40 Corporation tax relief for employee share acquisitions etc
(1) Chapter 6 of Part 12 of CTA 2009 (relief for employee share acquisitions: relationship between relief under Part 12 and other reliefs) is amended as follows.
(2) For section 1038 substitute—
Exclusion of other deductions
1038 (1) Subsection (2) applies if relief is or, apart from condition 2 in section 1009(1), would be available under this Part.
For this purpose, it does not matter if the amount of the relief is or would be calculated as nil.
(2) Except as provided for by this Part, for the purpose of calculating any company's profits for corporation tax purposes for any accounting period, no deduction is allowed—
(a) in relation to the provision of the shares or to any matter connected with the provision of the shares, or
(b) so far as not covered by paragraph (a) in a case in which the shares are acquired pursuant to an option, in relation to the option or to any matter connected with the option.
(3) In a case in which section 1022 has applied, in subsection (2)(b) references to the option cover the new option and any relevant earlier qualifying option.
(4) For the purposes of subsection (2) it does not matter if the accounting period in question falls wholly before or after the time at which the shares are acquired.
(5) In a case in which the shares are acquired under an employee share scheme, the deductions disallowed by subsection (2) include (in particular) deductions for amounts paid or payable by the employing company in relation to the participation of the employee in the scheme.
(6) But subsection (2) does not disallow deductions for—
(a) expenses incurred in setting up the scheme,
(b) expenses incurred in meeting, or contributing to, the costs of administering the scheme,
(c) the costs of borrowing for the purposes of the scheme, or
(d) fees, commission, stamp duty, stamp duty reserve tax, and similar incidental expenses of acquiring the shares.
(7) “Employee share scheme” means a scheme or arrangement for enabling shares to be acquired because of persons' employment.
(8) In a case in which relief is or, apart from condition 2 in section 1009(1), would be available under Chapter 5 by virtue of section 1030(2), subsection (2) does not disallow deductions in relation to the provision of the convertible securities.
(3) After section 1038 insert—
Exclusion of deductions for share options: shares not acquired
1038A (1) Subsection (2) applies if—
(a) a person obtains an option to acquire shares and the requirements of section 1015(1)(a) to (c) are met in relation to the obtaining of the option, or
(b) so far as not covered by paragraph (a), a person obtains an option to acquire shares and the obtaining of the option is connected with an option previously obtained in a case covered by paragraph (a) or this paragraph.
(2) For the purpose of calculating any company's profits for corporation tax purposes for any accounting period, no deduction is allowed in relation to—
(a) the option, or
(b) any matter connected with the option,
unless the shares are acquired pursuant to the option.
(3) For the purposes of subsection (2) it does not matter if the accounting period in question falls wholly before or after the time at which the option is obtained.
(4) In a case in which the shares would be acquired under an employee share scheme, the deductions disallowed by subsection (2) include (in particular) deductions for amounts paid or payable by the employing company in relation to the participation of the employee in the scheme.
(5) But subsection (2) does not disallow deductions for—
(a) expenses incurred in setting up the scheme,
(b) expenses incurred in meeting, or contributing to, the costs of administering the scheme,
(c) the costs of borrowing for the purposes of the scheme, or
(d) fees, commission, stamp duty, stamp duty reserve tax, and similar incidental expenses of acquiring the shares.
(6) “Employee share scheme” means a scheme or arrangement for enabling shares to be acquired because of persons' employment.
(7) Subsection (2) does not disallow deductions for—
(a) amounts on which the employee is subject to a charge under ITEPA 2003,
(b) amounts on which the employee would have been subject to a charge under ITEPA 2003 had the employee been a UK employee at all material times, or
(c) if the employee has died, amounts on which the employee would have been subject to a charge under ITEPA 2003 had the employee been alive.
(8) “UK employee” is to be read in accordance with section 1017(4).
(4) For the purposes of the following subsections—
“pre-20 March 2013 relevant accounting period” means an accounting period which begins before 20 March 2013 but ends on or after that date, and
“relevant accounting period” means an accounting period which ends on or after 20 March 2013.
(5) The amendment made by subsection (2) above has effect for the purpose of disallowing deductions for relevant accounting periods.
For this purpose, it does not matter if the acquisition of shares which gives rise, or would give rise, to the relief under Part 12 of CTA 2009 occurs before a company's first relevant accounting period.
(6) But the amendment made by subsection (2) above has no effect for the purpose of disallowing a deduction for a pre-20 March 2013 relevant accounting period where the acquisition of shares which gives rise, or would give rise, to the relief under Part 12 of CTA 2009 occurs before 20 March 2013.
(7) The amendment made by subsection (3) above has effect for the purpose of disallowing deductions for relevant accounting periods.
For this purpose, it does not matter if the option is obtained before a company's first relevant accounting period.
(8) But the amendment made by subsection (3) above has no effect for the purpose of disallowing a deduction for a pre-20 March 2013 relevant accounting period where—
(a) the option is obtained before 20 March 2013, and
(b) before that date, an event (for example, the lapse or cancellation of the option) occurs in consequence of which the shares cannot be acquired pursuant to the option.
41 Derivative contracts: property total return swaps etc
(1) Chapter 7 of Part 7 of CTA 2009 (chargeable gains arising in relation to derivative contracts) is amended as follows.
(2) In section 643 (contracts relating to land or certain tangible movable property)—
(a) in subsection (1), for “and C” substitute “ , C and D ”, and
(b) after subsection (4) insert—
(4A) Condition D is that no two or more of the parties to the derivative contract are connected persons.
(3) In section 650 (property based total return swaps)—
(a) in subsection (1), for “to F” substitute “ to H ”, and
(b) after subsection (7) insert—
(8) Condition G is that no two or more of the parties to the derivative contract are connected persons.
(9) Condition H is that the securing of a tax advantage is neither the main purpose, nor one of the main purposes, for which the company is a party to the derivative contract.
“Tax advantage” has the meaning given by section 1139 of CTA 2010.
(4) In section 659 (meaning of “relevant credits” and “relevant debits”), after subsection (4) insert—
(4A) But if the derivative contract has effect such that the return arising from the contract, so far as calculated by reference to that index, is calculated by reference to a percentage (“the capped percentage”) which is closer to zero than the full percentage change in that index over that period (or which is zero even though there has been a change in that index), for the purposes of subsection (4) R% is the capped percentage.
(5) The amendments made by this section have effect in relation to accounting periods beginning on or after 5 December 2012.
(6) But, for the purposes of subsection (5), an accounting period beginning before, and ending on or after, 5 December 2012 is to be treated as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.
45 Condition for company to be an “investment trust”
(1) In section 1158(2) of CTA 2010 (condition A for a company to be an “investment trust”), for “the business of the company consists of” substitute “ all, or substantially all, of the business of the company is ”.
(2) The amendment made by this section has effect in relation to accounting periods beginning on or after 1 January 2012.
47 Lifetime allowance charge: power to amend the transitional provision in Part 2 of Schedule 18 to FA 2011 etc
(1) Part 2 of Schedule 18 to FA 2011 (lifetime allowance charge: commencement and transitional provision relating to changes made for the tax year 2012-13 and onwards) is amended as follows.
(2) In paragraph 14—
(a) omit sub-paragraphs (2) and (15) to (17) (which confer power on the HMRC Commissioners to make provision specifying how notices under paragraph 14 are to be given),
(b) in sub-paragraph (7) omit “the annual rate of” where it first appears, and
(c) in sub-paragraph (11) after “(5)(a)” insert “ and (c)(i) ”.
(3) After paragraph 14 insert—
15 (1) The Commissioners for Her Majesty's Revenue and Customs may by regulations amend paragraph 14.
(2) Regulations under this paragraph may (for example) add to the cases in which paragraph 14 is to apply or is to cease to apply.
(3) Regulations under this paragraph may include provision having effect in relation to a time before the regulations are made; but—
(a) the time must be no earlier than 6 April 2012, and
(b) the provision must not increase any person's liability to tax.
(4) In relation to regulations under this paragraph made during 2013, sub-paragraph (3) has effect with the omission of paragraph (b) so long as the time in question is no earlier than 6 April 2013.
16 (1) The Commissioners for Her Majesty's Revenue and Customs may by regulations make provision specifying how any notice required to be given to an officer of Revenue and Customs under paragraph 14 is to be given.
(2) In sub-paragraph (1) the reference to paragraph 14 is to that paragraph as amended from time to time by regulations under paragraph 15.
17 (1) Regulations under paragraph 15 or 16 may include supplementary or incidental provision.
(2) The powers to make regulations under paragraphs 15 and 16 are exercisable by statutory instrument.
(3) A statutory instrument containing regulations under paragraph 15 or 16 is subject to annulment in pursuance of a resolution of the House of Commons.
(4) The amendments made by subsection (2)(b) and (c) are treated as having come into force on 6 April 2012.
(5) The Registered Pension Schemes (Lifetime Allowance Transitional Protection) Regulations 2011 (S.I. 2011/1752) are to continue to have effect and, so far as they were made under paragraph 14(2) and (15) of Schedule 18 to FA 2011, are to be treated as if they were made under paragraphs 16 and 17(1) of that Schedule (as inserted by subsection (3) above).
48 Lifetime allowance charge: new standard lifetime allowance for the tax year 2014-15 and subsequent tax years
(1) Section 218 of FA 2004 (standard lifetime allowance etc) is amended as follows.
(2) For subsection (2) substitute—
(2) The standard lifetime allowance for the tax year 2014-15 and, subject to subsection (3), subsequent tax years is £1,250,000.
(3) In subsection (3) for “the tax year 2012-13” substitute “ the tax year 2014-15 ”.
(4) The amendments made by subsections (2) and (3) have effect for the tax year 2014-15 and subsequent tax years.
(5) Schedule 22 contains transitional provision etc.
49 Annual allowance: new annual allowance for the tax year 2014-15 and subsequent tax years
(1) Section 228 of FA 2004 (annual allowance) is amended as follows.
(2) For subsection (1) substitute—
(1) The annual allowance for the tax year 2014-15 and, subject to subsection (2), each subsequent tax year is £40,000.
(3) In subsection (2) for “2011-12” substitute “ 2014-15 ”.
(4) The amendments made by this section have effect for the tax year 2014-15 and subsequent tax years.
50 Drawdown pensions and dependants' drawdown pensions
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In Schedule 16 to FA 2011 (benefits under pension schemes)—
(a) in paragraph 90(2)(a), after “year” insert “ beginning before 26 March 2013 and ”,
(b) in paragraph 90(3), omit paragraph (b) and the “and” before it,
(c) in paragraph 98(2)(a), after “year” insert “ beginning before 26 March 2013 and ”, and
(d) in paragraph 98(3), omit paragraph (b) and the “and” before it.
(4) The amendments made by subsections (1) and (2) have effect in relation to drawdown pension years beginning on or after 26 March 2013.
(5) The amendments made by subsection (3)(a) and (c) are treated as having come into force on 26 March 2013.
(6) The amendments made by subsection (3)(b) and (d) have effect in relation to transfers within paragraph 90(5) or 98(5) of Schedule 16 to FA 2011 occurring during a drawdown pension year ending on or after 25 March 2013.
(1) FA 2004 is amended as follows.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In paragraph 1 of Schedule 29 (pension commencement lump sums), in sub-paragraph (4)(a), omit the words from “at a time” to “65”.
(4) In consequence of subsection (3), paragraph 21 of Schedule 23 to the FA 2006 is repealed.
(5) The amendments made by this section have effect for the tax year 2013-14 and subsequent tax years.
52 Abolition of contracting out of state second pension: consequential amendments etc
(1) FA 2004 is amended as follows.
(2) In section 188 (relief for contributions), in subsection (3) (contributions excluded from relief), omit paragraph (c) and the word “and” immediately preceding that paragraph.
(3) In that section, omit subsection (6) (which treats certain amounts recovered by individual's employer as contributions paid by individual).
(4) Omit section 190(5) (certain reliefs not to count towards annual limit for relief).
(5) Omit section 196(5) (references to contributions to include references to minimum payments when determining relief for employers).
(6) Omit section 202 (minimum contributions under pensions legislation).
(7) Omit section 233(2) (references to contributions not to include references to minimum payments when determining pension input amount).
(8) In paragraph 5 of Schedule 29 (short service refund lump sum), after sub-paragraph (2) insert—
(2A) In sub-paragraph (2) the reference to the member's contributions includes—
(a) any amount paid under section 7 of the Social Security Act 1986 (incentive payments to schemes becoming contracted-out between 1986 and 1993),
(b) any amount paid by the Commissioners for Her Majesty's Revenue and Customs under section 42A(3) of the Pension Schemes Act 1993 or section 38A(3) of the Pension Schemes (Northern Ireland) Act 1993 (rebates), and
(c) any amount recovered by the member's employer under regulations falling within sub-paragraph (2B) in respect of minimum payments made to the scheme in relation to any period before 6 April 2012.
(2B) Those regulations are regulations which were made under—
(a) section 8(3) of the Pension Schemes Act 1993 (recovery of minimum payments), or
(b) section 4(3) of the Pension Schemes (Northern Ireland) Act 1993 (corresponding provision for Northern Ireland).
(9) Omit paragraph 14(2) of Schedule 36 (which excludes minimum payments from being relevant contributions for the purposes of enhanced protection from lifetime allowance charge).
(10) Subsections (1), (3) to (5) and (7) to (9) come into force on 6 April 2013.
(11) Subsection (2) comes into force on 6 April 2015.
(12) Subsection (6) comes into force on 6 April 2016, except that the repeal of section 202(5) of FA 2004 comes into force on such day as the Treasury may appoint by order made by statutory instrument.
(1) In section 150(8) of FA 2004 (meaning of “recognised overseas pension scheme”), for the words from “which” to the end substitute “ which satisfies any requirements prescribed for the purposes of this subsection by regulations made by the Commissioners for Her Majesty's Revenue and Customs. ”
(2) Section 169 of that Act (pension schemes: recognised transfers) is amended as follows.
(3) In subsection (2)(c), for “any prescribed information requirements imposed on the scheme manager” substitute “ any requirements imposed under subsection (4) ”.
(4) For subsection (4) substitute—
(4) Regulations may require the scheme manager of a QROPS or former QROPS to—
(a) give the Commissioners information of a prescribed description,
(b) give the Commissioners such evidence as they may require of a prescribed matter, and
(c) give a prescribed authority, in prescribed circumstances, information of a prescribed description.
(4A) Regulations under subsection (4) may make provision as to—
(a) the way and form in which information or evidence is to be given, and
(b) the times or intervals at which information or evidence is to be given.
(4B) The regulations may apply any provision of Part 7 of Schedule 36 to FA 2008 (penalties), with or without modifications, in relation to requirements imposed under the regulations on a former QROPS.
(5) In subsection (5)—
(a) for “the Inland Revenue has” substitute “ the Commissioners have ”,
(b) for paragraph (a) (but not the “and” at the end of it) substitute—
(a) any of the following conditions is met in relation to the scheme—
(i) there has been a failure to comply with a relevant requirement and the failure is significant,
(ii) any information given pursuant to a relevant requirement is incorrect in a material respect,
(iii) any declaration given pursuant to a relevant requirement is false in a material respect,
(iv) there is no scheme manager,
, and
(c) in paragraph (b), for “the failure” substitute “ that condition being met ”.
(6) For subsection (6) substitute—
(6) A failure to comply with a requirement is significant if—
(a) it is a failure to give information or evidence that is (or may be) of significance, or
(b) there are reasonable grounds for believing that the failure prejudices (or might prejudice) the assessment or collection of tax by the Commissioners.
(7) After subsection (7) insert—
(8) In subsections (4) to (6) and this subsection—
“the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;
“prescribed” means prescribed by regulations;
“QROPS” means a qualifying recognised overseas pension scheme, and “former QROPS” means a scheme that has at any time been a QROPS;
“regulations” means regulations made by the Commissioners;
“relevant requirement” means—
a requirement imposed by regulations under subsection (4), or
a requirement imposed by virtue of Part 1 of Schedule 36 to FA 2008 (powers to obtain information and documents).
(8) In section 280(1) of that Act (abbreviations), insert at the appropriate place—
“FA 2008” means the Finance Act 2008,
.
54 Overseas pension schemes: information and inspection powers
(1) Part 6 of Schedule 36 to FA 2008 (information and inspection powers: special cases) is amended as follows.
(2) In paragraph 34B (registered pension schemes etc)—
(a) in sub-paragraph (2), omit the “or” at the end of paragraph (b) and, at the end of paragraph (c) insert—
(d) a QROPS or former QROPS, or
(e) an annuity purchased with sums or assets held for the purposes of a QROPS or former QROPS.
;
(b) after sub-paragraph (4) insert—
(4A) In relation to a notice to which this paragraph applies that refers only to information or documents relating to a matter within sub-paragraph (2)(d) or (e), paragraph 20 (old documents) has effect as if the reference to 6 years were to 10 years.
;
(c) after sub-paragraph (7) insert—
(7A) Where the notice relates to a matter within sub-paragraph (2)(d) or (e), the officer of Revenue and Customs who gives the notice must give a copy of the notice to the scheme manager in relation to the pension scheme.
;
(d) in sub-paragraph (8), for “and (7)” substitute “ to (7A) ”.
(3) In paragraph 34C (registered pension schemes etc: interpretation), insert at the appropriate places—
“QROPS” and “former QROPS” have the meanings given by section 169(8) of FA 2004;
;
“ “scheme manager”, in relation to a pension scheme, has the meaning given by section 169(3) of FA 2004.
(4) In paragraphs 34B and 34C of Schedule 36 to FA 2008, references to a former QROPS include a scheme that ceased to be a QROPS before this Act was passed.
Schedule 23 contains—
(a) provision about employee shareholder shares, and
(b) provision for an exemption from income tax in connection with advice relating to proposed employee shareholder agreements.
(1) ITA 2007 is amended as follows.
(2) In section 29 (tax reductions: supplementary), in subsection (4B), after the entry for Chapter 1 of Part 5 insert— “ Chapter 1 of Part 5A (SEIS relief), ”.
(3) In section 32 (liability not dealt with in the calculation), after the entry for section 235 insert— “ under section 257G (withdrawal or reduction of SEIS relief), ”.
(4) In section 257DG (the control and independence requirement), for subsection (2) substitute—
(2) The independence element of the requirement is that—
(a) the issuing company must not at any time in period A (ignoring any on-the-shelf period) be within subsection (2A), and
(b) no arrangements must be in existence at any time in period A by virtue of which the issuing company could be within that subsection (whether during period A or otherwise).
(2A) The issuing company is within this subsection at any time if it is under the control of any other company (or of another company and any other person connected with that other company).
(2B) In subsection (2)(a) “on-the-shelf period” means a period during which the issuing company—
(a) has not issued any shares other than subscriber shares, and
(b) has not begun to carry on, or make preparations for carrying on, any trade or business.
(5) The amendments made by subsections (2) and (3) have effect for the tax year 2013-14 and subsequent tax years.
(6) The amendment made by subsection (4) has effect in relation to shares issued on or after 6 April 2013.
(1) Schedule 5BB to TCGA 1992 (seed enterprise investment scheme: re-investment) is amended as follows.
(2) In paragraph 1 (SEIS re-investment relief)—
(a) in sub-paragraph (2)—
(i) in paragraph (a), after “the tax year 2012-13” insert “ or the tax year 2013-14 (the year in question being referred to in this Schedule as “the relevant year”) ”, and
(ii) in paragraph (b), for “that year” substitute “ the relevant year ”,
(b) in sub-paragraph (3)(a), for “tax year 2012-13” substitute “ relevant year ”, and
(c) for sub-paragraph (5) substitute—
(5) The relevant percentage of the available SEIS expenditure is to be set against a corresponding amount of the original gain.
(5A) In sub-paragraph (5)—
“the available SEIS expenditure” means so much of the SEIS expenditure as—
is specified in the claim,
is unused, and
does not exceed so much of the original gain as is unmatched;
“the relevant percentage” means—
if the relevant year is the tax year 2012-13, 100%, and
if the relevant year is the tax year 2013-14, 50%.
(3) In paragraph 2 (restrictions on relief under paragraph 1)—
(a) in sub-paragraph (1), for “tax year 2012-13” substitute “ relevant year ”, and
(b) in sub-paragraph (2)—
(i) for “tax year 2012-13” substitute “ relevant year ”, and
(ii) for “that tax year” substitute “ that year ”.
(4) In paragraph 5 (removal or reduction of relief) in sub-paragraph (2) for “2012-13” substitute “ in which the shares were issued ”.
(5) Accordingly, in section 150G of TCGA (which introduces Schedule 5BB), for “tax year 2012-13” substitute “ tax years 2012-13 and 2013-14 ”.
(1) A claim for relief under this section (“disincorporation relief”) may be made where—
(a) a company transfers its business to some or all of the shareholders of the company,
(b) the transfer of the business is a qualifying business transfer (see section 59), and
(c) the business transfer date falls within the period of 5 years beginning with 1 April 2013.
(2) As to the consequences of a claim for disincorporation relief being made, see—
sections 162B and 162C of TCGA 1992;
section 849A of CTA 2009.
(3) In this section and sections 59 to 61 “the business transfer date”, in relation to the transfer of a business, is the date on which the business is transferred.
For this purpose, where the business is transferred under a contract—
(a) the date on which the business is transferred is to be determined in accordance with section 28 of TCGA 1992, and
(b) if the business in question is transferred by more than one contract, then for the purposes of that section the contract under which the business is transferred is to be taken to be the contract under which the goodwill of the business is transferred.
(4) This section and sections 59 and 60 apply to a transfer of a business with a business transfer date of 1 April 2013 or a later date.
(1) The transfer of a business from a company to some or all of the shareholders of the company is a qualifying business transfer for the purposes of section 58 if conditions A to E are met.
(2) Condition A is that the business is transferred as a going concern.
(3) Condition B is that the business is transferred together with all of the assets of the business, or together with all of those assets other than cash.
(4) Condition C is that the total market value of the qualifying assets of the business included in the transfer does not exceed £100,000.
(5) Condition D is that all of the shareholders to whom the business is transferred are individuals.
(6) Condition E is that each of those shareholders held shares in the company throughout the period of 12 months ending with the business transfer date.
(7) For the purposes of condition D, the reference to individuals includes an individual acting as a member of a partnership, but does not include an individual acting as a member of a limited liability partnership.
(8) Section 60 of TCGA 1992 (nominees and bare trustees) applies for the purposes of this section as it applies for the purposes of that Act.
(9) In this section “market value”, in relation to an asset, means the price which the asset might reasonably be expected to fetch on a sale in the open market.
(10) In this section a “qualifying asset” means—
(a) goodwill, or
(b) an interest in land which is not held as trading stock.
(1) A claim for disincorporation relief under section 58—
(a) is to be made jointly by the company and all of the shareholders to whom the business is transferred, and
(b) is irrevocable.
(2) Any claim for disincorporation relief must be made within the period of 2 years beginning with the business transfer date.
(1) In Part 5 of TCGA 1992 (transfer of business assets), in Chapter 1 (general provisions), after section 162A insert—
Transfer of business from company to shareholders
Disincorporation relief: assets (including pre-FA 2002 goodwill)
162B (1) This section applies where—
(a) a company transfers its business to some or all of the shareholders of the company, and
(b) a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013.
(2) The disposal and acquisition of any qualifying asset of the business included in the transfer is to be deemed to be for a consideration equal to the lower of—
(a) the sums allowable under section 38 as a deduction in the computation of the gain accruing to the company on the disposal of the asset in question, and
(b) the market value of the asset.
(3) In subsection (2) a “qualifying asset” means—
(a) goodwill, or
(b) an interest in land which is not held as trading stock.
(4) But subsection (2) does not apply to the goodwill of the business if section 162C applies to it.
Disincorporation relief: post-FA 2002 goodwill
162C (1) This section applies where—
(a) a company transfers its business to some or all of the shareholders of the company,
(b) a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013, and
(c) section 849A of CTA 2009 (disincorporation relief: transfer values for post-FA 2002 goodwill) applies to the transfer of the goodwill of the business.
(2) The acquisition of the goodwill of the business is deemed to be for a consideration equal to the value at which the goodwill is treated as transferred by virtue of section 849A of CTA 2009.
(2) In Part 8 of CTA 2009 (intangible fixed assets), Chapter 13 (transactions between related parties) is amended as follows.
(3) In section 844 (overview of Chapter), in subsection (2) for “849” substitute “ 849A ”.
(4) In section 845 (transfer between company and related party treated as at market value), in subsection (4) (exceptions to basic rule)—
(a) omit the “and” at the end of paragraph (ca), and
(b) after paragraph (d) insert
, and
(e) section 849A (disincorporation relief: transfer values for post-FA 2002 goodwill).
(5) After section 849 insert—
Disincorporation relief: transfer values for post-FA 2002 goodwill
849A (1) This section applies where—
(a) a company transfers its business to some or all of the shareholders of the company, and
(b) a claim for disincorporation relief in respect of the transfer has been made under section 58 of the Finance Act 2013.
(2) If section 735 applies to the transfer of the goodwill of the business, the transfer is treated for the purposes of this Part as being at the lower of—
(a) the tax written-down value of the goodwill, and
(b) its market value.
(3) If section 736 applies to the transfer of the goodwill of the business, the transfer is treated for the purposes of this Part as being at the lower of—
(a) the cost of the goodwill, and
(b) its market value.
(4) If section 738 applies to the transfer of the goodwill of the business, the proceeds of realisation of the goodwill are treated for the purposes of this Part as being nil.
(5) In subsection (2)(a) the reference to the tax written-down value of the goodwill is to its tax written-down value immediately before the transfer.
(6) In subsection (3)(a) “the cost of the goodwill” means the cost recognised for tax purposes (determined in accordance with section 736(6) and (7)).
(7) In this section market value has the meaning given in section 845(5).
(6) The amendments made by this section have effect in relation to a transfer of a business with a business transfer date of 1 April 2013 or a later date.
62 Attribution of gains to members of non-resident companies
(1) TCGA 1992 is amended as follows.
(2) In subsection (4) of section 13 (members to whom rule for attributing gains to members of non-resident companies does not apply), for “one tenth” substitute “ one quarter ”.
(3) In subsection (5) of that section (cases where rule for attributing gains to members of non-resident companies does not apply), after the “or” at the end of paragraph (b) insert—
(ca) a chargeable gain accruing on the disposal of an asset used, and used only, for the purposes of economically significant activities carried on by the company wholly or mainly outside the United Kingdom, or
(cb) a chargeable gain accruing to the company on a disposal of an asset where it is shown that neither—
(i) the disposal of the asset by the company, nor
(ii) the acquisition or holding of the asset by the company,
formed part of a scheme or arrangements of which the main purpose, or one of the main purposes, was avoidance of liability to capital gains tax or corporation tax, or
.
(4) After section 13 insert—
Section 13(5): interpretation
13A (1) For the purposes of section 13(5)(b) a disposal of an asset is to be regarded as a disposal of an asset used for the purposes of a trade carried on wholly outside the United Kingdom by a company if—
(a) the asset is accommodation, or an interest or right in accommodation, which is situated outside the United Kingdom, and
(b) the accommodation has for each relevant period been furnished holiday accommodation of which a person has made a commercial letting.
(2) For the purposes of subsection (1)(b) each of the following is “a relevant period”—
(a) the period of 12 months ending with the date of the disposal and each of the two preceding periods of 12 months, or
(b) if the company has been the beneficial owner of the accommodation (or interest or right) for a period longer than 36 months, the period of 12 months ending with the date of the disposal and each of the preceding periods of 12 months throughout which the company has been the beneficial owner of the accommodation (or interest or right).
(3) The reference in subsection (1)(b) to the commercial letting of furnished holiday accommodation is to be read in accordance with Chapter 6 of Part 4 of CTA 2009, but—
(a) as if sections 266, 268 and 268A were omitted, and
(b) as if, in section 267(1), the reference to an accounting period were a reference to a relevant period as defined by subsection (2) above.
(4) For the purposes of section 13(5)(ca) activities carried on by a company are “economically significant activities” if they are activities which consist of the provision by the company of goods or services to others on a commercial basis and involve—
(a) the use of staff in numbers, and with competence and authority,
(b) the use of premises and equipment, and
(c) the addition of economic value, by the company, to those to whom the goods or services are provided,
commensurate with the size and nature of those activities.
(5) In subsection (4) “staff” means employees, agents or contractors of the company.
(5) The amendments made by this section have effect in relation to disposals made on or after 6 April 2012.
(6) But, in the case of a disposal made on or after that date but before 6 April 2013, a person to whom a part of a chargeable gain or allowable loss would (but for the amendments made by this section) have accrued on the disposal may make an election in writing for section 13 of TCGA 1992 to apply in relation to the disposal without those amendments.
(7) An election under subsection (6) in respect of a disposal must be made—
(a) in the case of a person within the charge to capital gains tax, within 4 years from the end of the tax year in which the disposal was made, and
(b) in the case of a person within the charge to corporation tax, within 4 years from the end of the accounting period in which the disposal was made.
(1) In section 169D of TCGA 1992 (gifts to settlor-interested settlements etc: exceptions to sections 169B and 169C), in subsection (1), after “elected” insert “ , or could have elected, ”.
(2) The amendment made by this section has effect for the tax year 2012-13 and subsequent tax years.
Schedule 24 makes provision for capital gains tax purposes in connection with shares acquired under options which are qualifying options under the EMI code.
66 Currency used in tax calculations: chargeable gains and losses
(1) Chapter 4 of Part 2 of CTA 2010 (currency) is amended as follows.
(2) In section 5 (basic rule: sterling to be used), after subsection (2) insert—
(3) See section 9C for provision about the application of subsection (1) so far as it relates to calculating chargeable gains.
(3) After section 9B insert—
Chargeable gains and losses of companies
9C (1) This section applies if—
(a) a company disposes of an asset which is a ship, an aircraft, shares or an interest in shares, and
(b) at any time beginning with the company's acquisition of the asset (or, if earlier, the time allowable expenditure was first incurred in respect of the asset) and ending with the disposal, the company's relevant currency is not sterling.
(2) A company's relevant currency at any time is its functional currency at that time, subject to subsection (3).
(3) If, at any time—
(a) a company is a UK resident investment company, and
(b) the company has a designated currency (see sections 9A and 9B) which is different from its functional currency,
the company's relevant currency at that time is that designated currency.
(4) If the relevant currency of the company at the time of the disposal is not sterling, the chargeable gain or loss accruing to the company on the disposal must be calculated as follows—
Step 1 Calculate the chargeable gain or loss in the relevant currency of the company at the time of the disposal.
Step 2 Translate the amount of the chargeable gain or loss into sterling by reference to the spot rate of exchange on the day of the disposal.
(5) In any case, subsections (6) to (10) apply for the purposes of calculating the chargeable gain or loss.
(6) Where any allowable expenditure is incurred in a currency which is not the company's relevant currency at the time it is incurred, that expenditure is to be translated into that relevant currency by reference to the spot rate of exchange for the day on which it is incurred.
(7) Where, at any time after any allowable expenditure is incurred but before the asset is disposed of, there is a change in the company's relevant currency, that expenditure is to be translated (or, if it has previously been translated under this section, further translated) into the relevant currency of the company immediately following the change, by reference to the spot rate of exchange for the day of the change.
(8) Any amount of consideration for the disposal which is given in a currency other than the company's relevant currency is to be translated into that relevant currency by reference to the spot rate of exchange on the day of disposal.
(9) For the purposes of subsections (6) and (7)—
(a) any translation of expenditure under subsection (6) is to be done before any translation of the expenditure under subsection (7), and
(b) if subsection (7) applies as a result of more than one change in the company's relevant currency, it is to be applied in relation to each change in the order the changes were made (with the earliest first).
(10) Where, by virtue of any enactment, the company was at any time treated for the purposes of corporation tax on chargeable gains as acquiring the asset—
(a) for a consideration of such amount as would secure that neither a gain nor a loss would accrue to the person disposing of the asset, or
(b) for a consideration equal to the market value of the asset,
for the purposes of this section that allowable expenditure is treated as incurred by the company at that time.
(11) For the purposes of this section, a reference to a ship or aircraft includes a reference to the benefit of a contract—
(a) to which section 67 of CAA 2001 applies, and
(b) which relates to plant or machinery which is a ship or aircraft.
(12) In this section—
“allowable expenditure” means expenditure which, immediately before the disposal, was attributable to the asset under section 38(1)(a) to (c) of TCGA 1992;
“interest in shares” has the same meaning as in Schedule 7AC to TCGA 1992 (see paragraph 29 of that Schedule);
“shares” includes stock.
(4) The amendments made by this section come into force in accordance with provision made by the Treasury by order.
(1) In section 45D of CAA 2001 (first year qualifying expenditure on cars with low carbon dioxide emissions)—
(a) in subsection (1)(a), for “2013” substitute “2015”, and
(b) in subsection (4), for “110” substitute “95”.
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In section 104AA of that Act (special rate expenditure: meaning of “main rate car”), in subsection (4) for “160” substitute “130”.
(4) Accordingly, in section 77 of FA 2008 omit—
(a) subsection (2), and
(b) subsection (3).
(5) The amendments made by subsections (1)(b), (2) and (4)(b) have effect in relation to expenditure incurred on or after 1 April 2013.
(6) The amendment made by subsection (3) has effect in relation to expenditure incurred on or after the relevant date.
(7) But in relation to expenditure incurred on the hiring of a car—
(a) for a period of hire which begins before the relevant date, and
(b) under a contract entered into before that date,
section 49(1A) of ITTOIA 2005 and section 57(1A) of CTA 2009 apply on or after the relevant date as if the amendment made by subsection (3) did not have effect.
(8) “The relevant date” means—
(a) in the case of income tax, 6 April 2013, and
(b) in the case of corporation tax, 1 April 2013.
70 First-year allowance to be available for ships and railway assets
(1) In section 46(2) of CAA 2001 (general exclusions from first-year allowance), omit—
(a) general exclusion 3 (ships), and
(b) general exclusion 4 (railway assets),
and the italicised headings preceding them.
(2) The amendments made by this section have effect for expenditure incurred on or after 1 April 2013.
(1) In section 268D of CAA 2001 (hire cars for disabled persons), in subsection (2), after paragraph (a) insert—
(aa) personal independence payment under the Welfare Reform Act 2012, or the corresponding provision having effect in Northern Ireland, because of entitlement to the mobility component,
(ab) armed forces independence payment under a scheme established under section 1 of the Armed Forces (Pensions and Compensation) Act 2004,
.
(2) The amendment made by this section has effect in relation to expenditure incurred on or after 1 April 2013.
(1) Section 538 of CAA 2001 (contribution allowances: plant and machinery) is amended as follows.
(2) In subsection (1), omit the “and” at the end of paragraph (a) and after that paragraph insert—
(aa) C's contribution is to expenditure on the provision of plant or machinery, and
.
(3) In subsection (2)—
(a) in paragraph (a), for “asset provided by means of C's contribution” substitute “ plant or machinery ”,
(b) in paragraph (b), for “asset” substitute “ plant or machinery ”, and
(c) in paragraph (c)—
(i) for “asset” substitute “ plant or machinery ”, and
(ii) after “times” insert “ plant or machinery ”.
(4) The amendments made by this section have effect in relation to expenditure pooled, and to claims made, on or after 29 May 2013 (“the commencement date”).
(5) In relation to such expenditure and claims, when determining for the purposes of section 536(3)(a) of CAA 2001 whether an allowance can be made under Chapter 2 of Part 11 of that Act, the amendments made by this section are to be treated as always having had effect.
(6) Nothing in this section applies to a claim by a person for a contribution allowance under Part 2 of CAA 2001 in respect of a contribution made before the commencement date.
(7) Subsection (8) applies if—
(a) expenditure which a person has been regarded as having incurred (despite section 532(1) of CAA 2001) by virtue of section 536(1) of that Act has been pooled by virtue of section 53 of that Act—
(i) on or after 1 January 2013 but before the commencement date, or
(ii) before 1 January 2013 in circumstances where no claim was made in respect of the expenditure before that date, and
(b) had the amendments made by this section had effect at the time the expenditure was incurred, that person would not have been regarded as having incurred that expenditure (“the relevant expenditure”).
(8) Part 2 of CAA 2001 has effect as if an event had occurred as a result of which the person is required to bring into account as a disposal receipt under that Part, for the chargeable period in which the commencement date falls, a disposal value of an amount equal to E-A.
(9) For the purposes of subsection (8)—
E is the amount of the relevant expenditure, and
A is the total amount of writing-down allowances made in respect of the relevant expenditure.
(10) For the purpose of calculating A, the total amount of writing-down allowances made in respect of expenditure on an item of plant or machinery is to be determined as if that item were the only item of plant or machinery in relation to which Chapter 5 of Part 2 of CAA 2001 had effect.
(11) The event mentioned in subsection (8) is not to be regarded as a disposal event for the purposes of section 60(3) of CAA 2001.
(1) Section 596 of ITA 2007 (deemed manufactured payments: stock lending arrangements) is amended in accordance with subsections (2) and (3).
(2) For subsection (1) substitute—
(1) This section applies if conditions A to C are met.
(1A) Condition A is that there is a stock lending arrangement in respect of securities.
(1B) Condition B is that a dividend or interest on the securities is paid, as a result of the arrangement, to a person other than the person who is the lender under the arrangement.
(1C) Condition C is that—
(a) no provision is made for securing that the lender receives payments representative of the dividend or interest, or
(b) provision is made for securing that the lender receives—
(i) payments representative of the dividend or interest, and
(ii) another benefit in respect of the dividend or interest (including the release of the whole or part of any liability to pay an amount).
(3) In subsection (2), for paragraph (a) substitute—
(a) were required, under the arrangement—
(i) in a case falling within paragraph (a) of subsection (1C), to pay the lender an amount representative of the dividend or interest, or
(ii) in a case falling within paragraph (b) of that subsection, to pay the lender an amount representative of the dividend or interest but deducting from that amount any payment mentioned in sub-paragraph (i) of that paragraph on which tax has been, or is to be, charged, and
.
(4) Section 812 of CTA 2010 (deemed manufactured payments: stock lending arrangements) is amended in accordance with subsections (5) to (7).
(5) For subsection (1) substitute—
(1) This section applies if conditions A to C are met.
(1A) Condition A is that there is a stock lending arrangement in respect of securities.
(1B) Condition B is that a dividend or interest on the securities is paid, as a result of the arrangement, to a person other than the person who is the lender under the arrangement.
(1C) Condition C is that—
(a) no provision is made for securing that the lender receives payments representative of the dividend or interest, or
(b) provision is made for securing that the lender receives—
(i) payments representative of the dividend or interest, and
(ii) another benefit in respect of the dividend or interest (including the release of the whole or part of any liability to pay an amount).
(6) In subsection (2), for paragraph (a) substitute—
(a) were required, under the arrangement—
(i) in a case falling within paragraph (a) of subsection (1C), to pay the lender an amount representative of the dividend or interest, or
(ii) in a case falling within paragraph (b) of that subsection, to pay the lender an amount representative of the dividend or interest but deducting from that amount any payment mentioned in sub-paragraph (i) of that paragraph on which tax has been, or is to be, charged, and
.
(7) After subsection (6) insert—
(7) This section has effect regardless of section 358 of CTA 2009 (exclusion of credits on release of connected companies debts) or any other provision of Part 5 of that Act (loan relationships) which prevents a credit from being brought into account.
(8) The amendments made by this section have effect in relation to cases in which a dividend or interest is paid, or is treated as paid, on or after 5 December 2012.
Schedule 29 contains provision for, and in connection with, the application of the Tax Acts to manufactured payment relationships and payments representative of dividends and interest.
78 Relationship between rules prohibiting and allowing deductions
(1) In section 31 of ITTOIA 2005 (trade profits: relationship between rules prohibiting and allowing deductions)—
(a) after subsection (1) insert—
(1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
(a) does not have priority under subsection (1)(a), and
(b) is subject to any relevant prohibitive rule in this Part (and to the provisions mentioned in subsection (1)(b)).”, and
(b) after subsection (3) insert—
(4) In this section “relevant tax avoidance arrangements” means arrangements—
(a) to which the person carrying on the trade is a party, and
(b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
(2) In section 274 of ITTOIA 2005 (property businesses: relationship between rules prohibiting and allowing deductions)—
(a) after subsection (1) insert—
(1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a property business in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
(a) does not have priority under subsection (1)(a), and
(b) is subject to any relevant prohibitive rule in this Part (and to the provisions mentioned in subsection (1)(b)).”, and
(b) after subsection (3) insert—
(3A) In this section “relevant tax avoidance arrangements” means arrangements—
(a) to which the person carrying on the property business is a party, and
(b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
(3) In section 51 of CTA 2009 (trade profits: relationship between rules prohibiting and allowing deductions)—
(a) after subsection (1) insert—
(1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a trade in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
(a) does not have priority under subsection (1)(a), and
(b) is subject to any relevant prohibitive rule (and to the provisions mentioned in subsection (1)(b)).
, and
(b) after subsection (3) insert—
(4) In this section “relevant tax avoidance arrangements” means arrangements—
(a) to which the company carrying on the trade is a party, and
(b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
(4) In section 214 of CTA 2009 (property businesses: relationship between rules prohibiting and allowing deductions)—
(a) after subsection (1) insert—
(1A) But, if the relevant permissive rule would allow a deduction in calculating the profits of a property business in respect of an amount which arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements, that rule—
(a) does not have priority under subsection (1)(a), and
(b) is subject to any relevant prohibitive rule (and to the provisions mentioned in subsection (1)(b)).
, and
(b) after subsection (3) insert—
(3A) In this section “relevant tax avoidance arrangements” means arrangements—
(a) to which the company carrying on the property business is a party, and
(b) the main purpose, or one of the main purposes, of which is the obtaining of a tax advantage (within the meaning of section 1139 of CTA 2010).
“Arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
(5) The amendments made by this section have effect in relation to deductions in respect of amounts which arise directly or indirectly in consequence of, or otherwise in connection with—
(a) arrangements which are entered into on or after 21 December 2012, or
(b) any transaction forming part of arrangements which is entered into on or after that date.
(6) But those amendments do not have effect where the arrangements are, or any such transaction is, entered into pursuant to an unconditional obligation in a contract made before that date.
(7) “An unconditional obligation” means an obligation which may not be varied or extinguished by the exercise of a right (whether under the contract or otherwise).