(1) In this Chapter “construction operations” means operations of a description specified in subsection (2), not being operations of a description specified in subsection (3); and references to construction operations—
(a) except where the context otherwise requires, include references to the work of individuals participating in the carrying out of such operations; and
(b) do not include references to operations carried out or to be carried out otherwise than in the United Kingdom (or the territorial sea of the United Kingdom).
(2) The following operations are, subject to subsection (3), construction operations for the purposes of this Chapter—
(a) construction, alteration, repair, extension, demolition or dismantling of buildings or structures (whether permanent or not), including offshore installations;
(b) construction, alteration, repair, extension or demolition of any works forming, or to form, part of the land, including (in particular) walls, roadworks, power-lines, electronic communications apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipe-lines, reservoirs, water-mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence;
(c) installation in any building or structure of systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection;
(d) internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration;
(e) painting or decorating the internal or external surfaces of any building or structure;
(f) operations which form an integral part of, or are preparatory to, or are for rendering complete, such operations as are previously described in this subsection, including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works.
(3) The following operations are not construction operations for the purposes of this Chapter—
(a) drilling for, or extraction of, oil or natural gas;
(b) extraction (whether by underground or surface working) of minerals and tunnelling or boring, or construction of underground works, for this purpose;
(c) manufacture of building or engineering components or equipment, materials, plant or machinery, or delivery of any of these things to site;
(d) manufacture of components for systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection, or delivery of any of these things to site;
(e) the professional work of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape;
(f) the making, installation and repair of artistic works, being sculptures, murals and other works which are wholly artistic in nature;
(g) signwriting and erecting, installing and repairing signboards and advertisements;
(h) the installation of seating, blinds and shutters;
(i) the installation of security systems, including burglar alarms, closed circuit television and public address systems.
(4) The Treasury may by order made by statutory instrument amend either or both of subsections (2) and (3) by—
(a) adding,
(b) varying, or
(c) removing,
any description of operations.
(5) No statutory instrument containing an order under subsection (4) shall be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.
75 Meaning of “the Inland Revenue” etc and delegation of Board’s functions
(1) In this Chapter “the Inland Revenue” means any officer of the Board of Inland Revenue.
(2) In this Chapter “the Board of Inland Revenue” means the Commissioners of Inland Revenue (as to which, see in particular the Inland Revenue Regulation Act 1890 (c. 21)).
(3) The Board of Inland Revenue may make regulations providing for any of the following to be done on behalf of the Board—
(a) the registration of persons under section 63;
(b) the giving of directions under section 64(5); and
(c) the cancellation under section 66 of a person’s registration for gross payment.
(4) In this Chapter “the Commissioners” means the Commissioners for His Majesty’s Revenue and Customs.
(1) This Chapter has effect in relation to payments made on or after the appointed day under contracts relating to construction operations.
(2) Where a certificate issued to a person under section 561 of the Taxes Act 1988 is in force immediately before the appointed day, the person is to be treated as if, on the appointed day, the Board of Inland Revenue had registered him for gross payment.
(3) Where a registration card issued to a person in accordance with regulations made under section 566(2A) of the Taxes Act 1988 is in force immediately before the appointed day, the person is to be treated as if, on the appointed day, the Board of Inland Revenue had registered him for payment under deduction.
(4) Subsection (5) applies in relation to the first payment (“the relevant payment”) made after the appointed day by a person (“C”) to a sub-contractor (“SC”) under a contract relating to construction operations if—
(a) before the appointed day, C had made one or more payments to SC under the contract or another such contract,
(b) the last of those payments (“the last payment”) was made in the year of assessment in which the relevant payment was made or in either of the two years of assessment before that,
(c) at the time of the last payment—
(i) a certificate issued to SC under section 561 of the Taxes Act 1988 was in force, or
(ii) a registration card issued to SC in accordance with regulations made under section 566(2A) of that Act was in force, and
(d) on making the relevant payment, C has no reason to believe that SC—
(i) did not become registered for gross payment or (as the case may be) for payment under deduction by virtue of subsection (2) or (3), and
(ii) is not still so registered.
(5) Where this subsection applies, regulations under section 69(1) shall not require C, before making the relevant payment, to verify whether SC is registered for gross payment or for payment under deduction.
(6) Where subsection (5) applies, C shall be entitled to assume, on making any further payments to SC under a contract relating to construction operations, that SC has not subsequently ceased to be so registered, unless notified to the contrary in accordance with regulations made under section 69(3).
(7) In this section “the appointed day” means such day as the Treasury may by order appoint.
(8) The Treasury may by order make such further supplemental and transitional provision and savings as they think fit in connection with the coming into effect of this Chapter.
(1) Schedule 13 to this Act contains amendments of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) relating to childcare and childcare vouchers.
(2) The amendments have effect for the year 2005-06 and subsequent years of assessment.
(1) Schedule 14 to this Act contains amendments of the Income Tax (Earnings and Pensions) Act 2003 relating to vans.
(2) The amendments have effect for the year 2005-06 and subsequent years of assessment.
(1) In the Income Tax (Earnings and Pensions) Act 2003, after section 248 insert—
Emergency vehicles
248A (1) This section applies where—
(a) an emergency vehicle is made available to a person employed in an emergency service for the person’s private use,
(b) the terms on which it is made available prohibit its private use otherwise than when the person is on call or engaged in on-call commuting, and
(c) the person does not make private use of it otherwise than in such circumstances.
(2) No liability to income tax arises by virtue of Chapter 6 or 10 of Part 3 (taxable benefits: cars, vans etc. and residual liability to charge) in respect of the benefit.
(3) “Emergency vehicle” means a vehicle which is used to respond to emergencies and which either—
(a) has fixed to it a lamp designed to emit a flashing light for use in emergencies, or
(b) would have such a lamp fixed to it but for the fact that (if it did) a special threat to the personal physical security of those using it would arise by reason of it being apparent that they were employed in an emergency service.
(4) The following are “employed in an emergency service”—
(a) constables and other persons employed for police purposes,
(b) persons employed for the purposes of a fire, or fire and rescue, service, and
(c) persons employed in the provision of ambulance or paramedic services.
(5) The Treasury may by order amend subsection (4).
(6) “Private use”, in relation to a person, means any use other than for the person’s business travel; and “business travel” has the same meaning as in Chapter 6 of Part 3 (see section 171(1)).
(7) A person to whom an emergency vehicle is made available is on call when liable, as part of normal duties, to be called on to use the emergency vehicle to respond to emergencies.
(8) A person to whom an emergency vehicle is made available is engaged in on-call commuting when the person—
(a) is using it for ordinary commuting or for travel between two places that is for practical purposes substantially ordinary commuting, and
(b) is required to do so in order that it is available for use by the person, as part of normal duties, for responding to emergencies.
.
(2) In section 236(2)(c) of that Act (mileage allowance and passenger payments: meaning of “company vehicle”), after “vans)” insert “ and section 248A (emergency vehicles) ”.
(3) This section has effect for the year 2004-05 and subsequent years of assessment.
82 European travel expenses of MPs and other representatives
(1) The Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as follows.
(2) In section 294 (EU travel expenses of MPs and other representatives) in subsection (1) (exemption from income tax in respect of sums paid to Members of the House of Commons and other representatives in respect of EU travel expenses) for “EU” (in both places) substitute “ European ”.
(3) In that section, for subsections (2) to (4) substitute—
(2) “European travel expenses” means the cost of, and any additional expenses incurred in, travelling between the United Kingdom and a relevant European location.
(3) “Relevant European location” means—
(a) a European Union institution or agency, or
(b) the national parliament of—
(i) another member State,
(ii) a candidate or applicant country, or
(iii) a member State of the European Free Trade Association.
(4) The Treasury may by order amend subsection (3) by—
(a) adding a European location,
(b) removing a European location, or
(c) varying the description of a European location.
.
(4) In the heading of that section, “EU” accordingly becomes “European”.
(5) This section has effect in relation to sums paid in respect of costs or expenses incurred on or after 6th April 2004.
84 Charge to income tax by reference to enjoyment of property previously owned
(1) Schedule 15 (which contains provisions imposing a charge to income tax by reference to benefits received in certain circumstances by a former owner of property) has effect.
(2) That Schedule has effect for the year 2005-06 and subsequent years of assessment.
85 Relief where national insurance contributions met by employee
(1) Schedule 16 to this Act provides—
(a) for income tax relief in certain cases where national insurance contributions are met by an employee, and
(b) for consequential amendments.
(2) This section (and that Schedule) come into force in accordance with provision made by the Treasury by order made by statutory instrument.
86 Shares in employee-controlled companies and unconnected companies
(1) Each of the provisions of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (employment income: securities) specified in subsection (2) (exception from charges for certain company shares) is amended in accordance with subsections (3) to (5).
(2) The provisions are—
(a) section 429 (restricted securities),
(b) section 443 (convertible securities),
(c) section 446R (securities acquired for less than market value), and
(d) section 449 (post-acquisition benefits from securities).
(3) In subsection (1) of each of those sections, after paragraph (b) (but before the word “and” where that word features at the end) insert—
(ba) subsection (1A) is satisfied,
.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) In subsection (4) of sections 429, 443 and 446R, and in subsection (3) of section 449, for the words after “are not” substitute “ employment-related securities. ”; and accordingly omit sections 429(5), 443(5), 446R(5) and 449(4).
(6) In Chapter 3A of that Part of that Act (securities with artificially depressed market value), after section 446I insert—
Disapplication of exceptions from charges
446IA (1) Section 429 (exception from charge under section 426 for certain company shares) does not prevent section 426 (restricted securities: chargeable events) applying in relation to an event if section 446E or 446I(1)(a) would have effect in relation to the event.
(2) Section 443 (exception from charge under section 438 for certain company shares) does not prevent section 438 (convertible securities: chargeable events) applying in relation to an event if section 446G, 446H or 446I(1)(b) would have effect in relation to the event.
(3) Section 446R (exception from charge under Chapter 3C for certain company shares) does not prevent that Chapter (securities acquired for less than market value) applying in relation to employment-related securities if section 446B would have effect in relation to them.
(4) Section 449 (exception from charge under Chapter 4 for certain company shares) does not prevent that Chapter (benefits from securities) applying in relation to a benefit if section 446I(1)(e) would have effect in relation to the benefit.
.
(7) In Chapter 3B of that Part of that Act (securities with artificially enhanced market value), after section 446N insert—
Disapplication of exceptions from charges
446NA (1) None of the provisions specified in subsection (2) (exceptions from charges for certain company shares) apply in relation to employment-related securities if the market value of the employment-related securities at the time of the acquisition has been increased by at least 10% by non-commercial increases within the period of 7 years ending with the acquisition.
(2) The provisions are—
(a) section 429 (restricted securities),
(b) section 443 (convertible securities),
(c) section 446R (securities acquired for less than market value), and
(d) section 449 (post-acquisition benefits from securities).
(3) If section 446L (market value on valuation date increased by more than 10% by non-commercial increases during relevant period) applies in relation to employment-related securities, section 429 does not subsequently apply in relation to the employment-related securities.
.
(8) This section applies on and after 7th May 2004.
87 Restricted securities with artificially depressed value
(1) Section 446E of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (employee securities with artificially depressed market value: charge on restricted securities) is amended as follows.
(2) In subsection (1), after “on restricted securities),” insert—
(aa) immediately before the employment-related securities are disposed of (in circumstances which do not constitute such an event) or are cancelled without being disposed of,
.
(3) For subsections (3) to (6) substitute—
(3) “The relevant period”is the period beginning—
(a) if section 425(2) (no charge on acquisition of certain restricted securities or restricted interests in securities) applied in relation to the employment-related securities, 7 years before the acquisition, and
(b) in any other case, 7 years before the relevant date,
and ending with the relevant date.
(4) “The relevant date”is—
(a) in a case within subsection (1)(a), the date on which the chargeable event concerned occurs,
(b) in a case within subsection (1)(aa), the date on which the disposal or cancellation concerned occurs, and
(c) in a case within subsection (1)(b), the 5th April concerned.
(5) Where this section applies in a case within subsection (1)(aa) or (b), a chargeable event within section 427(3)(a) (lifting of restrictions) is to be treated as occurring in relation to the employment-related securities on the relevant date.
(6) In every case where this section applies, subsection (1) of section 428 (amount of charge on restricted securities) applies as if the reference in subsection (2) of that section to what would be the market value of the employment-related securities immediately after the chargeable event but for any restrictions were to what would be their market value at the appropriate time but for the matters to be disregarded.
(7) “The appropriate time”is—
(a) in a case within subsection (1)(a) or (b), the time immediately after the chargeable event concerned, and
(b) in a case within subsection (1)(aa), the time immediately before the chargeable event concerned.
(8) “The matters to be disregarded” are—
(a) any restrictions,
(b) the things done as mentioned in subsection (2), and
(c) if the employment-related securities are about to be disposed of or cancelled, that fact.
(9) Where this section applies in a case within subsection (1)(aa), section 428(1) applies with the omission of the reference to OP.
(10) Where this section applies in a case within subsection (1)(a) and the chargeable event concerned is within section 427(3)(c) (disposal for consideration), section 428 applies with the omission of subsection (9) (case where consideration is less than actual market value).
.
(4) This section applies on and after 7th May 2004.
(5) But if the employment-related securities were acquired before that date, section 446E of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) does not apply by virtue of the amendment made by subsection (2) of this section unless their market value would be artificially low immediately before the disposal or cancellation if the date on which the relevant period began were the later of—
(a) that on which it did begin, and
(b) 7th May 2004.
(1) The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.
(2) Omit section 421G (exclusion from Chapters 2 to 4 of Part 7 of shares awarded or acquired under approved plan or scheme).
(3) In Chapter 2 of Part 7 (restricted securities), after section 431 insert—
Shares under approved plan or scheme
431A (1) Where employment-related securities are restricted securities or a restricted interest in securities, the employer and the employee are to be treated as making an election under section 431(1) in relation to the employment-related securities if they are shares, or an interest in shares, to which this subsection applies.
(2) Subsection (1) applies to—
(a) shares awarded or acquired under an approved share incentive plan (within the meaning of Chapter 6 of this Part) in circumstances in which (in accordance with section 490) no liability to income tax arises,
(b) shares acquired by the exercise of a share option granted under an approved SAYE option scheme (within the meaning of Chapter 7 of this Part) in circumstances in which (in accordance with section 519) no liability to income tax arises,
(c) shares acquired by the exercise of a share option granted under an approved CSOP scheme (within the meaning of Chapter 8 of this Part) in circumstances in which (in accordance with section 524) no liability to income tax arises, and
(d) shares acquired by the exercise of a qualifying option within the meaning of section 527(4) (enterprise management incentives) in circumstances in which (in accordance with section 530) no liability to income tax arises.
.
(4) In section 489 (operation of tax advantages in connection with approved share incentive plans), after subsection (3) insert—
(4) And those sections do not apply if the main purpose (or one of the main purposes) of the arrangements under which the shares in question are awarded or acquired is the avoidance of tax or national insurance contributions.
.
(5) In sections 505 and 506 (charge on shares ceasing to be subject to approved share incentive plan), after subsection (4) insert—
(4A) Any tax due under subsection (2) or (3) is reduced by the amount or aggregate amount of any tax paid by virtue of Chapter 3B of this Part in relation to the shares.
.
(6) In section 519(1) (approved SAYE option schemes: no charge in respect of exercise of option) insert at the end
and
(c) the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements under which the option was granted or is exercised.
.
(7) In section 524(1) (approved CSOP schemes: no charge in respect of exercise of option) insert at the end
and
(c) the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements under which the option was granted or is exercised.
.
(8) Section 701 (PAYE: meaning of “asset”) is amended as follows.
(9) In subsection (2)(c)—
(a) in sub-paragraph (ia), for the words after “employee” substitute “ under a scheme approved under Schedule 4 (approved CSOP schemes) in circumstances in which Condition A or B as set out in section 524(2) or (2A) is met; ”,
(b) omit sub-paragraph (ii), and
(c) in sub-paragraph (iii), after “1996” insert “ where the avoidance of tax or national insurance contributions is not the main purpose (or one of the main purposes) of any arrangements under which the right was obtained or is exercised ”.
(10) After subsection (3) insert—
(3A) Paragraph (c) of subsection (2) does not apply to shares after their acquisition as mentioned in that paragraph.
.
(11) This section has effect on and after 18th June 2004 and (so far as it does not relate to the award or acquisition of shares) applies in relation to shares awarded or acquired before that date as well as in relation to those awarded or acquired on or after that date.
(12) Where section 431A(1) of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (as inserted by subsection (3)) has effect (by virtue of subsection (11)) in relation to shares acquired before 18th June 2004, it applies in relation to them so as to treat an election under section 431(1) of that Act as made in relation to them on that date.
(13) For the purposes of the application of Chapter 3B of Part 7 of that Act (securities with artificially enhanced market value) by reason of subsections (2) and (11) in relation to shares acquired before 18th June 2004, section 446O of that Act (meaning of “relevant period”) has effect as if they were acquired on that date.
(1) Section 421F of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (exclusion from Chapters 2 to 4 of Part 7 of shares acquired under terms of offer to the public) is amended as follows.
(2) In subsection (1), for “Chapters 2 to 4” substitute “ Chapters 2, 3 and 3C ”.
(3) After that subsection insert—
(1A) But subsection (1) does not disapply those Chapters if the main purpose (or one of the main purposes)—
(a) of the arrangements under which the right or opportunity under which the shares were acquired, or
(b) for which the shares are held,
is the avoidance of tax or national insurance contributions.
.
(4) This section has effect on and after 18th June 2004 and applies in relation to shares acquired before that date as well as in relation to those acquired on or after that date.
(5) For the purposes of the application of Chapter 3B of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (securities with artificially enhanced market value) by reason of subsections (2) and (4) in relation to shares acquired before that date, section 446O of that Act (meaning of “relevant period”) has effect as if they were acquired on that date.
(1) Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: securities) is amended as follows.
(2) In section 421C(2) (meaning of “relevant linked person” for purposes of Chapters 1 to 4), for “are connected or, although not connected, are” substitute “ are or have been connected or (without being or having been connected) are or have been ”.
(3) In section 472(2) (meaning of “relevant linked person” for purposes of Chapter 5), for “are connected or, although not connected, are” substitute “ are or have been connected or (without being or having been connected) are or have been ”.
(4) In section 477(3)(c) (chargeable events in relation to employment-related securities options), for the words after “benefit” substitute “ in connection with the employment-related securities option (other than one within paragraph (a) or (b)). ”
(5) This section has effect on and after 18th June 2004 and applies in relation to securities, interests and options that were employment-related securities or employment-related securities options on that date (as well as those acquired on or after that date).
(1) Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (enterprise management incentives) is amended as follows.
(2) In paragraph 8 (qualifying companies: introduction) after “having only qualifying subsidiaries (see paragraphs 10 and 11),” insert— “ property managing subsidiaries (see paragraphs 11A and 11B), ”.
(3) In paragraph 10 (the qualifying subsidiaries requirement) for sub-paragraph (2) substitute—
(2) In this paragraph “subsidiary” means any company which the company controls, either on its own or together with any person connected with it.
(3) For the purpose of sub-paragraph (2), the question whether a person controls a company is to be determined in accordance with section 416(2) to (6) of ICTA (“control” in the context of close companies).
(4) In paragraph 11 (meaning of “qualifying subsidiary”)—
(a) in sub-paragraph (2), omit paragraphs (a) to (c),
(b) before paragraph (d) of that sub-paragraph insert—
(ca) that the subsidiary is a 51% subsidiary of the holding company;
,
(c) in paragraph (d) of that sub-paragraph, after “company” insert “ or another of its subsidiaries ”,
(d) in paragraph (e) of that sub-paragraph, for “the conditions in paragraphs (a) to” substitute “ either of the conditions in paragraphs (ca) and ”,
(e) omit sub-paragraph (3),
(f) after sub-paragraph (7) insert—
(8) Sub-paragraph (9) applies at a time when the subsidiary or another company is in administration or receivership.
(9) The subsidiary is not to be regarded, by reason only of anything done as a consequence of the company concerned being in administration or receivership, as having ceased to be a company in relation to which the conditions in sub-paragraph (2) are met if—
(a) the entry into administration or receivership, and
(b) everything done as a consequence of the company concerned being in administration or receivership,
is for commercial reasons and is not part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax.
(10) Section 312(2A) of ICTA (meaning of being in administration or receivership) applies for the purposes of sub-paragraphs (8) and (9) as it applies for the purposes of Chapter 3 of Part 7 of ICTA (enterprise investment scheme).
.
(5) After paragraph 11 insert—
The property managing subsidiaries requirement
11A (1) A company is not a qualifying company if it has a property managing subsidiary which is not a qualifying 90% subsidiary of the company (see paragraph 11B).
(2) “Property managing subsidiary” means a qualifying subsidiary of a company whose business consists wholly or mainly in the holding or managing of land or any property deriving its value from land.
(3) In sub-paragraph (2) “land” and “property deriving its value from land” have the same meaning as in section 776 of ICTA.
Meaning of “qualifying 90% subsidiary”
11B (1) A company (“the subsidiary”) is a qualifying 90% subsidiary of a company (“the holding company”) if the following conditions are met.
(2) The conditions are—
(a) that the holding company possesses not less than 90% of the issued share capital of, and not less than 90% of the voting power in, the subsidiary;
(b) that the holding company would—
(i) in the event of a winding up of the subsidiary, or
(ii) in any other circumstances,
be beneficially entitled to not less than 90% of the assets of the subsidiary which would then be available for distribution to the shareholders of the subsidiary;
(c) that the holding company is beneficially entitled to not less than 90% of any profits of the subsidiary which are available for distribution to the shareholders of the subsidiary;
(d) that no person other than the holding company has control of the subsidiary; and
(e) that no arrangements are in existence by virtue of which any of the conditions in paragraphs (a) to (d) would cease to be met.
(3) Sub-paragraphs (4) to (10) of paragraph 11 (but not sub-paragraph (6)(b)) apply in relation to the conditions in sub-paragraph (2) above as they apply in relation to the conditions in sub-paragraph (2) of that paragraph.
.
(6) The amendments made by this section have effect in relation to any right to acquire shares granted on or after 17th March 2004.
(1) Section 98 of the Taxes Management Act 1970 (c. 9) (special returns etc) is amended as follows.
(2) In subsection (4A)(b), after “(4D)” insert “ , (4DA) ”.
(3) After subsection (4D) insert—
(4DA) A payment is within this subsection if—
(a) it is a payment to which section 349(1) of the principal Act (requirement to deduct tax) applies,
(b) a company, purporting to rely on section 101 of the Finance Act 2004 (payment of royalties without deduction at source), makes the payment without deduction of tax under section 349(1) of the principal Act, and
(c) at the time the payment is made section 98 of the Finance Act 2004 does not apply to the payment and the company—
(i) does not believe that that section does so apply, or
(ii) if it does so believe, cannot reasonably do so.
.
(4) In section 18 of the Taxes Act 1988 (Schedule D) after subsection (5) insert—
(6) This section is subject to Chapter 6 of Part 3 of the Finance Act 2004 (exemption from income tax for certain interest and royalty payments).
.
(5) In section 349 of the Taxes Act 1988 (certain payments to be made subject to deduction of income tax) after subsection (6) insert—
(7) This section is subject to Chapter 6 of Part 3 of the Finance Act 2004 (exemption from income tax for certain interest and royalty payments).
.
112 Computation of income etc subject to foreign tax and special withholding tax
(1) Section 795 of the Taxes Act 1988 (double taxation relief: computation of income subject to foreign tax) is amended as follows.
(2) In subsection (1) (remittance basis: grossing up) after “increased by” insert “ — (a) ” and at the end insert—
, and
(b) the amount of any special withholding tax levied in respect of the income.
.
(3) In subsection (2)(a) (other cases: no deduction for foreign tax) after “foreign tax” insert “ or special withholding tax ”.
(4) After subsection (4) insert—
(5) In this section—
(a) “special withholding tax” has the same meaning as in Chapter 7 of Part 3 of the Finance Act 2004 (see section 107(3) of that Act); and
(b) references to special withholding tax are to special withholding tax in respect of which a claim has been made under that Chapter.
.
(5) Section 277 of the Taxation of Chargeable Gains Act 1992 (c. 12) (which applies Chapters 1 and 2 of Part 18 of the Taxes Act 1988 in relation to capital gains tax) is amended as follows.
(6) After subsection (1) insert—
(1A) Subsection (1B) below applies where—
(a) a chargeable gain accrues to a person on a disposal by him of assets in circumstances where the consideration for the disposal consists of or includes an amount of savings income, and
(b) special withholding tax is levied in respect of the whole or any part of the consideration for the disposal.
(1B) In section 795 of the Taxes Act, as applied by this section, for the reference in subsection (1)(b) to the amount of any special withholding tax levied in respect of the income, there shall be substituted a reference to an amount equal to—
SWT
×
GUK
G
-
SWT
where—
SWT is the amount of special withholding tax levied in respect of the whole or the part of the consideration for the disposal,
GUK is the amount of the chargeable gain received in the United Kingdom, and
G is the amount of the chargeable gain accruing to the person on the disposal.
(1C) In subsections (1A) and (1B) above “savings income” and “special withholding tax” have the same meaning as in Chapter 7 of Part 3 of the Finance Act 2004 (see section 107 of that Act); and references to special withholding tax are to special withholding tax in respect of which a claim has been made under that Chapter.
.
(1) In section 792 of the Taxes Act 1988 (double taxation relief: interpretation of the credit code) in subsection (1), in the definition of “foreign tax”, at the end insert “ (other than special withholding tax within the meaning of Chapter 7 of Part 3 of the Finance Act 2004) ”.
(2) In section 811 of the Taxes Act 1988 (deduction for foreign tax where no credit allowable) in subsection (2), at the end insert “ and to section 111 of the Finance Act 2004 (computation of income subject to special withholding tax) ”.
(3) In section 278 of the Taxation of Chargeable Gains Act 1992 (c. 12) (allowance for foreign tax) in subsection (1), after “section 277” insert “ and to section 111 of the Finance Act 2004 (computation of chargeable gains subject to special withholding tax) ”.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Schedule 21 (which makes provision for relief under section 165 or 260 of the Taxation of Chargeable Gains Act 1992 (c. 12) not to be available on certain transfers to settlor-interested settlements etc or on transfers of shares etc to companies, and makes minor amendments in sections 79 and 281 of that Act) has effect.
118 Authorised unit trusts: treatment of umbrella schemes
(1) The Taxation of Chargeable Gains Act 1992 is amended as follows.
(2) In section 99(2) (application of Act to unit trust schemes: definitions)—
(a) in the opening words, after “Subject to subsection (3)” insert “ and section 99A ”; and
(b) for paragraph (b) substitute—
(aa) “unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme;
(b) “authorised unit trust” means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that period.
(3) After that section insert—
Authorised unit trusts: treatment of umbrella schemes
99A (1) In this section an “umbrella scheme” means an authorised unit trust—
(a) which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them, and
(b) under which the participants are entitled to exchange rights in one pool for rights in another,
and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.
(2) For the purposes of this Act (except subsection (1))—
(a) each of the parts of an umbrella scheme shall be regarded as an authorised unit trust, and
(b) the scheme as a whole shall not be regarded as an authorised unit trust or as any other form of collective investment scheme.
(3) In this Act, in relation to a part of an umbrella scheme, any reference to a unit holder is to a person for the time being having rights in the separate pool to which the part of the umbrella scheme relates.
(4) Nothing in subsections (2) or (3) shall prevent—
(a) gains accruing to an umbrella scheme being regarded as gains accruing to an authorised unit trust for the purposes of section 100(1) (exemption for authorised unit trusts etc);
(b) a transfer of business to an umbrella scheme being regarded as a transfer to an authorised unit trust for the purposes of section 139(4) (exclusion of transfers to authorised unit trusts etc);
(c) a disposal by a unit holder of units in an umbrella scheme being regarded as a disposal by him of units in an authorised unit trust for the purposes of section 271(1)(j) (exemption for disposal of units in an authorised unit trust which is also an approved personal pension scheme etc).
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(4) In section 288 (interpretation)—
(a) in subsection (1), in the definition of “collective investment scheme”, at the end insert “ (subject to section 99A) ”;
(b) in the table in subsection (8) (index of general definitions)—
(i) in the first column after “Unit trust scheme” insert “ and “unit holder” ”;
(ii) in the second column for “s 99” substitute “ ss 99 and 99A ”.
(5) The amendments made by this section have effect in relation to years of assessment and accounting periods beginning on or after 1st April 2004.