Finance Act 2013
2013 c. 29
An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.
[17th July 2013]
Most Gracious Sovereign
WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
2 Personal allowance for 2013-14 for those born after 5 April 1948
(1) For the tax year 2013-14 the amount specified in section 35(1) of ITA 2007 (personal allowance for those born after 5 April 1948) is replaced with “ £9,440 ”.
(2) Accordingly section 57 of that Act (indexation of allowances), so far as relating to the amount specified in section 35(1) of that Act, does not apply for that tax year.
(1) For the tax year 2013-14 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “ £32,010 ”.
(2) Accordingly section 21 of that Act (indexation of limits), so far as relating to the basic rate limit, does not apply for that tax year.
(1) Corporation tax is charged for the financial year 2014.
(2) For that year the rate of corporation tax is—
(a) 21% on profits of companies other than ring fence profits, and
(b) 30% on ring fence profits of companies.
(3) In subsection (2) “ring fence profits” has the same meaning as in Part 8 of CTA 2010 (see section 276 of that Act).
5 Small profits rate and fractions for financial year 2013
(1) For the financial year 2013 the small profits rate is—
(a) 20% on profits of companies other than ring fence profits, and
(b) 19% on ring fence profits of companies.
(2) For the purposes of Part 3 of CTA 2010, for that year—
(a) the standard fraction is 3/400ths, and
(b) the ring fence fraction is 11/400ths.
(3) In subsection (1) “ring fence profits” has the same meaning as in Part 8 of that Act (see section 276 of that Act).
7 Temporary increase in annual investment allowance
(1) In relation to expenditure incurred during the period beginning with 1 January 2013 and ending with the specified date , section 51A of CAA 2001 (entitlement to annual investment allowance) has effect as if in subsection (5) for “£25,000” there were substituted “ £250,000 ”.
(1A) The specified date is —
(a) for the purposes of corporation tax, 31 March 2014, and
(b) for the purposes of income tax, 5 April 2014.
(2) Schedule 1 contains provision about chargeable periods which straddle 1 January 2013 ....
(1) An accredited competitor who performs an Anniversary Games activity is not liable to income tax in respect of any income arising from the activity if the non-residence condition is met.
(2) The following are Anniversary Games activities—
(a) competing at the Anniversary Games, and
(b) any activity that is performed during the games period the main purpose of which is to support or promote the Anniversary Games.
(3) The non-residence condition is that—
(a) the accredited competitor is non-UK resident for the tax year 2013-14, or
(b) the accredited competitor is UK resident for the tax year 2013-14 but the year is a split year as respects the competitor and the activity is performed in the overseas part of the year.
(4) Section 966 of ITA 2007 (deduction of sums representing income tax) does not apply to any payment or transfer which gives rise to income benefiting from the exemption under subsection (1).
(5) In this section—
“accredited competitor” means a person to whom an accreditation card in the athletes' category has been issued by the company named UK Athletics Limited which was incorporated on 16 December 1998;
“the Anniversary Games” means the British Athletics London Anniversary Games held at the Olympic Stadium in London in July 2013;
“the games period” means the period—
beginning with 21 July 2013, and
ending with 29 July 2013;
“income” means employment income or profits of a trade, profession or vocation (including profits treated as arising as a result of section 13 of ITTOIA 2005).
(6) This section is treated as having come into force on 6 April 2013.
(1) An accredited competitor who performs a Commonwealth Games activity is not liable to income tax in respect of any income arising from the activity if the non-residence condition is met.
(2) The following are Commonwealth Games activities—
(a) competing at the Glasgow Commonwealth Games, and
(b) any activity that is performed during the games period the main purpose of which is to support or promote the Glasgow Commonwealth Games or any future Commonwealth Games.
(3) The non-residence condition is that—
(a) the accredited competitor is non-UK resident for the tax year in which the Commonwealth Games activity is performed, or
(b) the accredited competitor is UK resident for the tax year in which the activity is performed but the year is a split year as respects the competitor and the activity is performed in the overseas part of the year.
(4) Section 966 of ITA 2007 (deduction of sums representing income tax) does not apply to any payment or transfer which gives rise to income benefiting from the exemption under subsection (1).
(5) In this section—
“accredited competitor” means a person to whom a Glasgow 2014 accreditation card in the athletes' category has been issued by the company named Glasgow 2014 Limited which was incorporated on 11 June 2007;
“the games period” means the period—
beginning with 4 March 2014, and
ending with 3 September 2014;
“the Glasgow Commonwealth Games” means the Commonwealth Games held in Scotland in 2014;
“income” means employment income or profits of a trade, profession or vocation (including profits treated as arising as a result of section 13 of ITTOIA 2005).
(1) After section 293A of ITEPA 2003 insert—
UK travel expenses of other elected representatives
293B (1) No liability to income tax arises in respect of a payment to which this section applies if it is expressed to be made in respect of relevant UK travel expenses.
(2) This section applies to payments—
(a) made to members of the Scottish Parliament under section 81(2) of the Scotland Act 1998,
(b) made to members of the National Assembly for Wales under section 20(2) of the Government of Wales Act 2006 or to a member of the Welsh Assembly Government under section 53(2) of that Act, or
(c) made to members of the Northern Ireland Assembly under section 47(2) of the Northern Ireland Act 1998.
(3) In this section “relevant UK travel expenses” means expenses necessarily incurred on journeys of the following kinds within the United Kingdom—
(a) journeys within subsection (4) made by the member that are necessary for the performance of his or her duties as a member;
(b) if the member shares caring responsibilities with a spouse or partner, journeys made by the spouse or partner between the constituency or region and the member's parliamentary home.
(4) The journeys referred to in subsection (3)(a) are those—
(a) between the constituency or region and the Parliament or Assembly to which the member belongs,
(b) between the constituency or region and the member's parliamentary home, or
(c) within the constituency or region, but not excluded by subsection (5).
(5) A journey is excluded if—
(a) in the case of a member who has only one local office, it is between the member's local home and that office, and
(b) in any other case, it is between the member's local home and the principal local office.
(6) In this section—
“constituency or region”, in relation to a member, means the constituency or region which the member represents and the area within 20 miles of the boundary of that constituency or region;
“local office”, in relation to a member, means an office which is situated in the constituency or region and occupied by the member for the purposes of performing duties as a member;
“the member's local home” means a residence of the member situated in the constituency or region;
“the member's parliamentary home” means the member's only or main residence in the area comprising—
the main site of the Parliament or Assembly to which the member belongs, and
the area within 20 miles of that site;
“principal local office”, in relation to a member, means the local office most frequently occupied by the member for the purposes of performing duties as a member.
(7) A person has “caring responsibilities” if the person—
(a) has parental responsibility for a dependent child aged under 17 or for a child aged 17 or 18 who is in full-time education, or
(b) is the primary carer for a family member in receipt of—
(i) attendance allowance,
(ii) disability living allowance at the middle or highest rate for personal care,
(iii) the daily living component of personal independence payment, or
(iv) constant attendance allowance at or above the maximum rate with an industrial injuries disablement benefit, or the basic (full day) rate with a war disablement pension.
(8) The Treasury may by order amend the definition of “caring responsibilities” in subsection (7).
(2) The amendment made by this section has effect in relation to payments made on or after 6 April 2013.
11 Exemption from income tax of contributions to pension schemes
(1) In Chapter 9 of Part 4 of ITEPA 2003 (exemptions from income tax for pension provision), in section 308 (exemption of contributions to registered pension scheme), at the end insert “ in respect of the employee ”.
(2) The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.
12 Childcare exemptions: meaning of disabled child
(1) In section 318B of ITEPA 2003 (childcare: meaning of “disabled” etc), in subsection (3)(a), after “allowance” insert “ or personal independence payment ”.
(2) The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.
(1) In section 677(1) of ITEPA 2003 (UK social security benefits wholly exempt from tax), in Part 1 of Table B (benefits payable under primary legislation), insert at the appropriate place—
Universal credit | WRA 2012 | Part 1
Any provision made for Northern Ireland which corresponds to Part 1 of WRA 2012
.
(2) The amendment made by this section has effect for the tax year 2013-14 and subsequent tax years.
(1) Chapter 4 of Part 8 of ITA 2007 (reliefs: annual payments and patent royalties) is amended in accordance with subsections (2) and (3).
(2) In section 448 (relief for individuals), in subsection (1)(b) omit “or 903(5)” and “and patent royalties”.
(3) In section 449 (relief for other persons), in subsection (1)(b) omit “or 903(6)” and “and patent royalties”.
(4) Accordingly, that Act is amended as follows—
(a) in section 2 (overview of Act), in subsection (8)(c) omit “and patent royalties”,
(b) in section 24 (reliefs deductible at Step 2), in subsection (1)(b) omit “and patent royalties”, and
(c) in the heading for Chapter 4 of Part 8 of that Act omit “AND PATENT ROYALTIES”.
(5) The amendments made by this section have effect in relation to payments made on or after 5 December 2012.
Schedule 3 contains provision limiting the deductions which may be made at Step 2 of the calculation in section 23 of ITA 2007 (calculation of income tax liability).
(1) ITA 2007 is amended as follows.
(2) In section 809K (sections 809L to 809Z6: introduction), in subsection (2)(e), for “809V” substitute “ 809UA ”.
(3) Before section 809V (but after the italic heading) insert—
Money used for payments on account
809UA (1) Subsection (2) applies to income or chargeable gains of an individual if—
(a) the income or gains would (but for subsection (2)) be regarded as remitted to the United Kingdom by virtue of the bringing of money to the United Kingdom,
(b) the money is brought to the United Kingdom by way of direct payments to the Commissioners on account of income tax,
(c) the tax year (“tax year 2”) in respect of which the payments on account are made is a tax year for which section 809H (remittance basis charge for long-term UK resident) does not apply as respects the individual, and
(d) that section applied as respects the individual for the previous tax year (“tax year 1”).
(2) The relevant amount of income or chargeable gains is to be treated as not remitted to the United Kingdom if money equal to the relevant amount is taken offshore by—
(a) the 15 March following the end of tax year 2, or
(b) such later date as the Commissioners may allow on a claim made by the individual.
(3) A claim under subsection (2)(b)—
(a) may be made only if the individual has made and delivered a return under section 8 of TMA 1970 for tax year 2 and reasonably expects to receive from the Commissioners a repayment of tax paid in respect of that tax year, and
(b) may be made no later than the 5 April following the end of tax year 2.
(4) Money that is taken offshore in accordance with subsection (2) is to be treated as having the same composition of kinds of income and capital as the money used to make the payments on account.
(5) In this section “the relevant amount” means the lower of the following—
(a) the amount brought to the United Kingdom as mentioned in subsection (1)(b), and
(b) the applicable amount (as defined in section 809H) for tax year 1.
(4) In section 809Z9(11) (taking proceeds etc offshore or investing them: modification of general provisions)—
(a) for “section 809VB(2) but in that case” substitute “ sections 809UA(2) and 809VB(2), but in those cases ”, and
(b) at the beginning of paragraph (b) insert “ in the case of section 809VB(2), ”.
(5) The amendments made by this section have effect in relation to payments on account made in respect of the tax year 2012-13 and subsequent tax years.
(1) In Chapter 8 of Part 2 of ITEPA 2003 (application of provisions to workers under arrangements made by intermediaries), in section 49 (engagements to which Chapter applies), for subsection (1)(c) substitute—
(c) the circumstances are such that—
(i) if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client or the holder of an office under the client, or
(ii) the worker is an office-holder who holds that office under the client and the services relate to the office.
(2) This section has effect for the tax year 2013-14 and subsequent tax years.
23 Taxable benefit of cars: the appropriate percentage
(1) Section 139 of ITEPA 2003 (car with CO2 figure: the appropriate percentage) is amended in accordance with subsections (2) to (6).
(2) In subsection (2), after “the relevant threshold” omit “for the year”.
(3) For subsection (2)(a) substitute—
(a) if the car's CO2 emissions figure does not exceed 50 grams per kilometre driven, 5%,
(aa) if the car's CO2 emissions figure exceeds 50 grams per kilometre driven but does not exceed 75 grams per kilometre driven, 9%, and
.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In subsection (3)—
(a) after “the relevant threshold” omit “for the year”, and
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) In subsection (4)—
(a) after “the relevant threshold” (in both places) omit “for the year”, and
(b) in paragraph (b), for “35%” substitute “ 37% ”.
(7) Section 140 of that Act (car without CO2 figure: the appropriate percentage) is amended in accordance with subsections (8) to (11).
(8) In the Table in subsection (2), for “35%” substitute “ 37% ”.
(9) For subsection (3)(a) substitute—
(a) 5% if the car cannot in any circumstances emit CO2 by being driven, and
.
(10) In subsection (3)(b), for “35%” substitute “ 37% ”.
(11) Omit subsection (3A).
(12) The amendments made by this section have effect for the tax year 2015-16 and subsequent tax years.
Schedule 9 amends Schedule 15 to ICTA (qualifying insurance policies) and makes other provision relating to qualifying policies under Schedule 15 to ICTA.
29 Restriction on surrender of losses: controlled foreign company cases
(1) Section 105 of CTA 2010 (restriction on surrender of losses etc within section 99(1)(d) to (g)) is amended as follows.
(2) In subsection (2), for “the surrendering company's gross profits of the surrender period” substitute “ the profit-related threshold ”.
(3) In subsection (3), for “those gross profits” substitute “ the profit-related threshold ”.
(4) After subsection (3) insert—
(3A) The profit-related threshold” is the sum of—
(a) the surrendering company's gross profits of the surrender period, and
(b) where chargeable profits of a CFC for an accounting period ending in the surrender period are apportioned to the surrendering company in accordance with step 3 in subsection (1) of 371BC of TIOPA 2010 and the surrendering company is in relation to that accounting period of the CFC a chargeable company for the purposes of step 4 in that subsection, the total of the chargeable profits so apportioned.
(3B) Where—
(a) an accounting period of a CFC ending in the surrender period is one to which (because of paragraph 50 of Schedule 20 of FA 2012) the repeal of Chapter 4 of Part 17 of ICTA does not apply,
(b) chargeable profits of the CFC for that accounting period are apportioned to the surrendering company in accordance with sections 747(3) and 752 of ICTA, and
(c) the surrendering company is not prevented by section 747(5) of ICTA from being chargeable to tax in respect of the CFC for that accounting period,
the profit-related threshold also includes the total of the chargeable profits so apportioned.
(5) After subsection (5) insert—
(5A) For the purposes of this section—
“CFC” has the same meaning as in Part 9A of TIOPA 2010, except that in subsection (3B) it means a controlled foreign company as defined by section 747(2) of ICTA;
“chargeable profits”, in relation to a CFC, is to be read in accordance with section 371BA(3) of TIOPA 2010, except that in subsection (3B) it is to be read in accordance with section 747(6) of ICTA.
(6) The amendments made by this section have effect where the surrender period of the surrendering company ends on or after 20 March 2013, but subject to the following.
(7) For the purposes of section 105(3A)(b) and (3B)(b) of CTA 2010, chargeable profits do not include—
(a) chargeable profits for an accounting period within the meaning of Part 9A of TIOPA 2010 ending before 20 March 2013, or
(b) chargeable profits for an accounting period within the meaning of Chapter 4 of Part 17 of ICTA ending before that date.
(8) Subsection (9) applies where—
(a) an accounting period within the meaning of Part 9A of TIOPA 2010, or
(b) an accounting period within the meaning of Chapter 4 of Part 17 of ICTA,
falls partly before and partly on or after 20 March 2013.
(9) For the purposes of section 105 of CTA 2010, the chargeable profits of the CFC for that period, so far as apportioned to the surrendering company as mentioned in subsection (3A)(b) or (3B)(b) of that section (as the case requires), are to be further apportioned on a just and reasonable basis between the two parts of the period, and the chargeable profits referred to in subsection (3A)(b) or (3B)(b) are not to include the chargeable profits apportioned to the part ending before 20 March 2013.
(1) In section 156 of CTA 2010 (definition of “arrangements” for purposes of sections 154 to 155B, etc)—
(a) in subsection (2), in paragraph (b), after “include” insert
—
(i)
,
(b) at the end of that paragraph insert
, or
(ii) a condition or requirement imposed by, or agreed with, a Minister of the Crown, the Scottish Ministers, a Northern Ireland department or a statutory body.
, and
(c) after that subsection insert—
(2A) In subsection (2) “statutory body” means a body (other than a company as defined by section 1(1) of the Companies Act 2006) established by or under a statutory provision for the purpose of carrying out functions conferred on it by or under a statutory provision, except that the Treasury may, by order, specify that a body is or is not to be a statutory body for this purpose.
(2) In sections 154(3) and 155(3) of that Act (arrangements for transfers), for “154A” substitute “ 155A ”.
(3) In section 188 of that Act (other definitions for Part 5), in subsection (1), after “ “company”” insert “ (except in section 156(2A) ”.
(4) The amendments made by this section have effect in relation to accounting periods ending on or after 1 April 2013.
32 Change in company ownership: company reconstructions
(1) For section 676 of CTA 2010 (disallowance of trading losses where company reconstruction without a change of ownership) substitute—
Company reconstructions
676 (1) Subsection (2) applies if, before the change in ownership—
(a) a trade carried on by another company (“the predecessor company”) is transferred to the company, and
(b) the transfer is a transfer to which Chapter 1 of Part 22 applies (transfers of trade without a change of ownership).
(2) In determining any relief available to the company by virtue of section 944(3) (carry forward of trading losses in successor company), this Chapter applies as if—
(a) references to a trade carried on by the company included the trade as carried on by the predecessor company or by any predecessor of that company, and
(b) any loss sustained by the predecessor company or any predecessor of that company had been sustained by the company.
(3) Subsection (4) applies if, after the change in ownership—
(a) a trade carried on by the company is transferred to another company (“the successor company”), and
(b) the transfer is a transfer to which Chapter 1 of Part 22 applies.
(4) In determining—
(a) any relief available to the company under section 45 (carry forward of trading losses), or
(b) any relief available to the successor company or any successor of that company by virtue of section 944(3),
this Chapter applies as if references to a trade carried on by the company included the trade as carried on by the successor company or by any successor of that company.
(5) For the purposes of this section a company (“company A”) is a predecessor of another company (“company B”), and company B is a successor of company A, if the first or second condition is met.
(6) The first condition is that Chapter 1 of Part 22 applies in relation to company A and company B as respectively the predecessor and the successor within the meaning of that Chapter.
(7) The second condition is that—
(a) Chapter 1 of Part 22 applies in relation to company A and a third company (“company C”) as respectively the predecessor and the successor within the meaning of that Chapter, and
(b) company C is (whether by virtue of the first condition or this condition) a predecessor of company B.
(2) The amendment made by this section has effect in relation to changes in ownership that occur on or after 20 March 2013.
Schedule 13—
(a) inserts into Part 14 of CTA 2010 (change in company ownership) a new Chapter 5A (shell companies: restrictions on relief), and
(b) makes consequential provision.
36 Relief for television production and video games development
(1) Schedule 16 contains provision about television production.
(2) Schedule 17 contains provision about video games development.
(3) Schedule 18 contains consequential amendments.
In section 986 of CTA 2010 (exemption from corporation tax: meaning of “health service body”), insert the following entries at the appropriate places in the table—
a clinical commissioning group | section 1I of the National Health Service Act 2006
Health and Social Care Information Centre | section 252 of the Health and Social Care Act 2012
National Health Service Commissioning Board | section 1H of the National Health Service Act 2006
National Institute for Health and Care Excellence | section 232 of the Health and Social Care Act 2012
.
38 Chief constables etc (England and Wales): exemption
(1) In Chapter 8 of Part 22 of CTA 2010 (exemptions), after section 987 insert—
Police
Chief constables etc (England and Wales)
987A The following are not liable to corporation tax—
(a) a chief constable of a police force maintained under section 2 of the Police Act 1996;
(b) the Commissioner of Police of the Metropolis.
(2) The amendment made by this section is treated as having come into force on 16 January 2012, but, in relation to any time before 22 November 2012, section 987A of CTA 2010 has effect as if paragraph (a) were omitted.