Finance Act 2007
2007 c. 11
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.
[19th July 2007]
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:—
Income tax is charged for the tax year 2007-08; and for that tax year—
(a) the starting rate is 10%,
(b) the basic rate is 22%, and
(c) the higher rate is 40%.
(1) Corporation tax is charged for the financial year 2008; and 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.
(2) In this section “ring fence profits” has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A)).
(1) The Alcoholic Liquor Duties Act 1979 (c. 4) is amended as follows.
(2) In section 36(1AA)(a) (standard rate of duty on beer), for “£13.26” substitute “ £13.71 ”.
(3) 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 “£166.70” substitute “ £172.33 ”,
(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 “£38.43” substitute “ £39.73 ”, and
(c) in paragraph (c) (rate of duty per hectolitre in any other case), for “£25.61” substitute “ £26.48 ”.
(4) For Part 1 of the Table in Schedule 1 substitute—
Part 1 Wine and 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 | 54.85
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent | 75.42
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not sparkling | 177.99
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent | 172.33
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 | 227.99
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent | 237.31
.
(5) The amendments made by this section are deemed to have come into force on 26th March 2007.
(1) For the Table in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—
Table
1. Cigarettes | An amount equal to 22 per cent of the retail price plus £108.65 per thousand cigarettes.
2. Cigars | £158.24 per kilogram.
3. Hand-rolling tobacco | £113.74 per kilogram.
4. Other smoking tobacco and chewing tobacco | £69.57 per kilogram.
(2) The amendment made by subsection (1) is deemed to have come into force at 6 p.m. on 21st March 2007.
(1) For the Table in section 11(2) of FA 1997 substitute—
Table
Part of gross gaming yield | Rate
The first £1,836,500 | 15 per cent.
The next £1,266,000 | 20 per cent.
The next £2,217,500 | 30 per cent.
The next £4,680,000 | 40 per cent.
The remainder | 50 per cent.
(2) In section 11(3) of that Act, for “40 per cent” substitute “ 50 per cent ”.
(3) The amendments made by this section have effect in relation to accounting periods beginning on or after 1st April 2007.
(1) Schedule 1 contains amendments of and relating to Part 2 of BGDA 1981 (gaming duties) imposing a remote gaming duty.
(2) The amendments made by Schedule 1 have effect in respect of the provision of facilities on or after a date appointed by the Commissioners for Her Majesty's Revenue and Customs by order made by statutory instrument.
(1) The Hydrocarbon Oil Duties Act 1979 (c. 5) is amended as follows.
(2) In section 6(1A) (hydrocarbon oil: rates of duty)—
(a) in paragraph (a) (ultra low sulphur petrol), for “£0.4835” substitute “ £0.5035 ”,
(b) in paragraph (aa) (sulphur-free petrol), for “£0.4835” substitute “ £0.5035 ”,
(c) in paragraph (b) (light oil other than ultra low sulphur petrol and sulphur-free petrol), for “£0.5768” substitute “ £0.6007 ”,
(d) in paragraph (c) (ultra low sulphur diesel), for “£0.4835” substitute “ £0.5035 ”,
(e) in paragraph (ca) (sulphur-free diesel), for “£0.4835” substitute “ £0.5035 ”, and
(f) in paragraph (d) (heavy oil other than ultra low sulphur diesel and sulphur-free diesel), for “£0.5468” substitute “ £0.5694 ”.
(3) In section 6AA(3) (biodiesel), for “£0.2835” substitute “ £0.3035 ”.
(4) In section 6AD(3) (bioethanol), for “£0.2835” substitute “ £0.3035 ”.
(5) In section 8(3) (road fuel gas)—
(a) in paragraph (a) (natural road fuel gas), for “£0.1081” substitute “ £0.1370 ”, and
(b) in paragraph (b) (other road fuel gas), for “£0.1221” substitute “ £0.1649 ”.
(6) In section 11(1) (rebate on heavy oil)—
(a) in paragraph (a) (fuel oil), for “£0.0729” substitute “ £0.0929 ”,
(b) in paragraph (b) (gas oil which is not ultra low sulphur diesel), for “£0.0769” substitute “ £0.0969 ”, and
(c) in paragraph (ba) (ultra low sulphur diesel), for “£0.0769” substitute “ £0.0969 ”.
(7) In section 13A(1) (rebate on unleaded petrol), for “£0.0617” substitute “ £0.0642 ”.
(8) In section 14(1) (rebate on light oil for use as furnace oil), for “£0.0729” substitute “ £0.0929 ”.
(9) The amendments made by this section come into force on 1st October 2007.
(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 “£175” substitute “ £180 ”, and
(b) in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£110” substitute “ £115 ”.
(3) Paragraph 1B (graduated rates for light passenger vehicles) is amended as follows.
(4) For the words from “Table A” to “date,” substitute “ the following table ”.
(5) For “, or is liable to the standard rate or the premium” 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 | 150 | 95 | 115
150 | 165 | 120 | 140
165 | 185 | 145 | 165
185 | 225 | 190 | 205
225 | 285 | 300
The table has effect in relation to vehicles first registered before 23rd March 2006 as if—
(a) in column (3), in the last row, “190” were substituted for “ 285 ”, and
(b) in column (4), in the last row, “205” were substituted for “ 300 or is liable to the standard ”.
.
(6) For Tables A and B substitute—
(7) For paragraphs 1D and 1E substitute—
The standard rate
1D A vehicle is liable to the standard rate of duty if it does not qualify for the reduced rate of duty.
(8) In paragraph 1J (light goods vehicles)—
(a) in sub-paragraph (a) (vehicle which is not lower-emission van), for “£170” substitute “ £175 ”, and
(b) in sub-paragraph (b) (lower-emission van), for “£110” substitute “ £115 ”.
(9) In paragraph 2(1) (motorcycles)—
(a) in paragraph (b) (motorbicycle and engine's cylinder capacity more than 150cc but not more than 400cc), for “£31” substitute “ £32 ”,
(b) in paragraph (c) (motorbicycle and engine's cylinder capacity more than 400cc but not more than 600cc), for “£46” substitute “ £47 ”, and
(c) in paragraph (d) (any other case), for “£62” substitute “ £64 ”.
(10) The amendments made by this section have effect in relation to licences taken out on or after 22nd March 2007.
(1) For the Table in paragraph 42(1) of Schedule 6 to FA 2000 substitute—
Table
Taxable commodity supplied | Rate at which levy payable if supply is not a reduced-rate supply
Electricity | £0.00456 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility | £0.00159 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state | £0.01018 per kilogram
Any other taxable commodity | £0.01242 per kilogram
.
(2) The amendment made by subsection (1) has effect in relation to supplies treated as taking place on or after 1st April 2008.
(1) In section 16(4) of FA 2001 (rate of aggregates levy), for “£1.60” substitute “ £1.95 ”.
(2) The amendment made by subsection (1) has effect in relation to aggregate subjected to commercial exploitation on or after 1st April 2008.
(1) Section 42 of FA 1996 (amount of landfill tax) is amended as follows.
(2) In—
(a) subsection (1)(a) (the standard rate), and
(b) subsection (2) (reference to the standard rate taken to be £2 in cases of disposals of qualifying material),
for “£21” substitute “ £24 ”.
(3) The amendments made by subsection (2) have effect in relation to disposals made (or treated as made) on or after 1st April 2007 (but before 1st April 2008).
(4) In subsection (1)(a), for “£24” substitute “ £32 ” and, in subsection (2), for “£24 were to £2” substitute “ £32 were to £2.50 ”.
(5) The amendments made by subsection (4) come into force on 1st April 2008 and have effect in relation to disposals made (or treated as made) on or after that date.
(1) The Treasury may impose charges by providing for Community tradeable emissions allowances to be allocated in return for payment.
(2) The Treasury must by regulations make provision for and in connection with allocations of allowances in return for payment.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) The regulations may make any other provision about allocations which the Treasury consider appropriate, including (in particular)—
(a) provision as to the imposition of fees, and as to the making and forfeiting of deposits, in connection with participation in allocations,
(b) provision as to the persons by whom allocations are to be conducted,
(c) provision for the creation of criminal offences, or for the imposition and recovery of civil penalties, for failure to comply with the terms of a scheme made under subsection (5),
(d) provision for and in connection with the recovery of payments due in respect of allowances allocated (including provision as to the imposition and recovery of interest and penalties), and
(e) provision conferring rights of appeal against decisions made in allocations, the forfeiting of deposits and the imposition of penalties (including provision specifying the person, court or tribunal to hear and determine appeals).
(5) The Treasury may make schemes about the conduct and terms of allocations (to have effect subject to any regulations under this section); and schemes may in particular include provision about—
(a) who may participate in allocations,
(b) the allowances to be allocated, and
(c) where and when allocations are to take place.
(6) “Community tradeable emissions allowances” are transferable allowances which—
(a) relate to the making of emissions of greenhouse gases, and
(b) are allocated as part of a system made for the purpose of implementing any EU obligation of the United Kingdom relating to such emissions;
and “greenhouse gases” means carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.
(6A) Subsection (4)(c) does not permit the creation of a criminal offence with maximum penalties in excess of the maximum penalties which an instrument under section 2(2) of the European Communities Act 1972 may provide in respect of an offence created by such an instrument.
(7) Regulations under this section are to be made by statutory instrument.
(8) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons unless a draft of the regulations has been laid before, and approved by a resolution of, that House.
18 Extension of income tax deduction for expenditure on energy-saving items
(1) Section 312 of ITTOIA 2005 (deduction for expenditure on energy-saving items) is amended as follows.
(2) In subsection (1)(b) (expenditure incurred in acquiring and installing energy-saving item in dwelling-house), for “in the dwelling-house an energy-saving item” substitute “ an energy-saving item in the dwelling-house or in a building containing the dwelling-house ”.
(3) In subsection (1)(c) (expenditure incurred before 6th April 2009), for “2009” substitute “ 2015 ”.
(4) In section 313 of that Act (restrictions on relief), insert at the end—
(6) No deduction is allowed in respect of expenditure incurred in acquiring and installing the energy-saving item in a building containing the dwelling-house in so far as the expenditure is not for the benefit of the dwelling-house.
(5) In section 314 of that Act (regulations), insert at the end—
(3) Regulations under this section may—
(a) make different provision for different cases, and
(b) contain incidental, supplemental, consequential and transitional provision and savings (including provision as to appeals in relation to apportionments mentioned in subsection (1)(d)).
(6) The amendments made by subsections (2) and (4) have effect in relation to expenditure incurred on or after 6th April 2007.
(7) The amendment made by subsection (5) is deemed always to have had effect.
(8) Regulations under section 314 of ITTOIA 2005 made on or after the day on which this Act is passed but before 31st December 2007 may include provision having effect in relation to expenditure incurred on or after 6th April 2007.
(1) In FA 2003, after section 58A insert—
Relief for new zero-carbon homes
58B (1) The Treasury may make regulations granting relief on the first acquisition of a dwelling which is a “zero-carbon home”.
(2) In subsection (1) “first acquisition of a dwelling” means the acquisition of a building which—
(a) has been constructed for use as a single dwelling, and
(b) has not previously been occupied.
(3) For the purpose of subsection (2) land occupied or enjoyed with a dwelling as a garden or grounds is part of the dwelling.
(4) The regulations shall define “zero-carbon home” by reference to specified aspects of the energy efficiency of a building; for which purpose “energy efficiency” includes—
(a) consumption of energy,
(b) conservation of energy, and
(c) generation of energy.
(5) The relief may take the form of—
(a) exemption from charge, or
(b) a reduction in the amount of tax chargeable.
(6) Regulations under this section shall not have effect in relation to acquisitions on or after 1st October 2012.
(7) The Treasury may by order—
(a) substitute a later date for the date in subsection (6);
(b) make transitional provision, or provide savings, in connection with the effect of subsection (6).
Relief for new zero-carbon homes: supplemental
58C (1) Regulations under section 58B—
(a) shall include provision about the method of claiming relief (including documents or information to be provided), and
(b) in particular, shall include provision about the evidence to be adduced to show that a building satisfies the definition of “zero-carbon home”.
(2) Regulations made by virtue of subsection (1)(b) may, in particular—
(a) refer to a scheme or process established by or for the purposes of an enactment about building;
(b) establish or provide for the establishment of a scheme or process of certification;
(c) specify, or provide for the approval of, one or more schemes or processes for certifying energy efficiency.
(3) In defining “zero-carbon home” regulations under section 58B may include requirements which may be satisfied in relation to a building either—
(a) by features of the building itself, or
(b) by other installations or utilities.
(4) Regulations under section 58B may modify the effect of section 108, or another provision of this Part about linked transactions, in relation to a set of transactions of which at least one is the first acquisition of a dwelling which is a zero-carbon home.
(5) In determining whether section 116(7) applies, and in the application of section 116(7), a transaction shall be disregarded if or in so far as it involves the first acquisition of a dwelling which is a zero-carbon home.
(6) Regulations under section 58B—
(a) may provide for relief to be wholly or partly withdrawn if a dwelling ceases to be a zero-carbon home, and
(b) may provide for the reduction or withholding of relief where a person acquires more than one zero-carbon home within a specified period.
(7) Regulations under section 58B may include provision for relief to be granted in respect of acquisitions occurring during a specified period before the regulations come into force.
(2) In section 114 of FA 2003 (stamp duty land tax: orders and regulations), insert at the end—
(5) The first set of regulations under section 58B (new zero-carbon homes) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.
(6) An order or regulations under this Part—
(a) may make provision having effect generally or only in specified cases or circumstances,
(b) may make different provision for different cases or circumstances, and
(c) may include incidental, consequential or transitional provision or savings.
20 Income tax exemption for domestic microgeneration
(1) In ITTOIA 2005, after section 782 insert—
Domestic microgeneration
782A (1) No liability to income tax arises in respect of income arising to an individual from the sale of electricity generated by a microgeneration system if—
(a) the system is installed at or near domestic premises occupied by the individual, and
(b) the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises.
(2) In subsection (1)—
“domestic premises” means premises used wholly or mainly as a separate private dwelling, and
“microgeneration system” has the same meaning as in section 4 of the Climate Change and Sustainable Energy Act 2006.
(2) The amendment made by subsection (1) has effect for the tax year 2007-08 and subsequent tax years.
21 Renewables obligation certificates for domestic microgeneration
(1) In ITTOIA 2005, after section 782A (inserted by section 20) insert—
Renewables obligation certificates for domestic microgeneration
782B (1) No liability to income tax arises in respect of the receipt by an individual of a renewables obligation certificate if—
(a) the individual receives the certificate in connection with the generation of electricity by a microgeneration system,
(b) the system is installed at or near domestic premises occupied by the individual, and
(c) the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises.
(2) In subsection (1)—
“domestic premises” and “microgeneration system” have the same meaning as in section 782A, and
“renewables obligation certificate” means a certificate issued under section 32B of the Electricity Act 1989 or Article 54 of the Energy (Northern Ireland) Order 2003.
(2) In TCGA 1992, after section 263 insert—
Renewables obligation certificates for domestic microgeneration
263AZA (1) A gain accruing to an individual on a disposal of a renewables obligation certificate is not a chargeable gain if—
(a) the individual acquired the certificate in connection with the generation of electricity by a microgeneration system,
(b) the system is installed at or near domestic premises occupied by the individual, and
(c) the individual intends that the amount of electricity generated by it will not significantly exceed the amount of electricity consumed in those premises.
(2) In subsection (1)—
“domestic premises” means premises used wholly or mainly as a separate private dwelling,
“microgeneration system” has the same meaning as in section 4 of the Climate Change and Sustainable Energy Act 2006, and
“renewables obligation certificate” means a certificate issued under section 32B of the Electricity Act 1989 or Article 54 of the Energy (Northern Ireland) Order 2003.
(3) The amendment made by subsection (1) has effect for the tax year 2007-08 and subsequent tax years.
(4) The amendment made by subsection (2) has effect in relation to disposals on or after 6th April 2007.
22 Aggregates levy: exemption for aggregate removed from railways etc
(1) Section 17(3) of FA 2001 (exempt aggregate) is amended as follows.
(2) Omit “or” at the end of paragraph (d).
(3) After that paragraph insert—
(da) it consists wholly of aggregate won by being removed from the ground along the line or proposed line of any railway, tramway or monorail or proposed railway, tramway or monorail and in the course of excavations carried out—
(i) for the purpose of improving or maintaining the railway, tramway or monorail or of constructing the proposed railway, tramway or monorail; and
(ii) not for the purpose of extracting that aggregate;
.
(4) Insert “ or ” at the end of paragraph (e).
(5) The amendment made by subsection (3) comes into force on such day as the Treasury may by order made by statutory instrument appoint.
24 Landfill tax: bodies concerned with the environment
(1) In section 53(4) of FA 1996 (credit: bodies concerned with the environment), after paragraph (c) insert—
(ca) provision for an environmental body to be and remain approved only if it complies with conditions imposed from time to time by the regulatory body or for the regulatory body to be and remain approved only if it complies with conditions imposed from time to time by the Commissioners (including provision for the variation or revocation of such conditions);
.
(2) The amendment made by subsection (1) is deemed to have come into force on 22nd March 2007.
27 Extension of restrictions on allowable capital losses
(1) TCGA 1992 is amended as follows.
(2) In section 8 (company's total profits to include chargeable gains)—
(a) in subsection (2), for the words from “does not include—” to the end substitute “ does not include a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it. ”, and
(b) omit subsections (2A) to (2C).
(3) After section 16 insert—
Restrictions on allowable losses
16A (1) For the purposes of this Act, “allowable loss” does not include a loss accruing to a person if—
(a) it accrues to the person directly or indirectly in consequence of, or otherwise in connection with, any arrangements, and
(b) the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage.
(2) For the purposes of subsection (1)—
“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and
“tax advantage” means—
relief or increased relief from tax,
repayment or increased repayment of tax,
the avoidance or reduction of a charge to tax or an assessment to tax, or
the avoidance of a possible assessment to tax,
and for the purposes of this definition “tax” means capital gains tax, corporation tax or income tax.
(3) For the purposes of subsection (1) it does not matter—
(a) whether the loss accrues at a time when there are no chargeable gains from which it could otherwise have been deducted, or
(b) whether the tax advantage is secured for the person to whom the loss accrues or for any other person.
(4) In section 288(1) (interpretation), in the definition of “allowable loss”, after “16” insert “ , 16A ”.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) The amendments made by this section have effect in relation to losses accruing on disposals made on or after 6th December 2006.
29 Life policies etc: effect of rebated or reinvested commission
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) In section 552 of that Act (information: duty of insurers), after subsection (12) insert—
(13) For the purposes of this section, no account is to be taken of the effect of section 548A above or section 541A of ITTOIA 2005.
(3) In ITTOIA 2005, after section 541 insert—
Rebated or reinvested commission
Effect of rebated or reinvested commission in certain cases
541A (1) This section applies if—
(a) a chargeable event within section 484(1)(a)(i) to (iii), (c) or (e) occurs in respect of a policy or contract,
(b) commission in respect of the policy or contract has at any time been rebated or reinvested, and
(c) condition A or B is met.
(2) For the purposes of performing the calculation in section 494 (total allowable deductions) for the chargeable event, the total amount of premiums under the policy or contract paid in the period mentioned in section 494(1) or (2)(b) is to be reduced by the total amount of commission attributable to those premiums that has been rebated or reinvested.
(3) Condition A is that the total amount of premiums under the policy or contract paid in a relevant period exceeds £100,000.
(4) Condition B is that—
(a) at a time when the policy or contract was the taxable person's, the taxable person's policies and contracts exceeded the relevant threshold as respects a relevant period, and
(b) premiums under the policy or contract were paid in that relevant period.
(5) In subsection (4)(a) “taxable person” means the person whose policy or contract the policy or contract is, immediately before the chargeable event.
(6) For the purposes of subsection (4)(a) a person's policies and contracts “exceed the relevant threshold” as respects a relevant period if the total amount of premiums under them paid in that relevant period exceeds the sum specified in subsection (3).
(7) In this section “relevant period” means—
(a) the period beginning with the beginning of the tax year in which the chargeable event occurs and ending with the chargeable event, or
(b) any of the 3 preceding tax years.
(8) The Treasury may by order—
(a) substitute another sum for the sum for the time being specified in subsection (3);
(b) amend the definition of “relevant period”.
Section 541A: further definitions
541B (1) This section supplements section 541A.
(2) “Commission”, in relation to a policy or contract, includes any passing of value to or for the benefit of an intermediary, or a person connected with an intermediary, that can reasonably be taken to represent a reward in respect of the policy or contract.
(3) Commission in respect of a policy or contract is “reinvested” if, as a result of a waiver of an entitlement to it, there is an increase in the total value of a relevant person's policies and contracts.
(4) The amount of commission reinvested is the amount of the increase.
(5) Commission in respect of a policy or contract is “rebated” if—
(a) value passes (directly or indirectly) from an intermediary, or a person connected with an intermediary, to or for the benefit of a relevant person (and the passing of value does not amount to the reinvestment of the commission), and
(b) the passing of value can reasonably be taken to be in respect of the commission.
(6) The amount of commission rebated is the amount of value passed.
(7) A policy or contract is a person's policy or contract if a gain arising in connection with it would be—
(a) a gain for which the person, or (if the person is an individual) the person's spouse or civil partner, would be liable to tax under this Chapter, or
(b) treated by virtue of section 547(1) of ICTA as forming part of the person's income.
(8) Any necessary apportionment is to be made (on a just and reasonable basis) as regards—
(a) commission which is attributable to two or more premiums, and
(b) any part of such commission that has been rebated or reinvested.
(9) Commission which is in respect of one or more policies or contracts (but is not attributable to particular premiums) is to be attributed to such premiums as is just and reasonable.
(10) In subsections (3) and (5), “relevant person” means—
(a) any of the policyholders (including any of the persons who hold the contract),
(b) a person who beneficially owns the rights under the policy or contract,
(c) if those rights are held on trust, any of the trustees, or
(d) a person connected with a person within any of paragraphs (a) to (c).
(4) The amendments made by this section have effect in relation to a policy or contract if—
(a) it is made on or after 21st March 2007, or
(b) on or after that date, any of its terms are varied, or a right under it is exercised, so as to increase the benefits under it.
32 Restrictions on companies buying losses or gains: tax avoidance schemes
(1) TCGA 1992 is amended as follows.
(2) In section 184A(2) (losses accruing on disposals of pre-change assets not deductible from gains unless gains accrue on disposals of pre-change assets), omit “unless the gains accrue to the company on a disposal of a pre-change asset”.
(3) In section 184B(2) (losses not deductible from gains accruing on disposals of pre-change assets unless losses accrue on disposals of pre-change assets), omit “unless the loss accrues to the company on a disposal of a pre-change asset”.
(4) Section 70 of FA 2006 (which inserted sections 184A to 184F of TCGA 1992) is amended as follows.
(5) In subsection (9) (special provision for qualifying changes of ownership and disposals before 5th December 2005)—
(a) for “The following subsection applies” substitute “ Subsections (10) to (12) apply ”,
(b) in paragraph (a), omit “or 184B”,
(c) in paragraph (c), for “at all subsequent times,” substitute “ immediately afterwards, ”,
(d) after that paragraph insert—
(ca) no qualifying change of ownership occurs at any time in relation to the principal company of that group for the purposes of section 184A of TCGA 1992 directly or indirectly in consequence of, or otherwise in connection with, any arrangements the main purpose, or one of the main purposes, of which is to secure a tax advantage falling within subsection (1)(d) of that section, and
,
(e) omit paragraph (d) (together with the “and” following it), and
(f) in paragraph (e), omit “, or a qualifying gain for the purposes of section 184B of that Act,”.
(6) For subsections (10) and (11) substitute—
(10) Subsection (2) of that section has effect in relation to that qualifying loss subject to the following modifications.
(11) That subsection has effect as if there were inserted at the end of it “ unless the gains accrue to the company on a disposal of a pre-change asset ”.
(12) That subsection (modified as mentioned above) has effect as if the reference to a pre-change asset included an asset held before the relevant time by any company—
(a) which, immediately before that time, was a member of the same group of companies as the relevant company, and
(b) which, throughout the period beginning with that time and ending immediately after the making of the disposal referred to in that subsection, has remained under the control of the company which was the principal company of that group at the relevant time.
(13) Expressions which are used in subsections (9) to (12) have the same meaning as in sections 184A and 184C of TCGA 1992.
(7) The amendment made by subsection (2) has effect in relation to gains accruing on disposals made on or after 21st March 2007.
(8) The amendment made by subsection (3) has effect in relation to losses accruing on disposals made on or after that date.
(9) The amendments made by subsections (5) and (6) have effect in relation to disposals made on or after that date; but the amendment made by subsection (5)(d) has no effect in relation to disposals made before 9th May 2007.
33 Lloyd's corporate members: restriction of group relief
(1) In FA 1994, after section 227 insert—
Restriction of group relief
227A (1) Losses of the last active underwriting year of a corporate member are not eligible for surrender by the corporate member as group relief to another company unless the group-relief continuity condition is satisfied.
(2) In this section “last active underwriting year”, in relation to a corporate member, means—
(a) if the corporate member writes insurance business in only one underwriting year, that underwriting year, and
(b) otherwise, the last underwriting year in which the corporate member writes insurance business.
(3) Where in an underwriting year—
(a) the corporate member writes an amount of insurance business which is insignificant when compared with that written by it in the preceding underwriting year, or
(b) the only insurance business written by the corporate member consists of the acceptance of reinsurance to close premiums,
the underwriting year is not to be regarded for the purposes of subsection (2)(b) above as an underwriting year in which the corporate member writes insurance business.
(4) In subsection (3)(b) above “reinsurance to close premium” means a premium or other consideration under a contract in pursuance of which, in accordance with the rules or practice of Lloyd's, one underwriting member agrees with another to meet liabilities arising from the latter's underwriting business in an underwriting year so that the accounts of the business for that year may be closed.
(5) The group-relief continuity condition is satisfied if the corporate member (as the surrendering company) and the other company (as the claimant company) meet the conditions in section 402(2) or (3) of the Taxes Act 1988 throughout the period—
(a) beginning with the last day of the last active underwriting year of the corporate member, and
(b) ending with the first day of the first underwriting year in which losses of the last active underwriting year are declared.
(2) The amendment made by subsection (1) has effect in relation to any case where the corporate member (as the surrendering company) and the other company (as the claimant company) first meet the conditions in section 402(2) or (3) of ICTA on or after 21st March 2007.
(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) Part 2 of ITTOIA 2005 (trading income) is amended as follows.
(8) In section 38 (restriction of deductions for employee benefit contributions), for subsection (1) substitute—
(1) This section applies if, in calculating for income tax purposes the profits of a trade of a person (“the employer”) for a period, a deduction would otherwise be allowable for the period in respect of employee benefit contributions made or to be made (but see subsection (4)).
(9) In section 39 (making of “employee benefit contributions), for subsection (1) substitute—
(1) For the purposes of section 38, an “employee benefit contribution” is made if, as a result of any act or omission—
(a) property is held, or may be used, under an employee benefit scheme, or
(b) there is an increase in the total value of property that is so held or may be so used (or a reduction in any liabilities under an employee benefit scheme).
(10) In section 41 (timing and amount of certain benefits), for “the third party” (in both places) substitute “ a scheme manager ”.
(11) In section 42 (provision or payment out of employee benefit contributions)—
(a) in subsection (1), for “the third party”, in the first place, substitute “ a scheme manager ” and, in the second place, substitute “ the scheme manager ”,
(b) in subsection (3), for “the third party”, in the first place, substitute “ a scheme manager ” and, in the second place, substitute “ the scheme manager ”, and
(c) in subsection (5), for “third party” substitute “ scheme manager ”.
(12) In section 44(1) (interpretation), for the definition of “the third party” substitute—
“scheme manager” means a person who administers an employee benefit scheme (acting in that capacity).
(13) The amendments made by this section have effect in relation to employee benefit contributions made on or after 21st March 2007.
38 Insurance companies: gross roll-up business etc
(1) Part 1 of Schedule 7 contains provisions relating to gross roll-up business, capital redemption business and miscellaneous minor matters relating to insurance companies.
(2) The amendments made by that Part of that Schedule have effect—
(a) for the purposes of corporation tax, for periods of account of insurance companies beginning on or after 1st January 2007, and
(b) for the purposes of income tax, for the tax year 2007-08 and subsequent tax years.
(3) Subsection (2) is subject to the transitional provisions in Part 2 of that Schedule.
(1) Part 1 of Schedule 8 contains provision about the basis of taxation of insurance companies and related matters.
(2) The amendments made by that Part of that Schedule have effect for periods of account of insurance companies beginning on or after 1st January 2007.
(3) Subsection (2) is subject to the transitional provisions in Part 2 of that Schedule.