
  15. 8 Person liable
  16. 9 Farming and market gardening
  17. 10 Commercial occupation of land other than woodlands
  18. 11 Commercial occupation of woodlands
  19. 12 Profits of mines, quarries and other concerns
  20. 13 Visiting performers
  21. 14 Visiting performers: supplementary
  22. 15 Divers and diving supervisors
  23. 16 Oil extraction and related activities
  24. 16A Voluntary office-holders: compensation for lost profits
  25. 16B Payments to company directors
  26. 16C Professionals in practice: incidental income from an office or employment
  27. 17 Effect of becoming or ceasing to be a UK resident
  28. 18 Effect of company starting or ceasing to be within charge to income tax
  29. 19 Tied premises
  30. 20 Caravan sites where trade carried on
  31. 21 Surplus business accommodation
  32. 22 Payments for wayleaves
  33. 22A Trading allowance
  34. 23 Rent-a-room and qualifying care relief
  35. 23A Application of section 23E: conditions
  36. 23B Meaning of “relevant benefit”
  37. 23C Meaning of “qualifying third party payment”
  38. 23D Other definitions
  39. 23E Tax treatment of relevant benefits
  40. 23F Relevant benefits: persons other than T
  41. 23G Anti-avoidance
  42. 23H Double taxation
  43. 23I Tax treatment of carried interest
  44. 23J Election to disapply section 23I
  45. 23K Location of trade treated as carried on under section 23I etc
  46. 23L Carried interest arising where individual deceased
  47. 23M Temporary non-UK residents: tax treatment of accrued carried interest gains
  48. 23N Permitted deduction etc
  49. 23P Carried interest: anti-avoidance
  50. 23Q Carried interest: avoidance of double taxation
  51. 23R Definitions
  52. 24 Professions and vocations
  53. 24A Cash basis to apply by default
  54. 25 Generally accepted accounting practice
  55. 25A Cash basis for small businesses
  56. 25B Excluded trades
  57. 25C Election for profits to be calculated in accordance with GAAP
  58. 26 Losses calculated on same basis as profits
  59. 27 Receipts and expenses
  60. 28 Items treated under CAA 2001 as receipts and expenses
  61. 28A Money's worth
  62. 29 Interest
  63. 30 Animals kept for trade purposes
  64. 31 Relationship between rules prohibiting and allowing deductions
  65. 31A Conditions to be met for profits to be calculated on cash basis
  66. 31B Relevant maximum
  67. 31C Excluded persons
  68. 31D Effect of election under section 25A
  69. 31E Calculation of profits on cash basis
  70. 31F Overview of rest of Part 2 as it applies to cash basis
  71. 32 Professions and vocations
  72. 32A Application of Chapter to the cash basis
  73. 33 Capital expenditure
  74. 33A Cash basis: capital expenditure
  75. 34 Expenses not wholly and exclusively for trade and unconnected losses
  76. 35 Bad and doubtful debts
  77. 36 Unpaid remuneration
  78. 37 Unpaid remuneration: supplementary
  79. 38 Restriction of deductions
  80. 39 Making of “employee benefit contributions”
  81. 40 Provision of qualifying benefits
  82. 41 Timing and amount of certain qualifying benefits
  83. 42 Provision or payment out of employee benefit contributions
  84. 43 Profits calculated before end of 9 month period
  85. 44 Interpretation of sections 38 to 44
  86. 45 Business entertainment and gifts: general rule
  87. 46 Business entertainment: exceptions
  88. 47 Business gifts: exceptions
  89. 48 Car ... hire
  90. 49 Car ... hire: supplementary
  91. 50 Hiring cars (but not motor cycles) with low carbon dioxide emissions
  92. 50A Short-term hiring in and long-term hiring out
  93. 50B Connected persons: application of section 48
  94. 51 Patent royalties
  95. 51A Cash basis: interest payments on loans
  96. 52 Exclusion of double relief for interest
  97. 53 Social security contributions
  98. 54 Penalties , interest and VAT surcharges and interest
  99. 55 Crime-related payments
  100. 55A Expenditure on integral features
  101. 55B Rental rebates
  102. 56 Professions and vocations
  103. 56A Application of Chapter to the cash basis
  104. 57 Pre-trading expenses
  105. 57A Expenses incurred by traders on food and drink
  106. 57B Cash basis: interest payments on loans
  107. 58 Incidental costs of obtaining finance
  108. 59 Convertible loans and loan stock etc.
  109. 60 Tenants under taxed leases: introduction
  110. 61 Tenants occupying land for purposes of trade treated as incurring expenses
  111. 62 Limit on deductions if tenant entitled to mineral extraction allowance
  112. 63 Tenants dealing with land as property employed for purposes of trade
  113. 64 Restrictions on section 61 expenses: lease premium receipts
  114. 65 Restrictions on section 61 expenses: lease of part of premises
  115. 66 Corporation tax receipts under ICTA treated as taxed receipts
  116. 67 Restrictions on section 61 expenses: corporation tax receipts under ICTA
  117. 68 Replacement and alteration of trade tools
  118. 69 Payments for restrictive undertakings
  119. 70 Employees seconded to charities and educational establishments
  120. 71 Educational establishments
  121. 72 Payroll deduction schemes: contributions to agents' expenses
  122. 73 Counselling and other outplacement services
  123. 74 Retraining courses
  124. 75 Retraining courses: recovery of tax
  125. 76 Redundancy payments and approved contractual payments
  126. 77 Payments in respect of employment wholly in employer's trade
  127. 78 Payments in respect of employment in more than one capacity
  128. 79 Additional payments
  129. 79A Additional payments: change in the persons carrying on the trade
  130. 80 Payments made by the Government
  131. 81 Personal security expenses
  132. 82 Contributions to local enterprise organisations or urban regeneration companies
  133. 83 Meaning of “local enterprise organisation”
  134. 84 Approval of local enterprise agencies
  135. 85 Supplementary provisions with respect to approvals
  136. 86 Meaning of “urban regeneration company”
  137. 86A Contributions to flood and coastal erosion risk management projects
  138. 86B Interpretation of section 86A
  139. 87 Expenses of research and development
  140. 88 Payments to research associations, universities etc.
  141. 89 Expenses connected with patents
  142. 90 Expenses connected with designs or trade marks
  143. 91 Payments to Export Credits Guarantee Department
  144. 92 Expenses connected with foreign trades
  145. 93 Allocation of expenses
  146. 94 Family expenses
  147. 94A Costs of setting up SAYE option scheme or CSOP scheme
  148. 94AA Deductions in relation to salaried members
  149. 94B Professions and vocations
  150. 94C Provisions not applicable to certain firms
  151. 94D Expenditure on vehicles
  152. 94E Excluded vehicles
  153. 94F The appropriate mileage amount
  154. 94G Definitions of types of vehicle
  155. 94H Use of home for business purposes
  156. 94I Premises used both as a home and as business premises
  157. 95 Professions and vocations
  158. 95A Application of Chapter to the cash basis
  159. 96 Capital receipts
  160. 96A Capital receipts under, or after leaving, cash basis
  161. 96B Section 96A: supplementary provision
  162. 97 Debts incurred and later released
  163. 97A Cash basis: value of trading stock on cessation of trade
  164. 97B Cash basis: value of work in progress on cessation of profession or vocation
  165. 98 Acquisition of trade: receipts from transferor's trade
  166. 99 Reverse premiums
  167. 100 Excluded cases
  168. 101 Tax treatment of reverse premiums
  169. 102 Arrangements not at arm's length
  170. 103 Connected persons and property arrangements
  171. 104 Distribution of assets of mutual concerns
  172. 105 Industrial development grants
  173. 106 Sums recovered under insurance policies etc.
  174. 106A Professions and vocations
  175. 106B Application of Chapter
  176. 106C Amounts not reflecting commercial transactions
  177. 106D Capital receipts
  178. 106E Gifts to charities etc
  179. 107 Professions and vocations
  180. 108 Gifts of trading stock to charities etc.
  181. 109 Receipt by donor or connected person of benefit attributable to certain gifts
  182. 110 Meaning of “designated educational establishment”
  183. 111 Election for application of herd basis rules
  184. 111A Herd basis rules not to apply where cash basis used
  185. 112 Meaning of “animal”, “herd”, “production herd” etc.
  186. 113 Other interpretative provisions
  187. 114 Initial cost of herd and value of herd
  188. 115 Addition of animals to herd
  189. 116 Replacement of animals in herd
  190. 117 Amount of receipt if old animal slaughtered under disease control order
  191. 118 Sale of animals from herd
  192. 119 Sale of whole or substantial part of herd
  193. 120 Acquisition of new herd begun within 5 years of sale
  194. 121 Section 120: sale for reasons outside farmer's control
  195. 122 Replacement of part sold begun within 5 years of sale
  196. 123 Section 122: sale for reasons outside farmer's control
  197. 124 Herd basis elections
  198. 125 Five year gap in which no production herd kept
  199. 126 Slaughter under disease control order
  200. 127 Preventing abuse of the herd basis rules
  201. 128 Information if election made
  202. 129 Further assessment etc. if herd basis rules apply
  203. 130 Expenditure to which this Chapter applies
  204. 130A Chapter not to apply where cash basis used
  205. 131 Meaning of “film” and related expressions
  206. 132 Meaning of “original master version” and “certified master version”
  207. 133 Meaning of “relevant period”
  208. 134 Expenditure treated as revenue in nature
  209. 135 Allocation of production or acquisition expenditure to relevant periods
  210. 136 Application of provisions about certified master versions
  211. 137 Certified master versions: preliminary expenditure
  212. 138 Certified master versions: production expenditure
  213. 138A Certified master versions: acquisition expenditure
  214. 139 Certified master versions: production expenditure on limited-budget films
  215. 140 Certified master versions: acquisition expenditure on limited-budget films
  216. 140A “Disqualifying deduction”
  217. 141 “Total production expenditure in respect of the original master version”
  218. 142 When expenditure is incurred
  219. 142A Deferred income agreements which exist when deduction made
  220. 142B Meaning of “deferred income agreement in respect of a film”
  221. 142C Deferred income agreements entered into after deduction made
  222. 142D Meaning of the “net excess relief”
  223. 142E Sections 142A to 142D: time of entry into an agreement
  224. 143 Election for sections 134 to 140 not to apply
  225. 144 Meaning of “genuinely intended for theatrical release”
  226. 144A Chapter not to apply where cash basis used
  227. 145 Professions and vocations
  228. 146 Meaning of “relevant telecommunication right”
  229. 147 Expenditure and receipts treated as revenue in nature
  230. 148 Credits or debits arising from revaluation
  231. 148ZA Chapter not to apply where cash basis used
  232. 148A Lessor under long funding finance lease: rental earnings
  233. 148B Lessor under long funding finance lease: exceptional items
  234. 148C Lessor under long funding finance lease making termination payment
  235. 148D Lessor under long funding operating lease: periodic deduction
  236. 148DA “Starting value”: general
  237. 148DB “Starting value” where plant or machinery originally unqualifying
  238. 148E Long funding operating lease: lessor's additional expenditure
  239. 148EA Determination of remaining residual value resulting from lessor's first additional expenditure
  240. 148EB Determination of remaining residual value resulting from lessor's further additional expenditure
  241. 148F Lessor under long funding operating lease: termination of lease
  242. 148FA Cases where ss. 148A to 148F do not apply: plant or machinery held as trading stock
  243. 148FB Cases where ss. 148A to 148F do not apply: lessor also lessee under non-long funding lease
  244. 148FC Cases where ss. 148A to 148F do not apply: other avoidance
  245. 148FD Cases where ss 148A to 148F do not apply: films
  246. 148G Lessee under long funding finance lease: limit on deductions
  247. 148GA Lessee under long funding finance leases: right-of-use leases
  248. 148H Lessee under long funding finance lease: termination
  249. 148I Lessee under long funding operating lease
  250. 148J Interpretation of Chapter 10A
  251. 148K Application of Chapter to the cash basis
  252. 149 Taxation of amounts taken to reserves
  253. 150 Conversion etc. of securities held as circulating capital
  254. 151 Exchanges of gilts for gilt strips
  255. 152 Consolidation of gilt strips
  256. 153 Meaning of “gilt-edged security” and “strip”
  257. 154 Regulations for determining market value of securities or strips
  258. 154A Certain non-UK residents with interest on 3½% War Loan 1952 Or After
  259. 155 Levies and repayments under FISMA 2000
  260. 156 Purchase or sale of woodlands
  261. 157 Relief in respect of mineral royalties
  262. 158 Lease premiums etc: reduction of receipts
  263. 159 Ministers of religion
  264. 160 Alternative basis of calculation in early years of practice
  265. 161 Mineral exploration and access
  266. 162 Payments by persons liable to pool betting duty
  267. 163 Deduction for deemed employment payment
  268. 164 Special rules for partnerships
  269. 164A Deduction for deemed employment payments
  270. 164B Intermediaries providing worker's services to public sector
  271. 165 Deduction for site preparation expenditure
  272. 166 Allocation of site preparation expenditure
  273. 167 Site preparation expenditure: supplementary
  274. 168 Site restoration payments
  275. 169 Cemeteries and crematoria: interests in land
  276. 170 Deduction for capital expenditure
  277. 171 Allocation of ancillary capital expenditure
  278. 172 Exclusion of expenditure met by subsidies
  279. 172ZA Niches, memorials and inscriptions: introduction
  280. 172ZB Allowable deductions: niches
  281. 172ZC Allowable deductions: memorials
  282. 172ZD Allowable deductions: inscriptions
  283. 172ZE Costs of the building
  284. 172A Meaning of “trading stock”
  285. 172AA Chapter not to apply where cash basis used
  286. 172B Trading stock appropriated by trader
  287. 172C Trading stock supplied by trader
  288. 172D Disposals not made in the course of trade
  289. 172E Acquisitions not made in the course of trade
  290. 172F Transfer pricing rules to take precedence
  291. 173 Valuation of trading stock on cessation
  292. 174 Meaning of “trading stock”
  293. 175 Basis of valuation of trading stock
  294. 176 Sale basis of valuation: sale to unconnected person
  295. 177 Sale basis of valuation: sale to connected person
  296. 178 Sale basis of valuation: election by connected persons
  297. 179 Connected persons
  298. 180 Cost to buyer of stock valued on sale basis of valuation
  299. 181 Meaning of “sale” and related expressions
  300. 182 Valuation of work in progress on cessation
  301. 183 Meaning of “work in progress”
  302. 184 Basis of valuation of work in progress
  303. 185 Election for valuation at cost
  304. 186 Determination of questions ...
  305. 187 Professions and vocations
  306. 188 Application of Chapter
  307. 188A Chapter not to apply where cash basis used
  308. 189 Relief for unremittable amounts
  309. 190 Restrictions on relief
  310. 191 Withdrawal of relief
  311. 191A Chapter not to apply where cash basis used
  312. 192 Meaning of “know-how” etc.
  313. 193 Disposal of know-how if trade continues to be carried on
  314. 194 Disposal of know-how as part of disposal of all or part of a trade
  315. 195 Seller controlled by buyer etc.
  316. 196 Professions and vocations
  317. 197 Meaning of “accounting date”
  318. 198 General rule
  319. 199 First tax year
  320. 200 Second tax year
  321. 201 Tax year in which there is no accounting date
  322. 202 Final tax year
  323. 203 Apportionment etc. of profits to basis periods
  324. 204 Meaning of “overlap period” and “overlap profit”
  325. 204A Overlap profit and trading allowance under Chapter 1 of Part 6A
  326. 205 Deduction for overlap profit in final tax year
  327. 206 Restriction on bringing losses into account twice
  328. 207 Treatment of business start-up payments received in an overlap period
  329. 208 When the late accounting date rules apply
  330. 209 Rule if there is an accounting date
  331. 210 Rules if there is no accounting date
  332. 211 Treating middle date as accounting date
  333. 212 Consequence of treating middle date as accounting date
  334. 213 Circumstances in which middle date not treated as accounting date
  335. 214 When a change of accounting date occurs
  336. 215 Change of accounting date in third tax year
  337. 216 Change of accounting date in later tax year
  338. 217 Conditions for basis period to end with new accounting date
  339. 218 Commercial reasons for change of accounting date
  340. 219 The year after an ineffective change of accounting date
  341. 220 Deduction for overlap profit on change of accounting date
  342. 221 Claim for averaging of fluctuating profits
  343. 221A Claim not available where cash basis used
  344. 222 Circumstances in which claim for two-year averaging may be made
  345. 222A Circumstances in which claim for five-year averaging may be made
  346. 223 Adjustment of profits
  347. 224 Effect of adjustment
  348. 225 Effect of later adjustment of profits
  349. 225ZA Application of Chapter 16ZA
  350. 225ZAA Chapter not to apply where cash basis used
  351. 225ZB Right to make claim
  352. 225ZC Book value
  353. 225ZD Effect of claim for spreading profits
  354. 225ZE Adjustment: cessation of trading
  355. 225ZF Time limits etc for spreading claim
  356. 225ZG Interpretation
  357. 225ZH Chapter not to apply where cash basis used
  358. 225A Meaning of “oil extraction activities”
  359. 225B Meaning of “oil rights”
  360. 225C Meaning of “ring fence income”
  361. 225D Meaning of “ring fence trade”
  362. 225E Other definitions
  363. 225F Valuation where market value taken into account under section 2 of OTA 1975
  364. 225G Valuation where disposal not sale at arm's length
  365. 225H Valuation where excess of nominated proceeds
  366. 225I Valuation where relevant appropriation but no disposal
  367. 225J Valuation where appropriation to refining etc
  368. 225K Reduction of expenditure by reference to regional development grant
  369. 225L Adjustment as a result of regional development grant
  370. 225M Tariff receipts etc
  371. 225N Expenditure on abandonment guarantees
  372. 225O Relief for reimbursement expenditure under abandonment guarantees
  373. 225P Payment under abandonment guarantee not immediately applied
  374. 225Q Amounts excluded from section 225O(1)
  375. 225R Introduction to section 225S
  376. 225S Relief for expenditure incurred by a participator in meeting defaulter's abandonment expenditure
  377. 225T Reimbursement by defaulter in respect of certain abandonment expenditure
  378. 225U Interest on repayment of APRT
  379. 225V Receipts arising from decommissioning
  380. 226 Professions and vocations
  381. 227 Application of Chapter
  382. 227A Application of Chapter where cash basis used
  383. 227B Cash basis treatment: full relief under Chapter 1 of Part 6A (trading allowance)
  384. 227C Application of Chapter where section 227B applies
  385. 228 Adjustment income and adjustment expense
  386. 229 Income charged
  387. 230 Person liable
  388. 231 Calculation of the adjustment
  389. 232 Treatment of adjustment income
  390. 233 Treatment of adjustment expense
  391. 234 No adjustment for certain expenses previously brought into account
  392. 235 Cases where adjustment not required until assets realised or written off
  393. 236 Change from realisation basis to mark to market
  394. 237 Election for spreading if section 236 applies
  395. 238 Spreading on ending of exemption for barristers and advocates
  396. 239 Election to accelerate charge under section 238
  397. 239A Spreading on leaving cash basis
  398. 239B Election to accelerate charge under section 239A
  399. 240 Liability of personal representatives if person liable dies
  400. 240A Professions and vocations
  401. 240B “Entering the cash basis”
  402. 240C Unrelieved qualifying expenditure: Parts 2, 7 and 8 of CAA 2001
  403. 240CA Unrelieved qualifying expenditure: Part 5 of CAA 2001
  404. 240D Assets not fully paid for
  405. 240E Effect of election where predecessor and successor are connected persons
  406. 241 Professions and vocations
  407. 242 Charge to tax on post-cessation receipts
  408. 243 Extent of charge to tax
  409. 244 Income charged
  410. 245 Person liable
  411. 246 Basic meaning of “post-cessation receipt”
  412. 247 Other rules about what counts as post-cessation receipts
  413. 248 Debts paid after cessation
  414. 249 Debts released after cessation
  415. 250 Receipts relating to post-cessation expenditure
  416. 251 Transfer of rights if transferee does not carry on trade
  417. 252 Transfer of trading stock or work in progress
  418. 253 Lump sums paid to personal representatives for copyright etc.
  419. 254 Allowable deductions
  420. 255 Further rules about allowable deductions
  421. 256 Treatment of post-cessation receipts
  422. 257 Election to carry back
  423. 258 Changes in trustees and personal representatives
  424. 259 Meaning of “statutory insolvency arrangement”
  425. 260 Overview of Part 3
  426. 261 Provisions which must be given priority over Part 3
  427. 262 Priority between Chapters within Part 3
  428. 263 Introduction
  429. 264 UK property business
  430. 265 Overseas property business
  431. 266 Meaning of “generating income from land”
  432. 267 Activities not for generating income from land
  433. 268 Charge to tax on profits of a property business
  434. 269 Territorial scope of charge to tax
  435. 270 Income charged
  436. 271 Person liable
  437. 271A Basis of calculation of profits: GAAP required
  438. 271B Calculation of profits in accordance with GAAP
  439. 271C Basis of calculation of profits: cash basis required
  440. 271D Calculation of profits on the cash basis
  441. 271E Profits of a property business: application of trading income rules
  442. 272 Application of trading income rules: GAAP
  443. 272ZA Application of trading income rules: cash basis
  444. 272A Restricting deductions for finance costs related to residential property
  445. 272B Meaning of “costs of a dwelling-related loan”
  446. 273 Amounts not brought into account as part of a property business
  447. 274 Relationship between rules prohibiting and allowing deductions
  448. 274A Reduction for individuals: entitlement
  449. 274AA Reduction for individuals: calculation
  450. 274B Reduction for accumulated or discretionary trust income: entitlement
  451. 274C Reduction for accumulated or discretionary trust income: calculation
  452. 275 Apportionment etc. of profits to tax year
  453. 275A Rule if person starts to carry on business after 31 March
  454. 275B Rule if there is a late accounting date
  455. 275C Election to disapply late accounting date rules
  456. 276 Introduction
  457. 276A Application of Chapter to property businesses using cash basis
  458. 277 Lease premiums
  459. 278 Amount treated as lease premium where work required
  460. 279 Sums payable instead of rent
  461. 280 Sums payable for surrender of lease
  462. 281 Sums payable for variation or waiver of terms of lease
  463. 281A Sums to which sections 277 to 281 do not apply
  464. 282 Assignments for profit of lease granted at undervalue
  465. 283 Provisions supplementary to section 282
  466. 284 Sales with right to reconveyance
  467. 285 Sale and leaseback transactions
  468. 286 Provisions supplementary to sections 284 and 285
  469. 287 Circumstances in which additional calculation rule applies
  470. 288 The additional calculation rule
  471. 289 The additional calculation rule: special cases
  472. 290 Meaning of “unused amount” and “unreduced amount”
  473. 291 Deductions for expenses under section 292
  474. 292 Tenants under taxed leases treated as incurring expenses
  475. 293 Restrictions on section 292 expenses: the additional calculation rule
  476. 294 Restrictions on section 292 expenses: lease of part of premises
  477. 295 Limit on reductions and deductions
  478. 296 Corporation tax receipts treated as taxed receipts
  479. 297 Taking account of reductions in corporation tax receipts
  480. 298 Taking account of deductions for rent as a result of section 37(4) or 87(2) of ICTA
  481. 299 Payment of tax by instalments
  482. 300 Statement of accuracy for purposes of section 282
  483. 301 Claim for repayment of tax payable by virtue of section 284
  484. 302 Claim for repayment of tax payable by virtue of section 285
  485. 302A Appeals against proposed determinations
  486. 302B Section 302A: supplementary
  487. 302C Determination by tribunal
  488. 303 Rules for determining effective duration of lease
  489. 304 Applying the rules in section 303
  490. 305 Information about effective duration of lease
  491. 306 Provisions about premiums
  492. 307 Interpretation
  493. 307A Cash basis: application of Chapter
  494. 307B Cash basis: capital expenditure
  495. 307C Cash basis: deduction for costs of loans
  496. 307D Cash basis: modification of deduction for costs of loans
  497. 307E Capital receipts under, or after leaving, cash basis
  498. 307F Deemed capital receipts under, or after leaving, cash basis
  499. 307G Property allowance
  500. 308 Furnished lettings
  501. section-308A
  502. section-308B
  503. section-308C
  504. 309 Rent-a-room relief
  505. 310 Acquisition of business: receipts from transferor's UK property business
  506. 311 Reverse premiums
  507. 311A Replacement domestic items relief
  508. 312 Deduction for expenditure on energy-saving items
  509. 313 Restrictions on relief
  510. 314 Regulations
  511. 315 Deduction for expenditure on sea walls
  512. 316 Transfer of interest in premises
  513. 317 Ending of lease of premises
  514. 318 Transfer involving company within the charge to corporation tax
  515. 319 Relief in respect of mineral royalties
  516. 320 Nature of item apportioned on sale of estate or interest in land
  517. 321 Mutual business
  518. 329 Application of Chapter
  519. 329A Application of Chapter where cash basis used
  520. 330 Adjustment income and adjustment expense
  521. 331 Income charged
  522. 332 Person liable
  523. 333 Treatment of adjustment income
  524. 334 Treatment of adjustment expense
  525. 334A Spreading on leaving cash basis and related election
  526. 334B “Entering the cash basis”
  527. 334C Unrelieved qualifying expenditure
  528. 334D Assets not fully paid for
  529. 334E Effect of election where predecessor and successor are connected persons
  530. 335 Charge to tax on rent receivable in connection with a UK section 12(4) concern
  531. 336 Meaning of “rent receivable in connection with a UK section 12(4) concern”
  532. 337 Income charged
  533. 338 Person liable
  534. 339 Deduction for management expenses of owner of mineral rights
  535. 340 Relief in respect of mineral royalties
  536. 341 Meaning of “mineral lease or agreement” and “mineral royalties”
  537. 342 Extended meaning of “mineral royalties” etc. in Northern Ireland
  538. 343 Power of Commissioners to determine what counts as “mineral royalties”
  539. 344 Charge to tax on rent receivable for a UK electric-line wayleave
  540. 345 Meaning of “rent receivable for a UK electric-line wayleave”
  541. 346 Extent of charge to tax
  542. 347 Income charged
  543. 348 Person liable
  544. 349 Charge to tax on post-cessation receipts
  545. 350 Extent of charge to tax
  546. 351 Income charged
  547. 352 Person liable
  548. 353 Basic meaning of “post-cessation receipt”
  549. 354 Other rules about what counts as a “post-cessation receipt”
  550. 355 Transfer of rights if transferee does not carry on UK property business
  551. 356 Application to businesses within the charge to corporation tax
  552. 357 Charge to tax on overseas property income
  553. 358 Meaning of “overseas property income”
  554. 359 Income charged
  555. 360 Person liable
  556. 361 Changes in trustees and personal representatives
  557. 362 Effect of company starting or ceasing to be within charge to income tax
  558. 363 Overseas property businesses and overseas land: adaptation of rules
  559. 364 Meaning of “lease” and “premises”
  560. 365 Overview of Part 4
  561. 366 Provisions which must be given priority over Part 4
  562. 367 Priority between Chapters within Part 4
  563. 368 Territorial scope of Part 4 charges
  564. 368A Interpretation of special rules for temporary non-residents
  565. 369 Charge to tax on interest
  566. 370 Income charged
  567. 370A Valuation of interest not paid in cash
  568. 371 Person liable
  569. 372 Building society dividends
  570. 373 Open-ended investment company interest distributions
  571. 374 Date when interest payments under section 373 made
  572. 375 Interpretation of sections 373 and 374
  573. 376 Authorised unit trust interest distributions
  574. 377 Date when interest payments under section 376 made
  575. 378 Interpretation of sections 376 and 377
  576. 378A Offshore fund distributions
  577. 379 Payments by registered societies or certain co-operatives
  578. 380 Funding bonds
  579. 380A FSCS payments representing interest
  580. 381 Discounts
  581. 381A Charge to tax on disguised interest
  582. 381B Income charged
  583. 381C Person liable
  584. 381D Avoidance of double taxation
  585. 381E Exception for returns from certain shares
  586. 382 Contents of Chapter
  587. 383 Charge to tax on dividends and other distributions
  588. 384 Income charged
  589. 385 Person liable
  590. 385A No charge to tax on purchase by company of exempt employee shareholder shares
  591. 386 Open-ended investment company dividend distributions
  592. 387 Date when dividends paid under section 386
  593. 388 Interpretation of sections 386 and 387
  594. 389 Authorised unit trust dividend distributions
  595. 390 Date when dividends paid under section 389
  596. 391 Interpretation of sections 389 and 390
  597. 392 SIP shares: introduction
  598. 393 Later charge where cash dividends retained in SIPs are paid over
  599. 394 Distribution when dividend shares cease to be subject to SIP
  600. 395 Reduction in tax due in cases within section 394
  601. 396 Interpretation of sections 392 to 395
  602. 396A Arrangements offering a choice of capital or income return
  603. 396B Distributions in a winding up
  604. 397 Tax credits for qualifying distributions of UK resident companies: UK residents and eligible non-UK residents
  605. 397A Tax credits for distributions of non-UK resident companies: UK residents and eligible non-UK residents
  606. 397AA Tax credit under section 397A: conditions
  607. 397B Tax credits under section 397A: manufactured overseas dividends
  608. 397BA Meaning of “qualifying territory”
  609. 397C Meaning of “minority shareholder”
  610. 398 Increase in amount or value of dividends where tax credit available
  611. 399 Tax treated as paid on distributions received by non-UK resident persons
  612. 400 Non-qualifying distributions
  613. 401 Relief: distribution repaying shares or security issued in earlier distribution
  614. 401ZA Relief: distributions to trustees of employee-ownership trusts
  615. 401A Recovery of overpaid tax credit etc
  616. 401B Power to obtain information
  617. 401C Temporary non-residents
  618. 402 Charge to tax on dividends from non-UK resident companies
  619. 403 Income charged
  620. 404 Person liable
  621. 404A Distributions in a winding up
  622. 405 SIP shares: introduction
  623. 406 Later charge where cash dividends retained in SIPs are paid over
  624. 407 Dividend payment when dividend shares cease to be subject to SIP
  625. 408 Reduction in tax due in cases within section 407
  626. 408A Temporary non-residents
  627. 409 Charge to tax on stock dividend income
  628. 410 When stock dividend income arises
  629. 410A Conversion etc of bonus share capital
  630. 411 Income charged
  631. 412 Cash equivalent of share capital
  632. 413 Person liable
  633. 413A Temporary non-residents
  634. 414 Income tax treated as paid
  635. 414A Interpretation of Chapter
  636. 415 Charge to tax under Chapter 6
  637. 416 Income charged
  638. 417 Person liable
  639. 418 Relief where borrowers liable as settlors
  640. 419 Loans and advances to persons who die
  641. 420 Loans and advances to trustees of trusts that have ended
  642. 420A Temporary non-residents
  643. 421 Income tax treated as paid
  644. 421A Power to obtain information
  645. 422 Charge to tax on purchased life annuity payments
  646. 423 Meaning of “purchased life annuity”
  647. 424 Income charged
  648. 425 Person liable
  649. 426 Annuity payments received after deduction of tax
  650. 427 Charge to tax on profits from deeply discounted securities
  651. 428 Income charged
  652. 429 Person liable
  653. 430 Meaning of “deeply discounted security”
  654. 431 Excluded occasions of redemption
  655. 432 Securities which are not deeply discounted securities
  656. 433 Meaning of “excluded indexed security”
  657. 434 Securities issued in separate tranches: preliminary
  658. 435 Securities issued in separate tranches: basic rule
  659. 436 Deeply discounted securities issued in separate tranches: nominal value rule
  660. 437 Transactions which are disposals
  661. 438 Timing of transfers and acquisitions
  662. 439 Calculating the profit from disposals
  663. 440 Market value disposals
  664. 441 Market value acquisitions
  665. 442 Securities issued in accordance with qualifying earn-out right
  666. 443 Application of this Chapter to strips of government securities
  667. 444 Meaning of “strip” in Chapter 8
  668. 445 Strips of government securities: acquisitions and disposals
  669. 446 Strips of government securities: relief for losses
  670. 447 Restriction of profits on strips by reference to original acquisition cost
  671. 448 Restriction of losses on strips by reference to original acquisition cost
  672. 449 Strips of government securities: manipulation of acquisition, transfer or redemption payments
  673. 450 Market value of strips etc.
  674. 451 Market value of strips etc. quoted in foreign stock exchange lists
  675. 452 Power to modify this Chapter for strips
  676. 452A Application of this Chapter to corporate strips
  677. 452B Meaning of “interest-bearing corporate security” in Chapter 8
  678. 452C Conversion of interest-bearing corporate securities into corporate strips
  679. 452D Conversion into corporate strips: lower level conversions
  680. 452E Meaning of “corporate strip” in Chapter 8
  681. 452F Corporate strips: acquisitions and disposals
  682. 452G Corporate strips: manipulation of acquisition, transfer or redemption payments
  683. 453 Application of sections 454 to 456
  684. 454 Listed securities held since 26th March 2003: relief for losses
  685. 455 Listed securities held since 26th March 2003: calculating the profit or loss on disposals
  686. 456 Securities issued to connected persons etc. at excessive price: subsequent transfers to connected persons
  687. 457 Trustees
  688. 458 Non-UK resident trustees
  689. 459 Transfer of assets abroad
  690. 460 Minor definitions
  691. 461 Charge to tax under Chapter 9
  692. 462 When gains arise from policies and contracts
  693. 463 Income charged
  694. 463A Restricted relief qualifying policies: disapplication of section 485 etc
  695. 463B Restricted relief qualifying policies: allowable premiums
  696. 463C Restricted relief qualifying policies: personal representatives and trustees with deceased settlors
  697. 463D Restricted relief qualifying policies: assignments and events following assignments etc
  698. 463E Transitional protection for policies issued in respect of insurances made on or after 21 March 2012 but before 6 April 2013
  699. 464 Person liable for tax: introduction
  700. 465 Person liable: individuals
  701. 465A Amounts for which individuals liable to be treated as highest part of total income
  702. 465B Temporary non-residents
  703. 466 Person liable: personal representatives
  704. 467 Person liable: UK resident trustees
  705. 468 Non-UK resident trustees and foreign institutions
  706. 469 Two or more persons interested in policy or contract
  707. 470 Interests in rights under a policy or contract for section 469
  708. 471 Determination of shares etc.
  709. 472 Trusts created by two or more persons
  710. 473 Policies and contracts to which Chapter 9 applies: general
  711. 473A Connected policies or contracts treated as single policy or contract
  712. 474 Special rules: qualifying policies
  713. 475 Special rules: personal portfolio bonds
  714. 476 Special rules: foreign policies
  715. 477 Special rules: certain older policies and contracts
  716. 478 Exclusion of mortgage repayment policies
  717. 479 Exclusion of pension policies
  718. 480 Exclusion of excepted group life policies
  719. 481 Excepted group life policies: conditions about benefits
  720. 482 Excepted group life policies: conditions about persons intended to benefit
  721. 483 Exclusion of credit union group life policies
  722. 484 When chargeable events occur
  723. 485 Disregard of certain events in relation to qualifying policies
  724. 486 Exclusion of maturity of capital redemption policies in certain circumstances
  725. 487 Disregard of certain assignments
  726. 488 Disregard of some events after alterations of life insurance policy terms
  727. 489 Conditions applicable to alterations of life insurance policy terms
  728. 490 Last payment under guaranteed income bonds etc. treated as total surrender
  729. 491 Calculating gains: general rules
  730. 492 The total benefit value of a policy or contract
  731. 493 The value of a policy or contract
  732. 494 The total allowable deductions for a policy or contract
  733. 495 Disregard of certain amounts in calculating gains under section 491
  734. 496 Modification of section 494: qualifying endowment policies held as security for company debts
  735. 497 Disregard of trivial inducement benefits
  736. 498 Requirement for periodic calculations in part surrender or assignment cases
  737. 499 Meaning of “insurance year” and “final insurance year”
  738. 500 Events treated as part surrenders
  739. 501 Part surrenders: loans
  740. 502 Exception from section 501 for loans to buy life annuities
  741. 503 Exception from section 501 for certain loans under qualifying policies
  742. 504 Part surrenders: payments under guaranteed income bonds etc.
  743. 505 Assignments etc. involving co-ownership
  744. 506 Assignments occurring when there is a co-ownership transaction
  745. 507 Method for making periodic calculations under section 498
  746. 507A Recalculating gains under section 507
  747. 508 The value of rights partially surrendered or assigned
  748. 509 Chargeable events in certain cases where periodic calculations show gains
  749. 510 Requirement for transaction-related calculations in certain part surrender and assignment cases
  750. 511 Method for making transaction-related calculations under section 510
  751. 512 Available premium left for relevant transaction
  752. 512A Recalculating gains under section 511
  753. 513 Special rules for part surrenders and assignments in final insurance year
  754. 514 Chargeable events where transaction-related calculations show gains
  755. 515 Requirement for annual calculations in relation to personal portfolio bonds 9
  756. 516 Meaning of “personal portfolio bond”
  757. 517 Policies and contracts which are not personal portfolio bonds
  758. 518 The index categories
  759. 519 The index selection conditions
  760. 520 The property categories
  761. 521 The property selection conditions
  762. 522 Method for making annual calculations under section 515
  763. 523 The total amount of personal portfolio bond excesses
  764. 524 The total amount of part surrender gains
  765. 525 Chargeable events where annual calculations show gains
  766. 526 Power to make regulations about personal portfolio bonds
  767. 527 Reduction for sums taken into account otherwise than under Chapter 9
  768. 528 Reduction in amount charged on basis of non-UK residence where individual liable for tax
  769. 528A Reduction in amount charged on basis of non-UK residence of deceased person
  770. 529 Exceptions to section 528
  771. 530 Income tax treated as paid etc.
  772. 531 Exceptions to section 530
  773. 532 Relief for policies and contracts with European Economic Area insurers
  774. 533 Meaning of “comparable EEA tax charge”
  775. 534 Regulations providing for relief in other cases where foreign tax chargeable
  776. 535 Top slicing relief
  777. 536 Top slicing relieved liability: one chargeable event
  778. 537 Top slicing relieved liability: two or more chargeable events
  779. 538 Recovery of tax from trustees
  780. 539 Relief for deficiencies
  781. 540 When deficiencies arise: events following calculation events
  782. 541 Calculation of deficiencies
  783. 541A Effect of rebated or reinvested commission in certain cases
  784. 541B Section 541A: further definitions
  785. 542 Replacement of qualifying policies
  786. 543 Issue time of qualifying policy replacing foreign policy
  787. 544 Application of Chapter to policies and contracts in which companies interested
  788. 545 Minor definitions
  789. 546 Table of provisions subject to special rules for older policies and contracts
  790. ...
  791. section-548
  792. section-549
  793. section-550
  794. 551 Charge to tax on profits from disposal of deposit rights
  795. 552 Meaning of “deposit rights”
  796. 553 Income charged
  797. 554 Person liable
  798. 570 Charge to tax under Chapter 13
  799. 571 Meaning of “foreign holdings” etc.
  800. 572 Income charged
  801. 573 Person liable
  802. 574 Overview of Part 5
  803. 575 Provisions which must be given priority over Part 5
  804. 576 Priority between Chapters within Part 5
  805. 577 Territorial scope of Part 5 charges
  806. 577A Territorial scope of Part 5 charges: receipts from intellectual property
  807. 578 Contents of Chapter
  808. 579 Charge to tax on royalties and other income from intellectual property
  809. 580 Income charged under section 579
  810. 581 Person liable for tax under section 579
  811. 582 Deductions in calculating certain income charged under section 579
  812. 583 Charge to tax on income from disposals of know-how
  813. 584 Exceptions to charge under section 583
  814. 585 Income charged under section 583
  815. 586 Person liable for tax under section 583
  816. 587 Charge to tax on income from sales of patent rights
  817. 588 Income charged under section 587
  818. 589 Person liable for tax under section 587
  819. 590 UK resident sellers: spreading rules
  820. 591 Non-UK resident sellers: election for spreading
  821. 592 Further provision about elections for spreading: instalments
  822. 593 Death of seller
  823. 594 Winding up of a body corporate
  824. 595 Deduction of tax from payments to non-UK residents
  825. 596 Adjustments where tax has been deducted
  826. 597 Licences connected with patents
  827. 598 Rights to acquire future patent rights
  828. 599 Sums paid for Crown use etc. treated as paid under licence
  829. 600 Relief for expenses: patent income
  830. 601 How relief is given under section 600
  831. 602 Payments received after deduction of tax
  832. 603 Contributions to expenditure
  833. 604 Contributions not made by public bodies nor eligible for tax relief
  834. 605 Exchanges
  835. 606 Apportionment where property sold together
  836. 607 Questions about apportionments affecting two or more persons
  837. 608 Meaning of “capital sums” etc.
  838. 609 Charge to tax on films and sound recordings businesses
  839. 610 Income charged
  840. 611 Person liable
  841. 612 Calculation of income
  842. 613 Application of trading income rules to non-trade businesses
  843. 614 Charge to tax on certain telecommunication rights of a non-trader
  844. 615 Income charged
  845. 616 Person liable
  846. 617 Deductions in calculating certain income charged
  847. 618 Payments received after deduction of tax
  848. 619 Charge to tax under Chapter 5
  849. 619A Income treated as highest part of settlor's total income
  850. 620 Meaning of “settlement” and “settlor”
  851. 621 Income charged
  852. 622 Person liable
  853. 623 Calculation of income
  854. 624 Income where settlor retains an interest
  855. 625 Settlor's retained interest
  856. 626 Exception for outright gifts between spouses or civil partners
  857. 627 Exceptions for certain types of income
  858. 628 Exception for gifts to charities
  859. 628B Section 628A: tainting
  860. 629 Income paid to relevant children of settlor
  861. 630 Exception for gifts to charities
  862. 630A Exception for protected foreign-source income
  863. 631 Retained and accumulated income
  864. 632 Offshore income gains
  865. 633 Capital sums paid to settlor by trustees of settlement
  866. 634 Meaning of “capital sum” and “sums paid to settlor”
  867. 635 Amount of available income
  868. 636 Calculation of undistributed income
  869. 637 Qualifications to section 636
  870. 638 Capital sums paid by way of loan or repayment of loan
  871. 639 Loans to participators in close companies
  872. 640 Grossing-up of deemed income
  873. 641 Capital sums paid to settlor by body connected with settlement
  874. 642 Exception for certain loans or repayments of loans
  875. 643 Interpretation of sections 641 and 642
  876. 643ZA “Protected foreign-source income” and “transitional trust income”
  877. 643ZB Protected foreign-source income and transitional trust income not to be taxed elsewhere in Chapter
  878. 643A Benefits paid out of protected foreign-source income or transitional trust income
  879. 643B Meaning of “untaxed benefits total” in section 643A
  880. 643C Meaning of “available protected income” in section 643A
  881. 643D Reduction in section 643A income: previous capital gains tax charge
  882. 643E Reimbursement of tax paid by settlor because of section 643B(2)
  883. 643EA Onward gifts from non-residents or qualifying new residents
  884. 643F Income attributed by section 643A to user of remittance basis
  885. 643G Section 643F(4): benefits and income “relating” to deemed income
  886. 643H Meaning of close member of settlor's family in sections 643A to 643EA
  887. 643J Cases where income treated as arising to recipient of onward gift
  888. 643K Cases where deemed income attributed to recipient of onward gift
  889. 643L Cases where settlor liable following onward gift
  890. 643N Person liable under section 643J or 643L and remittance basis applied
  891. 644 Application to settlements by two or more settlors
  892. 645 Property or income originating from settlor
  893. 646 Adjustments between settlor and trustees etc.
  894. 646A Trustees' expenses to be rateably apportioned
  895. 647 Power to obtain information
  896. 648 Income arising under a settlement
  897. 649 Charge to tax on estate income
  898. 650 Absolute, limited and discretionary interests
  899. 651 Meaning of “UK estate” and “foreign estate”
  900. 652 Estate income: absolute interests in residue
  901. 653 Meaning of “the administration period” and “the final tax year”
  902. 654 Estate income: limited interests in residue
  903. 655 Estate income: discretionary interests in residue
  904. 656 Income charged: UK estates
  905. 657 Income charged: foreign estates
  906. 658 Special rules for foreign income
  907. 659 Person liable
  908. 660 Basic amount of estate income: absolute interests
  909. 661 Basic amount of estate income: limited interests
  910. 662 Basic amount of estate income: discretionary interests
  911. 663 The applicable rate for grossing up basic amounts of estate income
  912. 664 The aggregate income of the estate
  913. 665 Assumed income entitlement
  914. 666 The residuary income of the estate
  915. 667 Shares of residuary income of estate
  916. 668 Reduction in share of residuary income of estate
  917. 669 Reduction in residuary income: inheritance tax on accrued income
  918. 670 Applicable rate for determining assumed income entitlement (UK estates)
  919. 671 Successive absolute interests
  920. 672 Successive interests: assumed income entitlement of holder of absolute interest following limited interest
  921. 673 Successive interests: payments in respect of limited interests followed by absolute interests
  922. 674 Successive interests: holders of limited interests
  923. 675 Basic amount of estate income: successive limited interests
  924. 676 Apportionments
  925. 677 Relief where UK income tax borne by foreign estate: absolute interests
  926. 678 Relief where UK income tax borne by foreign estate: limited and discretionary interests
  927. 679 Income from which basic amounts are treated as paid
  928. 679A Income from which sums within section 668(1)(b) are treated as paid
  929. 680 Income treated as bearing income tax
  930. 680A Income treated as dividend income
  931. 680B Income treated as savings income
  932. 680C Income treated as property income
  933. 681 Transfers of assets etc. treated as payments
  934. 682 Assessments, adjustments and claims after the administration period
  935. 682A Statements relating to estate income
  936. 683 Charge to tax on annual payments not otherwise charged
  937. 684 Income charged
  938. 685 Person liable
  939. 685A Settlor-interested settlements
  940. 686 Payments received after deduction of tax
  941. 687 Charge to tax on income not otherwise charged
  942. 688 Income charged
  943. 689 Person liable
  944. 689A Temporary non-residents
  945. 690 Overview of Part 6
  946. 691 National Savings Bank ordinary account interest
  947. 692 Income from savings certificates
  948. 693 Income from Ulster Savings Certificates
  949. 694 Income from individual investment plans
  950. 694A Deceased investors
  951. 695 Investment plans
  952. 695A Investment plans for children
  953. 696 Plan managers
  954. 697 Special requirements for certain foreign managers
  955. 698 Requirements for discharge of foreign institution's duties
  956. 699 Non-entitlement to exemption
  957. 700 Information
  958. 701 General and supplementary powers
  959. 702 Interest under certified SAYE savings arrangements
  960. 703 Meaning of “certified SAYE savings arrangement”
  961. 704 Types of arrangements and providers
  962. 705 Certification of arrangements
  963. 706 Withdrawal and variation of certifications and connected requirements
  964. 707 Authorisation of providers
  965. 708 Withdrawal and variation of authorisations
  966. 709 Venture capital trust dividends
  967. 710 Treatment of shares where annual acquisition limit exceeded
  968. 711 Identification of shares after disposals
  969. 712 Identification of shares after reorganisations etc.
  970. 713 Introduction: securities free of tax to residents abroad (“FOTRA securities”)
  971. 714 Exemption of profits from FOTRA securities
  972. 715 Interest from FOTRA securities held on trust
  973. 716 Restriction on deductions etc. relating to FOTRA securities
  974. 717 Exemption for part of purchased life annuity payments
  975. 718 Excluded annuities
  976. 719 Extent of exemption under section 717
  977. 720 Exempt proportion: term dependent solely on duration of life
  978. 721 Exempt sum: term dependent solely on duration of life
  979. 722 Consideration for the grant of annuities
  980. 723 Determinations
  981. 724 Regulations
  982. 725 Annual payments under immediate needs annuities
  983. 726 Meaning of “care provider”
  984. 727 Certain annual payments by individuals
  985. 728 Commercial payments
  986. 729 Payments for non-taxable consideration
  987. 730 Foreign maintenance payments
  988. 731 Periodical payments of personal injury damages
  989. 732 Compensation awards
  990. 733 Persons entitled to exemptions for personal injury payments etc.
  991. 734 Payments from trusts for injured persons
  992. 735 Health and employment insurance payments
  993. 736 Health and employment risks and benefits
  994. 737 Period for which payments may be made
  995. 738 Risk of significant loss
  996. 739 Conditions to be met by policies also providing other benefits
  997. 740 Conditions to be met where policies are linked
  998. 741 Aggregation of policies where employment ends for health reasons
  999. 742 Meaning of “the insured”
  1000. 743 Policies for the benefit of others who contribute to premiums
  1001. 744 Payments to adopters , etc: England and Wales
  1002. 745 Payments to adopters, etc: Scotland
  1003. 746 Payments to adopters, etc: Northern Ireland
  1004. 747 Power to amend sections 744 to 746
  1005. 748 Payments by persons liable to pool betting duty
  1006. 749 Repayment interest, and interest paid under repayment supplements
  1007. 749A Interest on tax overpaid
  1008. 750 Interest from tax reserve certificates
  1009. 751 Interest on damages for personal injury
  1010. 752 Interest under employees' share schemes
  1011. 753 Interest on repayment of student loan
  1012. 753A Interest on unpaid relevant contributions
  1013. 754 Redemption of funding bonds
  1014. 755 Interest on foreign currency securities etc. owned by non-UK residents
  1015. 756 Which securities and loans are foreign currency ones for section 755
  1016. 756A Interest on certain deposits of victims of National-Socialist persecution
  1017. 757 Interest and royalty payments: introduction
  1018. 758 Exemption for certain interest and royalty payments
  1019. 759 The person making the payment
  1020. 760 The person beneficially entitled to the payment
  1021. 761 Meaning of “25% associates”
  1022. 762 Interest payments: exemption notices
  1023. 763 Special relationships
  1024. 764 Application of ICTA provisions about special relationships
  1025. 765 Anti-avoidance
  1026. 766 Interest and royalty payments: interpretation
  1027. 767 Power to amend references to the Directive by order
  1028. 768 Commercial occupation of woodlands
  1029. 769 Housing grants
  1030. 770 Amounts applied by SIP trustees acquiring dividend shares or retained for reinvestment
  1031. 771 Relevant foreign income of consular officers and employees
  1032. 772 Further provisions about Orders under section 771
  1033. 773 Income from Inter-American Development Bank securities
  1034. 774 Income from securities issued by designated international organisations
  1035. 775 Income towards reducing the national debt
  1036. 775A Government bonus for savings account or other investment plan
  1037. 776 Scholarship income
  1038. 776A Payments under Jobs Growth Wales Plus
  1039. 777 VAT repayment supplements
  1040. 778 Incentives to use electronic communications
  1041. 779 Gains on commodity and financial futures
  1042. 780 Disabled person's vehicle maintenance grant
  1043. 781 Payments under New Deal 50plus
  1044. 782 Payments under employment zone programme
  1045. 782A Domestic microgeneration
  1046. 782B Renewables obligation certificates for domestic microgeneration
  1047. 782C Volunteers etc: compensation for lost employment income
  1048. 783 General disregard of exempt income for income tax purposes
  1049. 783A Relief under this Chapter
  1050. 783AA “Relevant trade” of an individual
  1051. 783AB “Miscellaneous income”
  1052. 783AC The individual's “relevant income”
  1053. 783AD The individual's trading allowance
  1054. 783AE Full relief: introduction
  1055. 783AF Full relief: trade profits
  1056. 783AG Full relief: miscellaneous income
  1057. 783AH Partial relief: alternative calculation of profits: introduction
  1058. 783AI Partial relief: alternative calculation of trade profits
  1059. 783AJ Partial relief: alternative calculation of chargeable miscellaneous income
  1060. 783AK Deductible amount: splitting of trading allowance
  1061. 783AL Election for full relief not to be given
  1062. 783AM Election for partial relief
  1063. 783AN Exclusion from relief: expenses deducted against rent-a-room receipts
  1064. 783AO Exclusion from relief: payments by employer
  1065. 783AP Exclusion from relief: payments by firm
  1066. 783AQ Exclusion from relief: payments by close company
  1067. 783AR Interpretation of this Chapter
  1068. 783B Relief under this Chapter
  1069. 783BA “Relevant property business” of an individual
  1070. 783BB “Relievable receipts” of a property business
  1071. 783BC The individual's “relevant property income”
  1072. 783BD The individual's property allowance
  1073. 783BE Full relief: introduction
  1074. 783BF Full relief: property profits
  1075. 783BG Partial relief: alternative calculation of property profits: introduction
  1076. 783BH Partial relief: alternative calculation of property profits
  1077. 783BI Deductible amount: splitting of property allowance
  1078. 783BJ Election for full relief not to be given
  1079. 783BK Election for partial relief
  1080. 783BL Exclusion from relief: tax reduction under section 274A
  1081. 783BM Exclusion from relief: expenses deducted against rent-a-room receipts
  1082. 783BN Exclusion from relief: payments by employer
  1083. 783BO Exclusion from relief: payments by firm
  1084. 783BP Exclusion from relief: payments by close company
  1085. 783BQ Interpretation of this Chapter
  1086. 784 Overview of Chapter 1
  1087. 785 Person who qualifies for relief
  1088. 786 Meaning of “rent-a-room receipts”
  1089. 787 Meaning of “residence”
  1090. 788 Meaning of “total rent-a-room amount”
  1091. 789 The individual's limit
  1092. 790 Exclusive receipts condition
  1093. 791 Full rent-a-room relief: introduction
  1094. 792 Full rent-a-room relief: trading income
  1095. 793 Full rent-a-room relief: property income
  1096. 794 Full rent-a-room relief: income chargeable under Chapter 8 of Part 5
  1097. 795 Alternative calculation of profits: introduction
  1098. 796 Alternative calculation of profits: trading income
  1099. 797 Alternative calculation of profits: property income
  1100. 798 Alternative calculation of profits: income chargeable under Chapter 8 of Part 5
  1101. 799 Election not to apply full relief
  1102. 800 Election for alternative methodof calculating profits
  1103. 801 Time limit on adjustment of assessment
  1104. 802 Minor definitions
  1105. 803 Overview of Chapter 2
  1106. 804 Person who qualifies for relief
  1107. 804A Shared lives care: further condition for relief
  1108. 805 Meaning of “qualifying care receipts”
  1109. 805A Meaning of providing qualifying care
  1110. 806 Meaning of providing foster care
  1111. 806A Meaning of providing shared lives care
  1112. 806B Meaning of “residence”
  1113. 807 Calculation of “total qualifying care receipts”
  1114. 808 The individual's limit
  1115. 809 Share of fixed amount: residence used by more than one carer
  1116. 810 Share of fixed amount: income period not a year
  1117. 811 The amount per adult or child
  1118. 812 Full qualifying care relief: introduction
  1119. 813 Full qualifying care relief: trading income
  1120. 814 Full qualifying care relief: income chargeable under Chapter 8 of Part 5
  1121. 815 Alternative calculation of profits: introduction
  1122. 816 Alternative calculation of profits: trading income
  1123. 817 Alternative calculation of profits: income chargeable under Chapter 8 of Part 5
  1124. 818 Election for alternative methodof calculating profits
  1125. 819 Adjustment of assessment
  1126. 820 Periods of account not ending on 5th April
  1127. 821 Meaning of “relevant limit”
  1128. 822 Full relief
  1129. 823 Alternative method of calculating profits
  1130. 824 Capital allowances: introduction
  1131. 825 Unallocated capital expenditure
  1132. 825A Deemed disposal event
  1133. 825B Plant or machinery used for care business
  1134. 825C Plant or machinery used for other qualifying activities
  1135. 825D Subsequent disposal events
  1136. 826 Excluded capital expenditure
  1137. 827 Excluded capital expenditure: subsequent treatment of asset
  1138. 828 Overlap profit
  1139. 828A Indexation of the fixed amount and the amount per adult and child
  1140. 829 Overview of Part 8
  1141. 830 Meaning of “relevant foreign income”
  1142. 831 Claims for relevant foreign income to be charged on the remittance basis
  1143. 832 Relevant foreign income charged on remittance basis
  1144. 832A Section 832: temporary non-residents
  1145. 832B Section 832: deductions from remitted income
  1146. 833 Income treated as remitted: repayment of UK-linked debts
  1147. 834 Arrangements treated as repayment of UK-linked debts
  1148. 835 Relief for delayed remittances
  1149. 836 Relief for delayed remittances: backdated pensions
  1150. 837 Claims for relief on delayed remittances
  1151. 838 Expenses attributable to collection or payment of relevant foreign income
  1152. 839 Annual payments payable out of relevant foreign income
  1153. 840 Relief for backdated pensions charged on the arising basis
  1154. 840A Claims under section 840
  1155. 841 Unremittable income: introduction
  1156. 842 Claim for relief for unremittable income
  1157. 843 Withdrawal of relief
  1158. 844 Income charged on withdrawal of relief after source ceases
  1159. 845 Valuing unremittable income
  1160. 845A Claim for relief for qualifying new residents
  1161. 845B Qualifying new residents
  1162. 845C Effect of claim, foreign employment election or foreign gain claim on losses
  1163. 845D Effect of claim, foreign employment election or foreign gain claim: costs of dwelling-related loan
  1164. 845E Effect of claim, foreign employment election or foreign gain claim on personal allowance etc
  1165. 845F Effect of claim on relief for contributions to registered pension schemes
  1166. 845G Foreign income relief ignored for purposes of determining adjusted net income
  1167. 845H Qualifying foreign income
  1168. 845I Disqualified income
  1169. 845J Performance income
  1170. 846 Overview of Part 9
  1171. 847 General provisions
  1172. 848 Assessment of partnerships
  1173. 848A Bare trusts
  1174. 849 Calculation of firm's profits or losses
  1175. 850 Allocation of firm's profits or losses between partners
  1176. 850A Profit-making period in which some partners have losses
  1177. 850B Loss-making period in which some partners have profits
  1178. 850C Excess profit allocation to non-individual partners
  1179. 850D Excess profit allocation: cases involving individuals who are not partners
  1180. 850E Payments by B out of the excess part of B's profit share
  1181. 851 Calculations etc. where firm has other income or losses
  1182. 852 Carrying on by partner of notional trade
  1183. 852A Notional trades: indirect partners
  1184. 853 Basis periods for partners' notional trades
  1185. 854 Carrying on by partner of notional business
  1186. 855 Basis periods for partners' notional businesses
  1187. 855A Notional business: indirect partners
  1188. 856 Overlap profits from partners' notional businesses
  1189. 857 Partners to whom the remittance basis applies
  1190. 858 Resident partners and double taxation agreements
  1191. 859 Special provisions about farming and property income
  1192. 860 Adjustment income
  1193. 861 Sale of patent rights: effect of partnership changes
  1194. 862 Sale of patent rights: effect of later cessation of trade
  1195. 863 Limited liability partnerships
  1196. 863A Limited liability partnerships: salaried members
  1197. 863B Condition A
  1198. 863C Condition B
  1199. 863D Condition C
  1200. 863E M's contribution to the limited liability partnership: the basic calculation
  1201. 863F M's contribution to the limited liability partnership: deemed contributions
  1202. 863G Anti-avoidance
  1203. 863H Election for special provision for alternative investment fund managers to apply
  1204. 863I Allocation of profit to the AIFM firm
  1205. 863J Vesting of remuneration represented by the allocated profit
  1206. 863K Vesting statements
  1207. 863L The AIFMD remuneration guidelines
  1208. 864 Overview of Part 10
  1209. 865 Unpaid remuneration: non-trades and non-property businesses
  1210. 866 Employee benefit contributions: non-trades and non-property businesses
  1211. 867 Business entertainment and gifts: non-trades and non-property businesses
  1212. 868 Social security contributions: non-trades etc.
  1213. 869 Penalties , interest and VAT surcharges and interest: non-trades etc.
  1214. 870 Crime-related payments: non-trades and non-property businesses
  1215. 871 Apportionment etc. of miscellaneous profits to tax year
  1216. 872 Losses calculated on same basis as miscellaneous income
  1217. 873 Orders and regulations made by Treasury or Commissioners
  1218. 874 Activities in UK sector of continental shelf
  1219. 875 Meaning of “caravan”
  1220. 876 Meaning of “farming” and related expressions
  1221. 877 Meaning of grossing up
  1222. 878 Other definitions
  1223. 879 Interpretation: Scotland
  1224. 880 Interpretation: Northern Ireland
  1225. 881 Disapplication of corporation tax: section 9 of ICTA
  1226. 882 Consequential amendments
  1227. 883 Commencement and transitional provisions etc.
  1228. 884 Repeals and revocations
  1229. 885 Abbreviations and general index in Schedule 4
  1230. 886 Short title
  1231. Schedule A1 Carried Interest: interpretation of key terms
  1232. SCHEDULE 1 Consequential amendments
  1233. SCHEDULE 2 Transitionals and savings etc.
  1234. SCHEDULE 3 Repeals and revocations
  1235. SCHEDULE 4 Abbreviations and defined expressions

Proposed changes to this act

No one has proposed a change to this act yet.

1,235 provisions

704 Types of arrangements and providers

(1) A linked savings arrangement may be— (a) a national savings arrangement, or (b) an institutional arrangement. (2) In this Chapter “national savings arrangement” means an arrangement which— (a) provides for contributions to be paid to raise money under section 12 of the National Loans Act 1968 (c. 13) (power of Treasury to borrow), (b) is governed by regulations made under section 11 of the National Debt Act 1972 (c. 65) (power of Treasury to make regulations as to raising of money under auspices of Director of Savings), and (c) provides for the repayment of those contributions, together with interest, in accordance with those regulations. (3) In this Chapter “institutional arrangement” means— (a) a bank arrangement, or (b) a building society arrangement ... (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) In this Chapter— (a) “bank arrangement” means an arrangement which provides for contributions to be paid to a person within section 991(2)(b) of ITA 2007 (banks), and (b) “provider”, in relation to such an arrangement, means that person. (5) In this Chapter— (a) “building society arrangement” means an arrangement which provides for contributions to be paid by way of investment in shares in a building society, and (b) “provider”, in relation to such an arrangement, means that society. (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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705 Certification of arrangements

(1) A linked savings arrangement is certified under this section if it is certified by the Commissioners — (a) as a linked savings arrangement, and (b) in the case of an institutional arrangement, as meeting such requirements as the Treasury may specify for the purposes of this Chapter. (2) The requirements which may be specified under subsection (1)(b) are such requirements as the Commissioners consider appropriate. (3) They may, in particular, relate to— (a) the descriptions of individuals who may enter into contracts under an arrangement, (b) the contributions to be paid by them, and (c) the sums to be paid or repaid to them. (4) Different requirements may be specified for— (a) bank arrangements, (b) building society arrangements, and (c) European authorised institution arrangements. (5) In this Chapter “the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs.

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706 Withdrawal and variation of certifications and connected requirements

(1) The Commissioners may— (a) withdraw the requirements specified under section 705(1)(b) for any description of arrangements and any certification made by reference to those requirements, or (b) vary those requirements and withdraw any certification made by reference to them. (2) The withdrawal, or variation and withdrawal, is only effective if the Commissioners — (a) specify the date on which it is to take effect, and (b) give notice of it ... at least 15 days before that date to the provider authorised under section 707 to enter into contracts under the arrangement concerned. (3) The withdrawal, or variation and withdrawal, does not affect (a) the operation of the arrangement concerned before that date, (b) contracts made under that arrangement before that date, or (c) where the notice so provides, contracts which are of a description specified in the notice and are made under that arrangement after that date.

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707 Authorisation of providers

(1) In the case of an institutional arrangement, section 702(1) (exemption of interest payable under certified SAYE savings arrangements) only applies if, at the time the contract under the arrangement is made, the provider is authorised by the Commissioners to enter into contracts under it. (2) If the authorisation is conditional, the conditions must be met at that time. (3) Authorisation may be given for arrangements generally or a particular arrangement. (4) More than one authorisation may be given to the same provider.

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708 Withdrawal and variation of authorisations

(1) The Commissioners may withdraw the authorisation of a provider or vary it by imposing, varying or removing conditions. (2) The withdrawal or variation is only effective if the Commissioners — (a) specify the date on which it is to take effect, and (b) except in the case of a variation removing all conditions, give notice of it ... to the provider at least 28 days before that date. (3) The withdrawal or variation does not affect contracts made before that date. (4) The fact that a provider has had its authorisation withdrawn or varied does not affect the later exercise by the Commissioners of their powers under section 707 or this section as respects the provider.

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709 Venture capital trust dividends

(1) No liability to income tax arises in respect of a venture capital trust dividend if— (a) conditions A and B are met, and (b) where the dividend is paid in respect of shares acquired after 8th March 1999, condition C is met. (2) In subsection (1) a “venture capital trust dividend” means a dividend paid in respect of ordinary shares in a company which— (a) is a venture capital trust— (i) at the end of the accounting period in which the profits or gains in respect of which it is paid arose or accrued, and (ii) when the dividend is paid, and (b) was such a trust when the person to whom it is paid acquired the shares. (3) Condition A is that the person beneficially entitled to the dividend— (a) is an individual of at least 18 years, and (b) is beneficially entitled to it as the holder of the shares or as the person for whom, or for whose benefit, they are held by a nominee. (4) Condition B is that— (a) in the tax year in which the shares were acquired the market value of all the shares acquired by the individual or any nominee of the individual in companies which were venture capital trusts at the time of acquisition did not exceed £200,000, or (b) in that year that market value exceeded £200,000, but the shares are treated under section 710 as having been acquired within that limit. (5) For the purposes of subsection (4), the market value of a share is determined as at the time of its acquisition. (6) Condition C is that the shares were acquired for genuine commercial reasons and not as part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, was the avoidance of tax. (7) Shares that were not so acquired are ignored for the purposes of subsection (4) and section 710 (whether or not they were acquired after 8th March 1999). (8) In this section and in sections 710 and 711— “market value” has the same meaning as in TCGA 1992 (see sections 272 and 273), “nominee”, in relation to an individual, includes the trustees of a bare trust of which the individual is the only beneficiary, and “ordinary shares” means shares forming part of the company's ordinary share capital.

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710 Treatment of shares where annual acquisition limit exceeded

(1) This section sets out the rules for determining which shares whose market value is relevant for the limit in section 709(4) are treated as shares acquired within that limit (“exempt shares”) where that limit is exceeded in a tax year. (2) Shares are treated as exempt shares so far as their acquisition does not cause the limit to be exceeded at the time they are acquired. (3) Subsection (2) is subject to subsection (4). (4) If shares of different descriptions acquired on the same day cause the limit to be exceeded on that day, shares of each description are treated as exempt shares so far as their market value does not exceed the appropriate proportion of the available value. (5) In subsection (4)— “the appropriate proportion”, in relation to shares of a particular description, means the proportion which their market value bears to the market value of all the shares acquired on that day, and “available value” means the maximum value of shares which could be acquired on that day without exceeding the limit.

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711 Identification of shares after disposals

(1) In determining whether a disposal relates to shares in a company which were acquired when it was a venture capital trust or others, it is assumed that the others are disposed of first. (2) In determining whether a disposal of shares in a company which were acquired when it was a venture capital trust relates to shares which meet the condition in section 709(4) (annual acquisition limit) or others (“excess shares”), assumptions A and B are to be made. (3) Assumption A is that shares acquired on an earlier day are disposed of before those acquired on a later day. (4) Assumption B is that where the shares were acquired on the same day, excess shares are disposed of first. (5) For the purposes of this section, acquisitions and disposals by an individual's nominee are treated as made by the individual, and acquisitions and disposals between them are ignored.

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712 Identification of shares after reorganisations etc.

(1) This section applies if shares (“the new shares”) are treated under Chapter 2 of Part 4 of TCGA 1992 (reorganisations etc.) as the same assets as other shares (“the old shares”). (2) If all the old shares met— (a) the condition in section 709(4) (annual acquisition limit), and (b) if it applied to the old shares, the condition in section 709(6) (acquisition for genuine commercial reasons), the new shares are treated as doing so. (3) If only some of the old shares met those conditions, the corresponding proportion of the new shares are treated as meeting them and the remainder are treated as not doing so. (4) In the tax year in which the new shares are acquired the value of the new shares is ignored in determining whether other shares acquired in the same tax year meet the condition in section 709(4).

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713 Introduction: securities free of tax to residents abroad (“FOTRA securities”)

(1) This Chapter provides for exemptions from income tax in respect of FOTRA securities. (2) In this Chapter “FOTRA security” means— (a) a security issued with a condition about exemption from taxation authorised by section 22 of F(No.2)A 1931, (b) a gilt-edged security which was issued before 6th April 1998 and without any such condition (other than 3½% War Loan 1952 Or After), or (c) 3½% War Loan 1952 Or After. (3) In this Chapter “the exemption condition” has the meaning given by subsections (4) to (6), according to the kind of FOTRA security involved. (4) In relation to a security within subsection (2)(a), it means the condition authorised by section 22 of F(No.2)A 1931. (5) In relation to a security within subsection (2)(b), it means a condition with which 7.25% Treasury Stock 2007 was first issued, being a condition treated by section 161(1) of FA 1998 (non-FOTRA securities)— (a) as a condition with which the security within subsection (2)(b) was issued, and (b) as a condition authorised in relation to its issue by section 22 of F(No.2)A 1931. (6) In relation to 3½% War Loan 1952 Or After, it means a condition of its issue authorised by section 47 of F(No.2)A 1915.

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714 Exemption of profits from FOTRA securities

(1) No liability to income tax arises in respect of profits from a FOTRA security if conditions A and B are met. (2) Subsection (1) is subject to subsection (5). (3) Condition A is that the profits are stated in the exemption condition to be exempt from income tax. (4) Condition B is that any requirements for obtaining the exemption imposed by the security's conditions of issue are met. (5) Whatever the exemption condition provides, amounts charged under the provisions specified in subsection (6) are not exempted by subsection (1). (6) The provisions are— Chapter 5 of Part 5 (settlements: amounts treated as income of settlor) so far as it applies to income within section 619(1)(a) or (b), and Chapter 2 of Part 13 of ITA 2007(anti-avoidance provisions: transfer of assets abroad). (7) This section does not affect the need to claim repayment of tax within the time limit applicable for a claim.

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715 Interest from FOTRA securities held on trust

(1) This section applies if— (a) a FOTRA security is held on trust, and (b) apart from this section, interest payable on the security would not be exempt from income tax under section 714 because of the security not being in the beneficial ownership of a non-UK resident person. (2) For the purposes of determining whether the interest is exempt under section 714 it is to be assumed that the security is in the beneficial ownership of a non-UK resident person if none of the beneficiaries of the trust is UK resident for the tax year in which the interest arises. (3) In subsection (2) “beneficiaries of the trust” includes any person known to the trustees as a person— (a) who is, or will or may become, entitled under the terms of the trust to receive income under the trust, or (b) to whom or for whose benefit such income may be paid or applied. (4) In subsection (3) “income under the trust” includes any property held on the terms of the trust and falling to be treated as capital so far as it is or represents amounts received by the trustees as income.

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716 Restriction on deductions etc. relating to FOTRA securities

(1) A person who meets conditions A and B may not bring into account for income tax purposes— (a) any amount relating to changes in the value of a FOTRA security, or (b) expenses related to holding it or to any transaction concerning it. (2) Condition A is that the person is the beneficial owner of the security. (3) Condition B is that the person is a person who would be exempt from tax on the security under this Chapter.

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717 Exemption for part of purchased life annuity payments

(1) No liability to income tax arises under Chapter 7 of Part 4 in respect of so much of an annuity payment made under a purchased life annuity as is within this subsection in accordance with section 719 (extent of exemption). (2) Subsection (1) is subject to section 718. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) In this Chapter “purchased life annuity” has the same meaning as in Chapter 7 of Part 4 (see section 423).

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718 Excluded annuities

(1) The exemption in section 717(1) does not apply to payments made under the annuities specified in subsection (2). (2) The annuities are— (a) an annuity the whole or part of the consideration for which consisted of sums satisfying the conditions for relief under section 266 of ICTA (life assurance premiums), (b) an annuity purchased following a direction in a will, and (c) an annuity purchased to provide for an annuity payable as a result of a will or settlement out of income of property disposed of by the will or settlement. (3) For the purposes of subsection (2)(c), it does not matter whether or not capital could also be used to pay the annuity.

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719 Extent of exemption under section 717

(1) This section sets out the rules for determining the extent to which an annuity payment is within the exemption in section 717(1). (2) The rules depend on— (a) whether or not the amount of the annuity payments under the annuity depends solely on the duration of a human life or lives (see subsections (3) to (5)), and (b) whether or not the annuity's term depends solely on the duration of a human life or lives (see subsections (6) to (8)). (3) If the amount of the annuity payments depends solely on the duration of a human life or lives, the same proportion of each payment (“the exempt proportion”) is exempt. (4) But if the amount of the annuity payments also depends on another contingency, each payment is exempt so far as it does not exceed a fixed sum (“the exempt sum”). (5) If an annuity payment within subsection (4) is less than the exempt sum, the shortfall is added to the exempt sum for the next payment (and so on). (6) The ways to determine the exempt proportion and the exempt sum differ according to whether or not the annuity's term depends solely on the duration of a human life or lives. (7) If the annuity's term depends solely on the duration of a human life or lives— (a) the exempt proportion is determined as set out in section 720, and (b) the exempt sum is determined as set out in section 721. (8) If the annuity's term also depends on another contingency— (a) the exempt proportion is the proportion which is just and reasonable, having regard to the contingencies affecting the annuity and to section 720, and (b) the exempt sum is the amount which is just and reasonable, having regard to the contingencies affecting the annuity and to section 721.

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720 Exempt proportion: term dependent solely on duration of life

(1) In the case of an annuity within section 719(7) (term dependent solely on duration of life), the exempt proportion is — AP × PP AV where— AP is the annuity payment, PP is the purchase price of the annuity, and AV is the actuarial value of the annuity payments. (2) The purchase price of the annuity is the total amount or value of the consideration given for the annuity. (3) The actuarial value of the annuity payments is their value at the date when the first of the payments starts to accrue. (4) That value is determined— (a) by reference to tables of mortality prescribed under section 724, (b) taking the age at that date of a person during whose life the annuity is payable as that person's age in whole years on that date, and (c) without discounting any payment for the time to elapse before it is payable. (5) But if it is not possible to determine that actuarial value by reference to the tables mentioned in subsection (4)(a), it is such amount as may be certified by the Government Actuary or the Deputy Government Actuary.

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721 Exempt sum: term dependent solely on duration of life

(1) In the case of an annuity within section 719(7) (term dependent solely on duration of life), the exempt sum is — PP × 1 TY × PM 12 where— PP is the purchase price of the annuity, TY is the expected term of the annuity in years (and any odd fraction of a year), and PM is the period in months (and any odd fraction of a month) in respect of which the annuity payment is made. (2) The purchase price of the annuity is the total amount or value of the consideration given for the annuity. (3) The expected term of the annuity is the period from the date when the first annuity payment starts to accrue to the date when it is expected that the last payment will become payable. (4) The expected term of the annuity is determined— (a) as at the date when the first annuity payment starts to accrue, (b) by reference to tables of mortality prescribed under section 724, and (c) taking the age at that date of a person during whose life the annuity is payable as that person's age in whole years on that date. (5) But if it is not possible to determine that term by reference to the tables mentioned in subsection (4)(b), it is such period as may be certified by the Government Actuary or the Deputy Government Actuary.

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722 Consideration for the grant of annuities

(1) This section applies if the amount or value given for an annuity is to be determined for the purposes of sections 720(2) or 721(2) and either— (a) consideration is not given solely for the annuity, or (b) it appears that the amount or value of the consideration nominally given for it affected, or was affected by, the consideration given for something else. (2) For the purposes of subsection (1), consideration given for a right to a return of premiums or of other consideration for an annuity is treated as given solely for the annuity. (3) If subsection (1)(a) applies, the consideration is to be apportioned in such way as is just and reasonable. (4) If subsection (1)(b) applies, the total amount or value of the considerations given is to be apportioned in such way as is just and reasonable.

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723 Determinations

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724 Regulations

(1) the Commissioners for Her Majesty’s Revenue and Customs may by regulations— (a) prescribe the procedure to be used in giving effect to sections 717 to 722 and this section where no provision is made in those provisions, (b) apply any provision of the Income Tax Acts, with or without modifications, for the purposes of those provisions or the regulations, (c) prescribe tables of mortality for the purposes of sections 720(4) and 721(4). (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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725 Annual payments under immediate needs annuities

(1) No liability to income tax arises under Chapter 7 of Part 4 in respect of so much of an annual payment made under an immediate needs annuity as is made— (a) for the benefit of the person protected under that annuity, and (b) to a care provider or a local authority in respect of the provision of care for that person. (2) In this section “immediate needs annuity” means a contract for a purchased life annuity— (a) the purpose or one of the purposes of which is to protect a person against the consequences of the person being unable, at the time the contract is made, to live independently without assistance because of a condition to which subsection (3) applies, and (b) under which benefits are payable in respect of the provision of care for the person protected. (3) This subsection applies to— (a) mental or physical impairment, or (b) injury, sickness or other infirmity, which is expected to be permanent. (4) In this section and section 726 “care” means accommodation, goods or services which it is necessary or desirable to provide to a person because of a condition to which subsection (3) applies. (5) In this section— “care provider” has the meaning given in section 726, and “purchased life annuity” has the same meaning as in Chapter 7 of Part 4 (see section 423). (6) The Treasury may by order amend— (a) subsection (2), and (b) subsection (3), so far as it applies for the purposes of subsection (2).

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726 Meaning of “care provider”

(1) In section 725 “care provider” means a person who— (a) carries on a trade, profession or vocation which consists of or includes the provision of care, and (b) meets the care registration requirement. (2) A person meets the care registration requirement in relation to care provided in England if the person is registered under Part 2 of the Care Standards Act 2000 or Chapter 2 of Part 1 of the Health and Social Care Act 2008 in respect of the provision of care. (2A) A person meets the care registration requirement in relation to care provided in Wales if the person is registered under— (a) Part 2 of the Care Standards Act 2000, or (b) Part 1 of the Regulation and Inspection of Social Care (Wales) Act 2016 (anaw 2), in respect of the provision of the care. (3) A person meets the care registration requirement in relation to care provided in Scotland if the person provides care as, or as part of, a service which is registered under— (a) Chapter3 of Part 5 of the Public Services Reform (Scotland) Act 2010 (asp 8), or (b) section 10Q of the National Health Service (Scotland) Act 1978 (c. 29). (4) A person meets the care registration requirement in relation to care provided in Northern Ireland if the person is registered in respect of the provision of care under— (a) Part 2 or 3 of the Registered Homes (Northern Ireland) Order 1992 (S.I. 1992/3204 (N.I. 20)), or (b) Part 3 of the Health and Personal Social Services (Quality, Improvement and Regulation) (Northern Ireland) Order 2003 (S.I. 2003/431 (N.I. 9)). (5) A person meets the care registration requirement in relation to care provided in a territory outside the United Kingdom if the person meets requirements under the law of that territory relating to the provision of care that are comparable to those mentioned in subsections (2) to (4). (6) The Treasury may by order amend this section.

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727 Certain annual payments by individuals

(1) No liability to income tax arises under Part 5 in respect of an annual payment if it— (a) is made by an individual, and (b) arises in the United Kingdom. (2) Subsection (1) is subject to— section 728 (commercial payments), and section 729 (payments for non-taxable consideration). (3) Subsection (1) also applies to a payment made by an individual's personal representatives if— (a) the individual would have been liable to make it, and (b) that subsection would have applied if the individual had made it. (4) For the purposes of subsection (1) and section 728, “individual” includes a Scottish partnership if at least one partner is an individual.

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728 Commercial payments

A payment by an individual is not exempt from income tax under section 727(1) if it is made for commercial reasons in connection with the individual's trade, profession or vocation.

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729 Payments for non-taxable consideration

(1) A payment that meets condition A is only exempt from income tax under section 727(1) if condition B or C is met. (2) Condition A is that— (a) the payment is made under a liability incurred at any time for consideration in money or money's worth, and (b) some or all of the consideration is not required to be brought into account in calculating the payer's income for income tax purposes. (3) Condition B is that the payment is income within section 627(1) (payments on dissolution or separation) in the recipient's hands. (4) Condition C is that the payment is made to an individual under a liability incurred at any time in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person with a subsequent interest. (5) In the application of subsection (4) to Scotland, the reference to settled property is to be read as a reference to property held in trust.

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730 Foreign maintenance payments

(1) No liability to income tax arises under Part 5 in respect of an annual payment if— (a) it is a maintenance payment, (b) it arises outside the United Kingdom, and (c) had it arisen in the United Kingdom it would be exempt from income tax under section 727 (certain annual payments by individuals). (2) In subsection (1) “maintenance payment” means a periodical payment which meets conditions A and B. (3) Condition A is that the payment is made under a court order or a written or oral agreement. (4) Condition B is that the payment is made by a person— (a) as one of the parties to a marriage or civil partnership to, or for the benefit of, and for the maintenance of, the other party, (b) to any person under 21 for that person's own benefit, maintenance or education, or (c) to any person for the benefit, maintenance or education of a person under 21. (5) In subsection (4) “marriage” includes a marriage that has been dissolved or annulled , and “civil partnership” includes a civil partnership that has been dissolved or annulled . (6) Subsection (1) also applies to a payment made by an individual's personal representatives if— (a) the individual would have been liable to make it, and (b) that subsection would have applied if the individual had made it.

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731 Periodical payments of personal injury damages

(1) No liability to income tax arises for the persons specified in section 733 in respect of periodical payments to which subsection (2) applies or annuity payments to which subsection (3) applies. (2) This subsection applies to periodical payments made pursuant to— (a) an order of the court, so far as it is made in reliance on section 2 of the Damages Act 1996 (c. 48) (periodical payments) (including an order as varied), (b) an order of a court outside the United Kingdom which is similar to an order made in reliance on that section (including an order as varied), (c) an agreement, so far as it settles a claim or action for damages in respect of personal injury (including an agreement as varied), (d) an agreement, so far as it relates to making payments on account of damages that may be awarded in such a claim or action (including an agreement as varied), or (e) a Motor Insurers' Bureau undertaking in relation to a claim or action in respect of personal injury (including an undertaking as varied). (3) This subsection applies to annuity payments made under an annuity purchased or provided— (a) by the person by whom payments to which subsection (2) applies would otherwise fall to be made, and (b) in accordance with such an order, agreement or undertaking as is mentioned in subsection (2) or a varying order, agreement or undertaking. (4) In this section “damages in respect of personal injury” includes damages in respect of a person's death from personal injury. (5) In this section “personal injury” includes disease and impairment of physical or mental condition. (6) In this section “a Motor Insurers' Bureau undertaking” means an undertaking given by — (a) the Motor Insurers' Bureau (being the company of that name incorporated on 14th June 1946 under the Companies Act 1929 (c. 23)), or (b) an Article 75 insurer under the Bureau's Articles of Association.

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732 Compensation awards

(1) No liability to income tax arises for the persons specified in section 733 in respect of annuity payments if they are made under an annuity purchased or provided under an award of compensation made under the Criminal Injuries Compensation Scheme or the Victims of Overseas Terrorism Compensation Scheme. (2) The Treasury may by order provide for sections 731, 733 and 734 to apply, with such modifications as they consider necessary, to periodical payments by way of compensation for personal injury for which provision is made under a scheme or arrangement other than the Criminal Injuries Compensation Scheme or the Victims of Overseas Terrorism Compensation Scheme. (3) In this section— “the Criminal Injuries Compensation Scheme” means— the schemes established by arrangements made under the Criminal Injuries Compensation Act 1995 (c. 53), arrangements made by the Secretary of State for compensation for criminal injuries in operation before the commencement of those schemes, or the scheme established under the Criminal Injuries (Northern Ireland) Order 2002 (S.I. 2002/796) (N.I.1), and “personal injury” includes disease and impairment of physical or mental condition.

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733 Persons entitled to exemptions for personal injury payments etc.

The persons entitled to the exemptions given by sections 731(1) and 732(1) for payments are— (a) the person entitled to the damages under the order, agreement, undertaking or to the compensation under the award in question (“A”), (b) a person who receives the payment in question on behalf of A, and (c) a trustee who receives the payment in question on trust for the benefit of A under a trust under which A is, while alive, the only person who may benefit.

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734 Payments from trusts for injured persons

(1) No liability to income tax arises for the persons specified in subsection (2) in respect of sums paid under a lifetime trust— (a) to the person (“A”) who is entitled to— (i) a payment under an order, agreement or undertaking within section 731(2) or an annuity purchased or provided as mentioned in section 731(3), or (ii) compensation under an award within section 732(1), or (b) for the benefit of A. (2) The persons are— (a) A, and (b) if subsection (1)(b) applies, a person who receives the sum on behalf of A. (3) For the purposes of subsection (1), sums are paid under a lifetime trust if they are paid— (a) by the trustees of a trust under which A is, while alive, the only person who may benefit, and (b) out of payments within section 731(2) or (3) or 732(1) which are received by them on trust for A.

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735 Health and employment insurance payments

(1) No liability to income tax arises under this Act in respect of an annual payment under an insurance policy if— (a) the payment is a benefit provided under so much of the policy as insures against a health or employment risk (see section 736), (b) no part of any premiums under the policy has been deductible in calculating the income of the insured for income tax purposes, and (c) the conditions in sections 737 and 738 and, so far as applicable, those in sections 739 and 740 are met in relation to the policy. (2) Subsection (1)(b) is subject to section 743. (3) For the meaning of “the insured”, see sections 742 and 743(2).

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736 Health and employment risks and benefits

(1) For the purposes of sections 735 and 737 to 743, a policy insures against a health risk if it insures against the insured becoming, or becoming in any specified way, subject— (a) to any physical or mental illness, disability, infirmity or defect, or (b) to any deterioration in a condition resulting from any such illness, disability, infirmity or defect. (2) For the purposes of sections 735 and 737 to 743, a policy insures against an employment risk if it insures against circumstances arising as a result of which the insured ceases— (a) to be employed or hold office, or (b) to carry on any trade, profession or vocation. (3) For the purposes of section 735, this section and sections 737 to 743, references to insurance against a risk include insurance providing for benefits payable otherwise than by way of indemnity if the circumstances insured against occur.

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737 Period for which payments may be made

(1) The condition in this section is that the only annual payments provided for by the policy which relate to the health or employment risk it insures against (“the insured risk”) are payments in respect of one or more of the following periods. (2) They are— (a) a period throughout which an illness, disability, infirmity or defect insured against by the part of the policy relating to the insured risk continues, (b) a period throughout which, in circumstances insured against by the part of the policy relating to the insured risk, the insured is unemployed, does not hold an office or is not carrying on a trade, profession or vocation, (c) a period throughout which, in circumstances insured against by the part of the policy relating to the insured risk, the insured's income is less than it would otherwise have been, and (d) where a period within paragraph (a), (b) or (c) ends with the death of the insured, a period immediately following that period. (3) For the purposes of subsection (2)(a), an illness, disability, infirmity or defect is treated as continuing during a period of convalescence or rehabilitation related to it. (4) For the purposes of subsection (2)(c), income from the policy is ignored.

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738 Risk of significant loss

(1) The condition in this section is that throughout the period that the policy has contained provisions relating to the health or employment risk those provisions have been such that any policy of insurance which only contained those provisions would involve the possibility that the insurer would make a significant loss on the premiums. (2) In determining whether a policy would involve that possibility, any return on the investment of the premiums is to be taken into account. (3) For this purpose reinsurance is ignored.

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739 Conditions to be met by policies also providing other benefits

(1) The conditions in this section only apply if the policy provides for the payment of benefits which do not all relate to the health or employment risk. (2) The conditions are that so far as the policy's terms relate to the health or employment risk— (a) they do not differ significantly from what they would have been if the only benefits had been those relating to that risk, and (b) the way in which they are given effect does not differ significantly from the way in which they would have been given effect in that case. (3) A difference relating only to the reduction of benefits payable to or in respect of a person because of other benefits being payable to or in respect of the person is to be ignored. (4) For the purposes of this section, all the persons for whose benefit the policy provides insurance against the health or employment risk are to be considered.

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740 Conditions to be met where policies are linked

(1) The conditions in this section only apply if— (a) the insured is or has been the insured under one or more other policies (“connected policies”), and (b) each of the connected policies has been in force either— (i) at a time when the policy in question was in force, or (ii) at the time immediately before it was entered into. (2) The conditions are that so far as the terms of the policy relate to the health or employment risk— (a) they do not differ significantly from what they would have been if no connected policies had been entered into, and (b) the way in which they are given effect does not differ significantly from the way in which they would have been given effect in that case. (3) A difference relating only to the reduction of benefits payable to or in respect of a person under the policy because of benefits being payable to or in respect of the person under any of the connected policies is to be ignored. (4) For the purposes of this section, all the persons for whose benefit the policy provides insurance against the health or employment risk are to be considered.

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741 Aggregation of policies where employment ends for health reasons

(1) This section applies if— (a) payments are made to or in respect of a person who has left employment because of the occurrence of something insured against by an employment policy as a health risk, (b) the payments are made under another policy (“the replacement policy”) which was entered into under, or in accordance with, provisions contained in the employment policy, (c) the employment policy has ceased to apply to the person, and (d) the rights in accordance with which the payments are made under the replacement policy superseded rights under the employment policy with effect from the time when that policy ceased to apply to the person. (2) The employment policy and the replacement policy are to be treated as a single policy for the purposes of sections 735 to 738, this section and section 743. (3) In this section— “employment” includes an office, and “employees” and “employer” are to be read accordingly, and “employment policy” means a policy entered into wholly or partly for the benefit of the employees of an employer against a health risk.

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742 Meaning of “the insured”

In sections 735 to 737 “the insured” includes— (a) the insured's spouse or civil partner , (b) any child under 21 of the insured or the insured's spouse or civil partner , and (c) any person on whom any liabilities arising from an actual or proposed transaction identified in the policy will fall jointly with the insured or the insured's spouse.

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743 Policies for the benefit of others who contribute to premiums

(1) This section applies if— (a) a policy of insurance is taken out by one person (“A”) wholly or partly for the benefit of another (“B”), (b) B makes payments or contributions in respect of the premiums, and (c) annual payments under the policy are wholly or partly attributable, on a just and reasonable basis, to the payments or contributions made by B. (2) So far as those benefits are so attributable, B is to be treated as the insured in relation to that policy for the purposes of sections 735 to 742. (3) So far as those benefits are so attributable, payments or contributions not made by B are ignored for the purposes of section 735(1)(b) (no part of the premiums to have been deductible in calculating the insured's income).

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