Finance Act 2009
2009 c. 10
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.
[21st July 2009]
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:—
(1) For the tax year 2009-10 the amount specified in section 10(5) of ITA 2007 (basic rate limit) is replaced with “£37,400”.
(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.
3 Personal allowance for 2009-10 for those aged under 65
(1) For the tax year 2009-10 the amount specified in—
(a) section 35 of ITA 2007, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(personal allowance for those aged under 65) is replaced with “£6,475”.
(2) Accordingly—
(a) section 57 of ITA 2007, so far as relating to the amount specified in section 35 of that Act, ...
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(indexation) do not apply for the tax year 2009-10.
4 Reduction of personal allowance for those with income exceeding £100,000
(1) In section 35 of ITA 2007 (personal allowances for those aged under 65), the existing provision becomes subsection (1) of that section; and after that subsection insert—
(2) For an individual whose adjusted net income exceeds £100,000, the allowance under subsection (1) is reduced by one-half of the excess.
(3) If the amount of any allowance that remains after the operation of subsection (2) would otherwise not be a multiple of £1, it is to be rounded up to the nearest amount which is a multiple of £1.
(4) For the meaning of “adjusted net income” see section 58.
(2) In sections 36(2)(b) and 37(2)(b) of ITA 2007 (limit on reduction of personal allowances for those aged 65 to 74 or 75 and over), for “the amount of a personal allowance under section 35” substitute “ the amount of any allowance to which the individual would be entitled under section 35 if under the age of 65 throughout the tax year ”.
(3) In section 57(1)(a) and (3)(a) of ITA 2007 (indexation of allowances), for “35” substitute “ 35(1) ”.
(4) The amendments made by subsections (1) and (2) have effect for the tax year 2010-11 and subsequent tax years.
(5) The amendment made by subsection (3) has effect for finding allowances for the tax year 2011-12 and subsequent tax years.
(1) Section 6 of ITA 2007 (rates of income tax) is amended as follows.
(2) In subsection (1), omit the “and” at the end of paragraph (b) and insert at the end
, and
(d) the additional rate.
(3) In subsection (3)(b), for “and dividend upper rate” substitute “ , dividend upper rate and dividend additional rate ”.
(4) In section 9 (trust rate and dividend trust rate)—
(a) in subsection (1), for “40%” substitute “ 50% ”, and
(b) in subsection (2), for “32.5%” substitute “ 42.5% ”.
(5) Schedule 2 contains provision supplementing this section (including provision about rates under Part 4 of FA 2004).
(6) The amendments made by this section have effect for the tax year 2010-11 and subsequent tax years.
(1) Corporation tax is charged for the financial year 2010.
(2) For that year the rate of corporation tax is—
(a) 28% 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 meaning given by section 276 of CTA 2010.
8 Small companies' rates and fractions for financial year 2009
(1) For the financial year 2009 the small companies' rate is—
(a) 21% on profits of companies other than ring fence profits, and
(b) 19% on ring fence profits of companies.
(2) For the financial year 2009 the fraction mentioned in section 13(2) of ICTA is—
(a) 7/400ths in relation to profits of companies other than ring fence profits (“the standard fraction”), and
(b) 11/400ths in relation to ring fence profits of companies (“the ring fence fraction”).
(3) See section 7(3) of FA 2008 for provision applying section 3(3) to (7) of FA 2007 in relation to profits for an accounting period any part of which falls in the financial year 2009.
(4) In this section “ring fence profits” has the meaning given by section 276 of CTA 2010.
9 Extension of reduced standard rate and anti-avoidance provision
(1) The Value Added Tax (Change of Rate) Order 2008 (S.I. 2008/3020) (reducing standard rate of value added tax to 15 per cent) is to cease to be in force on 1 January 2010 (rather than ceasing to be in force on 1 December 2009 in accordance with section 2(2) of VATA 1994).
(2) Schedule 3 contains—
(a) provision for a supplementary charge to value added tax on supplies spanning the date of the VAT change (see Parts 1 to 5), and
(b) minor amendments of provisions about orders changing the standard rate of value added tax (see Part 6).
(1) Part 4 of FA 2003 (stamp duty land tax) has effect in relation to transactions with an effective date on or after 22 April 2009 but before 1 January 2010 as if—
(a) in section 55(2) (amount of tax chargeable: general), in Table A (bands and percentages for residential property), for “£125,000” (in both places) there were substituted “ £175,000 ”, and
(b) in paragraph 2(3) of Schedule 5 (amount of tax chargeable: rent), in Table A (bands and percentages for residential property), for “£125,000” (in both places) there were substituted “ £175,000 ”.
(2) The following are revoked—
(a) the Stamp Duty Land Tax (Variation of Part 4 of the Finance Act 2003) Regulations 2008 (S.I. 2008/2338), and
(b) the Stamp Duty Land Tax (Exemption of Certain Acquisitions of Residential Property) Regulations 2008 (S.I. 2008/2339).
(3) The revocations made by subsection (2) have effect in relation to transactions with an effective date on or after 22 April 2009.
(1) ALDA 1979 is amended as follows.
(2) In section 5 (rate of duty on spirits), for “£21.35” substitute “ £22.64 ”.
(3) In section 36(1AA)(a) (standard rate of duty on beer), for “£14.96” substitute “ £16.47 ”.
(4) In section 62(1A) (rates of duty on cider)—
(a) in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for “£188.10” substitute “ £207.20 ”,
(b) in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for “£43.37” substitute “ £47.77 ”, and
(c) in paragraph (c) (rate of duty per hectolitre in any other case), for “£28.90” substitute “ £31.83 ”.
(5) For the table in Schedule 1 substitute—
Table of rates of duty on wine and made-wine
Part 1 Wine or made-wine of a strength not exceeding 22 per cent
Description of wine or made-wine | Rates of duty per hectolitre
£
Wine or made-wine of a strength not exceeding 4 per cent | 65.94
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent | 90.68
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not being sparkling | 214.02
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent | 207.20
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent | 274.13
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent | 285.33
Part 2 Wine or made-wine of a strength exceeding 22 per cent
Description of wine or made-wine | Rates of duty per litre of alcohol in wine or made-wine
£
Wine or made-wine of a strength exceeding 22 per cent | 22.64.
(6) The following are revoked—
(a) the Alcoholic Liquor Duties (Surcharges) and Tobacco Products Duty Order 2008 (S.I. 2008/3026), so far as relating to excise duty on alcoholic liquors, and
(b) the Alcoholic Liquor (Surcharge on Spirits Duty) Order 2008 (S.I. 2008/3062).
(7) The amendments made by this section are treated as having come into force on 23 April 2009.
(1) For the table in Schedule 1 to TPDA 1979 substitute—
Table
1. Cigarettes | An amount equal to 24 per cent of the retail price plus £114.31 per thousand cigarettes
2. Cigars | £173.13 per kilogram
3. Hand-rolling tobacco | £124.45 per kilogram
4. Other smoking tobacco and chewing tobacco | £76.12 per kilogram.
(2) The Alcoholic Liquor Duties (Surcharges) and Tobacco Products Duty Order 2008 (S.I. 2008/3026), so far as relating to excise duty on tobacco products, is revoked.
(3) The amendments made by this section are treated as having come into force at 6 pm on 22 April 2009.
(1) Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.
(2) In paragraph 1 (general)—
(a) in sub-paragraph (2) (vehicle not covered elsewhere in Schedule otherwise than with engine cylinder capacity not exceeding 1,549cc), for “£185” substitute “ £190 ”, and
(b) in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£120” substitute “ £125 ”.
(3) In paragraph 1B (graduated rates for light passenger vehicles), for the table substitute—
Table
CO2 emissions figure | Rate
(1) | (2) | (3) | (4)
Exceeding | Not exceeding | Reduced rate | Standard rate
g/km | g/km | £ | £
100 | 120 | 15 | 35
120 | 140 | 100 | 120
140 | 150 | 105 | 125
150 | 165 | 130 | 150
165 | 185 | 155 | 175
185 | 225 | 200 | 215
225 | 390 | 405
The table has effect in relation to vehicles first registered under this Act before 23 March 2006 as if—
(a) in column (3), in the last row, “200” were substituted for “ 390 ”, and
(b) in column (4), in the last row, “215” were substituted for “ 405 ”.
(4) In paragraph 1J (light goods vehicles)—
(a) in sub-paragraph (a) (vehicle which is not lower-emission van), for “£180” substitute “ £185 ”, and
(b) in sub-paragraph (b) (lower-emission van), for “£120” substitute “ £125 ”.
(5) The amendments made by this section have effect in relation to licences taken out on or after 1 May 2009.
(1) Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.
(2) In paragraph 1(2) (vehicle not covered elsewhere in Schedule otherwise than with engine cylinder capacity not exceeding 1,549cc), for “£190” substitute “ £205 ”.
(3) Paragraph 1B (graduated rates for light passenger vehicles) is amended as follows.
(4) For “table” substitute “ tables ”.
(5) Omit the “and” at the end of paragraph (a).
(6) Insert at the end of paragraph (b)
and
(c) whether or not the duty is payable on the first vehicle licence for the vehicle.
(7) For the table substitute—
Table 1 Rates payable on first vehicle licence for vehicle
CO2 emissions figure | Rate
(1) | (2) | (3) | (4)
Exceeding | Not exceeding | Reduced rate | Standard rate
g/km | g/km | £ | £
130 | 140 | 100 | 110
140 | 150 | 115 | 125
150 | 165 | 145 | 155
165 | 175 | 240 | 250
175 | 185 | 290 | 300
185 | 200 | 415 | 425
200 | 225 | 540 | 550
225 | 255 | 740 | 750
255 | 940 | 950
Table 2 Rates payable on any other vehicle licence for vehicle
CO2 emissions figure | Rate
(1) | (2) | (3) | (4)
Exceeding | Not exceeding | Reduced rate | Standard rate
g/km | g/km | £ | £
100 | 110 | 10 | 20
110 | 120 | 20 | 30
120 | 130 | 80 | 90
130 | 140 | 100 | 110
140 | 150 | 115 | 125
150 | 165 | 145 | 155
165 | 175 | 170 | 180
175 | 185 | 190 | 200
185 | 200 | 225 | 235
200 | 225 | 235 | 245
225 | 255 | 415 | 425
255 | 425 | 435
Table 2 has effect in relation to vehicles first registered, under this Act or under the law of a country or territory outside the United Kingdom, before 23 March 2006 as if—
(a) in column (3), in the last two rows, “235” were substituted for “ 415 ” and “425”, and
(b) in column (4), in the last two rows, “245” were substituted for “ 425 ” and “435”.
(8) In paragraph 1J(a) (light goods vehicle which is not lower-emission van), for “£185” substitute “ £200 ”.
(9) Schedule 4 contains further provision about rates of vehicle excise duty etc.
(10) The amendments made by this section have effect in relation to licences taken out on or after 1 April 2010.
(1) HODA 1979 is amended as follows.
(2) In section 6(1A) (main rates)—
(a) in paragraph (a) (unleaded petrol), for “£0.5235” substitute “ £0.5419 ”,
(b) in paragraph (aa) (aviation gasoline), for “£0.3103” substitute “ £0.3334 ”,
(c) in paragraph (b) (light oil other than unleaded petrol or aviation gasoline), for “£0.6207” substitute “ £0.6391 ”, and
(d) in paragraph (c) (heavy oil), for “£0.5235” substitute “ £0.5419 ”.
(3) In section 6AA(3) (rate of duty on biodiesel), for “£0.3235” substitute “ £0.3419 ”.
(4) In section 6AD(3) (rate of duty on bioethanol), for “£0.3235” substitute “ £0.3419 ”.
(5) In section 8(3) (road fuel gas)—
(a) in paragraph (a) (natural road fuel gas), for “£0.1660” substitute “ £0.1926 ”, and
(b) in paragraph (b) (other road fuel gas), for “£0.2077” substitute “ £0.2482 ”.
(6) In section 11(1) (rebate on heavy oil)—
(a) in paragraph (a) (fuel oil), for “£0.0966” substitute “ £0.1 ”, and
(b) in paragraph (b) (gas oil), for “£0.1007” substitute “ £0.1042 ”.
(7) In section 14(1) (rebate on light oil for use as furnace fuel), for “£0.0966” substitute “ £0.1 ”.
(8) In section 14A(2) (rebate on certain biodiesel), for “£0.1007” substitute “ £0.1042 ”.
(9) The amendments made by subsection (2)(b) and (c) are treated as having come into force on 1 May 2009.
(10) The other amendments made by this section are treated as having come into force on 1 April 2009.
(1) HODA 1979 is amended as follows.
(2) In section 6(1A) (main rates)—
(a) in paragraph (a) (unleaded petrol), for “£0.5419” substitute “ £0.5619 ”,
(b) in paragraph (aa) (aviation gasoline), for “£0.3334” substitute “ £0.3457 ”,
(c) in paragraph (b) (light oil other than unleaded petrol or aviation gasoline), for “£0.6391” substitute “ £0.6591 ”, and
(d) in paragraph (c) (heavy oil), for “£0.5419” substitute “ £0.5619 ”.
(3) In section 6AA(3) (rate of duty on biodiesel), for “£0.3419” substitute “ £0.3619 ”.
(4) In section 6AD(3) (rate of duty on bioethanol), for “£0.3419” substitute “ £0.3619 ”.
(5) In section 8(3) (road fuel gas)—
(a) in paragraph (a) (natural road fuel gas), for “£0.1926” substitute “ £0.2216 ”, and
(b) in paragraph (b) (other road fuel gas), for “£0.2482” substitute “ £0.2767 ”.
(6) In section 11(1) (rebate on heavy oil)—
(a) in paragraph (a) (fuel oil), for “£0.1” substitute “ £0.1037 ”, and
(b) in paragraph (b) (gas oil), for “£0.1042” substitute “ £0.1080 ”.
(7) In section 14(1) (rebate on light oil for use as furnace fuel), for “£0.1” substitute “ £0.1037 ”.
(8) In section 14A(2) (rebate on certain biodiesel), for “£0.1042” substitute “ £0.1080 ”.
(9) The amendments made by this section come into force on 1 September 2009.
(1) In section 30 of FA 1994 (air passenger duty: rates), for subsections (1) to (4) substitute—
(1) Air passenger duty is chargeable on the carriage of each chargeable passenger at the rate determined as follows.
(2) If the passenger's journey ends at a place in the United Kingdom or a territory specified in Part 1 of Schedule 5A—
(a) if the passenger's agreement for carriage provides for standard class travel in relation to every flight on the passenger's journey, the rate is £11, and
(b) in any other case, the rate is £22.
(3) If the passenger's journey ends at a place in a territory specified in Part 2 of Schedule 5A—
(a) if the passenger's agreement for carriage provides for standard class travel in relation to every flight on the passenger's journey, the rate is £45, and
(b) in any other case, the rate is £90.
(4) If the passenger's journey ends at a place in a territory specified in Part 3 of Schedule 5A—
(a) if the passenger's agreement for carriage provides for standard class travel in relation to every flight on the passenger's journey, the rate is £50, and
(b) in any other case, the rate is £100.
(4A) If the passenger's journey ends at any other place—
(a) if the passenger's agreement for carriage provides for standard class travel in relation to every flight on the passenger's journey, the rate is £55, and
(b) in any other case, the rate is £110.
(2) Schedule 5 contains further provision about air passenger duty.
(3) The amendment made by subsection (1) has effect in relation to the carriage of passengers beginning on or after 1 November 2009.
(1) In section 42(1)(a) and (2) of FA 1996 (amount of landfill tax), for “£40” substitute “ £48 ”.
(2) The amendments made by subsection (1) have effect in relation to disposals made (or treated as made) on or after 1 April 2010.
(1) In section 11(2) of FA 1997 (rates of gaming duty), for the table substitute—
Table
Part of gross gaming yield | Rate
The first £1,929,000 | 15 per cent
The next £1,329,500 | 20 per cent
The next £2,329,000 | 30 per cent
The next £4,915,500 | 40 per cent
The remainder | 50 per cent.
(2) The amendment made by subsection (1) has effect in relation to accounting periods beginning on or after 1 April 2009.
22 Provisions affecting amount of amusement machine licence duty
(1) BGDA 1981 is amended as follows.
(2) Section 21 (gaming machine licences) is amended as follows.
(3) Subsection (5) (excepted machines) is amended as follows.
(4) In paragraph (c) (machines in case of which cost of single game does not exceed 10p and maximum value of prize for winning single game does not exceed £5)—
(a) in sub-paragraph (i), omit the “and” at the end,
(b) in sub-paragraph (ii), for “£5” substitute “ £15 ”, and
(c) after that sub-paragraph insert—
(iii) the maximum cash component of the prize for winning a single game does not exceed £8,
.
(5) After that paragraph insert—
(ca) a gaming machine in respect of which—
(i) the cost of a single game does not exceed £1,
(ii) the maximum value of the prize for winning a single game does not exceed £50, and
(iii) any prize that can be won is neither money nor something that can be exchanged for or used in place of money or that can be exchanged for something other than money, and
.
(6) After that subsection insert—
(6) To the extent that a prize consists of anything other than money, its value for the purposes of this section and sections 22 and 23 below is—
(a) in the case of a voucher or token that may be exchanged for, or used in place of, an amount of money, that amount,
(b) in the case of a voucher or token that does not fall within paragraph (a) and that may be exchanged for something other than money, the cost that the person providing the machine would incur in obtaining that thing from a person who is not a connected person, and
(c) in any other case, the cost that the person providing the machine would incur in obtaining the prize from a person who is not a connected person.
(7) Section 839 of the Income and Corporation Taxes Act 1988 (connected persons) applies for the purposes of subsection (6).
(7) In section 22(2) (machine in respect of which benefits for winning single game do not exceed £8 to be “small-prize machine”), for “£8” substitute “ £10 ”.
(8) Section 23 (amount of duty) is amended as follows.
(9) In subsection (3) (categories of machines), in the definition of Category C gaming machine, in paragraph (ii)—
(a) for “50p” substitute “ £1 ”, and
(b) for “£35” substitute “ £70 ”.
(10) Omit subsection (5) (which is superseded by the amendment made by subsection (6)).
(11) In consequence of the amendments made by the preceding provisions of this section, omit—
(a) in FA 2000, in Schedule 2, paragraph 3(1)(b), and
(b) in FA 2007, section 9(2) and (4).
(12) The amendments made by this section are treated as having come into force on 1 June 2009.
24 First-year capital allowances for expenditure in 2009-2010
(1) Part 2 of CAA 2001 (plant and machinery allowances) has effect as if—
(a) in section 39 (first-year qualifying expenditure), a reference to this section were included in the list of provisions describing first-year qualifying expenditure, and
(b) in the Table in section 52(3) (amount of first-year allowances), there were inserted at the end—
Expenditure qualifying under section 24 of FA 2009 (expenditure in 2009-2010) | 40%
.
(2) Expenditure is first-year qualifying expenditure under this section if—
(a) it is incurred in 2009-2010,
(b) it is not within any of the general exclusions in section 46(2) of CAA 2001 (subject to subsection (4)),
(c) it is not special rate expenditure (as defined by section 104A of CAA 2001), and
(d) it is not first-year qualifying expenditure under a provision of Chapter 4 of Part 2 of CAA 2001.
(3) For the purposes of this section expenditure is incurred in 2009-2010—
(a) in the case of expenditure incurred by a person within the charge to corporation tax, if it is incurred on or after 1 April 2009 but before 1 April 2010, and
(b) in the case of expenditure incurred by a person within the charge to income tax, if it is incurred on or after 6 April 2009 but before 6 April 2010.
(4) General exclusion 6 in section 46(2) of CAA 2001 (expenditure on provision of plant or machinery for leasing) does not prevent expenditure being first-year qualifying expenditure under this section if the plant or machinery is provided for leasing under an excluded lease of background plant or machinery for a building (as defined by section 70R of that Act).
(5) Expressions used in this section and in Part 2 of CAA 2001 have the same meaning here as in that Part of that Act, subject to subsection (6).
(6) In determining whether expenditure is incurred in 2009-2010, any effect of section 12 of CAA 2001 (expenditure incurred before qualifying activity carried on) on the time at which it is to be treated as incurred is to be disregarded.
(1) If—
(a) a person (“P”) makes arrangements under which P agrees (in whatever terms) to forgo (to any extent) tax relief or a right to tax relief (whenever arising), and
(b) the Treasury designates the arrangements for the purposes of this section,
all relevant enactments are to have effect with such modifications as are necessary or expedient to give effect to the agreement.
(2) The Treasury may not designate arrangements for the purposes of this section unless—
(a) the arrangements have been made with the Treasury, another government department or another public body, and
(b) under the arrangements, or under other arrangements, the Treasury, another government department or another public body—
(i) guarantees or assumes a loss or other liability of P or another person,
(ii) insures or indemnifies P or another person against a loss or other liability,
(iii) agrees to make a payment to P or another person in respect of a loss or other liability of any person (whether or not the person to whom the payment is to be made), or
(iv) gives other financial support or assistance to P or another person (whether in money or otherwise).
(3) If P forgoes (to any extent) tax relief or a right to tax relief under subsection (1)—
(a) no tax relief is to be given to P or any other person by virtue of what is forgone or anything resulting from or representing what is forgone, and
(b) all relevant enactments are to have effect with such modifications as are necessary or expedient to give effect to paragraph (a).
(4) In this section—
“relevant enactments” means—
the Corporation Tax Acts, and
the enactments relating to petroleum revenue tax;
“tax relief” means—
a reduction (by any means) of P's liability to any tax, or
a payable tax credit.
(5) This section has effect in relation to arrangements made on or after 22 April 2009; but that does not prevent subsections (1) and (3) from having effect in relation to times before 22 April 2009.
Schedule 7 contains provision extending Part 14 of CTA 2009 (remediation of contaminated land) to derelict land and other provision amending that Part of that Act.
(1) Chapter 2 of Part 4 of ITTOIA 2005 (interest) is amended as follows.
(2) In section 369(2) (list of provisions extending what is treated as interest for certain purposes), after “bonds),” insert— “ section 380A (FSCS payments representing interest), ”.
(3) After section 380 insert—
FSCS payments representing interest
380A (1) Any payment representing interest which is made under the FSCS is treated as interest for the purposes of this Act.
(2) “Payment representing interest” means a payment calculated in the same way as interest which would have been paid to the recipient but for the circumstances giving rise to the making of payments under the FSCS.
(3) Where a payment representing interest is made net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest, the amount treated as interest by this section is the aggregate of the payment representing interest and that sum.
(4) This section applies to payments made under the FSCS whether or not they are made (in whole or in part) on behalf of the Treasury or any other person.
(5) In this section “the FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000).
(4) In ITA 2007, after section 979 insert—
FSCS payments representing interest
979A (1) This section applies where a payment is made under the FSCS representing interest net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest but for the circumstances giving rise to the making of payments under the FSCS.
(2) A payment of the relevant gross amount is treated as having been made under the FSCS after there has been deducted from it a sum representing income tax of that amount.
(3) That sum is accordingly taken into account under section 59B of TMA 1970 in determining the income tax payable by, or repayable to, the recipient.
(4) “The relevant gross amount” means the aggregate of the amount of the payment representing interest which is made and that sum.
(5) If the recipient requests it in writing, the scheme manager of the FSCS must provide the recipient with a statement showing—
(a) the relevant gross amount,
(b) the amount of the sum treated as deducted, and
(c) the amount of the payment representing interest.
(6) The duty to comply with a request under subsection (5) is enforceable by the recipient.
(7) In this section—
“the FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000);
“payment representing interest” has the same meaning as in section 380A of ITTOIA 2005.
(5) The amendments made by this section have effect in relation to payments made on or after 6 October 2008.
Schedule 17 contains provision—
(a) removing the existing requirements in relation to the international movement of capital in sections 765 to 767 of ICTA, and
(b) imposing new reporting requirements on certain bodies corporate in relation to the international movement of capital.
39 Certain distributions of offshore funds taxed as interest
(1) Chapter 2 of Part 4 of ITTOIA 2005 (interest) is amended as follows.
(2) In section 369(2) (list of provisions extending what is treated as interest for certain purposes), after the entry relating to section 376 insert— “ section 378A (offshore fund distributions), ”.
(3) After section 378 insert—
Offshore fund distributions
378A (1) This section applies where—
(a) a dividend is paid by an offshore fund, and
(b) the offshore fund fails to meet the qualifying investments test at any time in the relevant period.
(2) The dividend is treated as interest for income tax purposes.
(3) For the purposes of this section, an offshore fund fails to meet the qualifying investments test if the market value of the fund's qualifying investments exceeds 60% of the market value of all of the assets of the fund (excluding cash awaiting investment).
(4) “The relevant period” means—
(a) the relevant period of account of the offshore fund, or
(b) if longer, the period of 12 months ending on the last day of that period.
(5) “The relevant period of account” means—
(a) the last period of account ending before the dividend is paid, in a case in which the profits available for distribution at the end of that period (and not used since then by distribution or otherwise) equal or exceed the amount of the dividend (aggregated with any other distribution made by the offshore fund at the same time), and
(b) the period of account in which the dividend is paid, in any other case.
(6) This section applies to a manufactured overseas dividend if, and only if, it is representative of a distribution to which this section would apply.
(7) In this section—
“dividend” includes any distribution that (but for this section) would be treated as a dividend for income tax purposes;
“manufactured overseas dividend” has the same meaning as in Chapter 2 of Part 11 of ITA 2007 (manufactured payments);
“offshore fund” has the same meaning as in Chapter 5 of Part 17 of ICTA (see sections 756A to 756C of that Act);
“qualifying investments” has the meaning given in section 494 of CTA 2009.
(4) Accordingly, in section 367 of ITTOIA 2005 (priority between Chapters within Part 4), in subsection (3)—
(a) in paragraph (a), after “dividends)” insert “ , 378A (offshore fund distributions) ”, and
(b) in paragraph (b), insert at the end “or Chapter 4 (or both)”.
(5) The amendments made by this section have effect in relation to—
(a) distributions arising on or after 22 April 2009, and
(b) manufactured overseas dividends that are representative of a distribution arising on or after that date.