Finance Act 2008 (c. 9)

SCHEDULES

SCHEDULE 2 U.K. Capital gains tax reform

Rate: consequentials U.K.

1 U.K. TCGA 1992 is amended as follows.

2 U.K. In section 2(7)(a) (chargeable gains and allowable losses), omit “77 or”.

3 U.K. Omit section 6 (rates: special cases).

4 U.K. In section 13(7A) (attribution of gains to members of non-resident companies: ordering rules), omit paragraphs (b) to (d).

5 U.K. Omit sections 77 to 79 (charge on settlor with interest in settlement).

6 U.K. Omit section 88(6) (gains of dual resident settlements: sections 77 to 79 to be ignored).

7 (1) Schedule 4A (disposal of interest in settled property: deemed disposal of underlying assets) is amended as follows. U.K.

(2) In paragraph 7—

(a) in sub-paragraph (4), for “77(2) to (5) and (8)” substitute “ 169F(2) to (6) ”, and

(b) in sub-paragraph (5)(c), for “77(2A)(a) or (b)” substitute “ 169F(3A)(a) or (b) ”.

(3) In paragraph 12—

(a) for “section 79(1) and (3) to (5A)” substitute “ paragraphs 7 and 8(1), (3), (6) and (7) of Schedule 5 ”, and

(b) for “sections 77 and 78” substitute “ section 86 ”.

8 (1) Schedule 4B (transfers of value by trustees linked with trustee borrowing) is amended as follows. U.K.

(2) In paragraph 1(1), omit “77,”.

(3) In paragraph 3, omit—

(a) in sub-paragraph (1), “77,”, and

(b) sub-paragraph (2),

and in the heading before it omit “77,”.

9 U.K. Omit paragraph 6(3) of Schedule 4C (attribution of gains to beneficiaries: sections 77 to 79 to be ignored).

10 U.K. In paragraph 1(1) of Schedule 5 (construction of section 86(1)(e)), for “sections 3 and 77 to 79” substitute “ section 3 ”.

11 U.K. Chapter 4 of Part 2 of FA 2005 (trusts with vulnerable beneficiary) is amended as follows.

12 U.K. In section 23(4) (introduction), for “33” substitute “ 32 ”.

13 U.K. In section 26(1) (income tax: amount of relief), in the definition of VQTI, after “extra” insert “ income ”.

14 (1) Section 28 (vulnerable person's liability: VQTI) is amended as follows. U.K.

(2) In subsection (1), after “total” (in both cases) insert “ income ”.

(3) In subsection (2), omit “and capital gains tax”.

(4) In subsection (4), omit paragraph (b) and the “and” before it.

(5) In subsection (7), omit paragraph (b) and the “and” before it.

15 U.K. In section 30 (qualifying trust gains: special capital gains tax treatment), omit subsections (1A) and (3A).

16 (1) Section 31 (UK resident vulnerable persons: section 77 treatment) is amended as follows. U.K.

(2) For subsections (2) and (3) substitute—

“(2) The trustees' liability to capital gains tax for the tax year is to be reduced by an amount equal to—

where—

TQTG is the amount of capital gains tax to which the trustees would (apart from this Chapter) be liable for the tax year in respect of the qualifying trust gains, and

VQTG is the amount arrived at under subsection (3).

(3) That amount is—

where—

TLVB is the total amount of capital gains tax to which the vulnerable person is liable for the tax year, and

TLVA is what TLVB would be if the qualifying trust gains accrued to the vulnerable person (instead of to the trustees) and no allowable losses were deducted from the qualifying trust gains.”

(3) In the heading, for “section 77 treatment” substitute “ amount of relief ”.

17 (1) Section 32 (non-UK resident vulnerable persons: amount of relief) is amended as follows U.K.

(2) In subsection (2), for the definition of VQTG substitute— “ VQTG is the amount arrived at under subsection (3). ”

(3) After that subsection insert—

“(3) That amount is—

where—

TLVB is the total amount of capital gains tax to which the vulnerable person would be liable for the tax year if the vulnerable person's taxable amount for the tax year for the purposes of section 3 of TCGA 1992 were equal to the vulnerable person's deemed CGT taxable amount for the tax year (if any), and

TLVA is what TLVB would be if the vulnerable person's taxable amount for the tax year for the purposes of section 3 of TCGA 1992 were equal to the aggregate of the vulnerable person's deemed CGT taxable amount for the tax year (if any) and the amount of the qualifying trust gains.

(4) For the purposes of this section the vulnerable person's deemed CGT taxable amount for the tax year is to be determined in accordance with Schedule 1.”

18 U.K. Omit section 33 (non-UK resident vulnerable person's liability: VQTG).

19 U.K. In section 41(3) (interpretation), for “33” substitute “ 32 ”.

20 (1) Schedule 1 (non-UK resident vulnerable persons: interpretation) is amended as follows. U.K.

(2) Omit paragraphs 1 and 2.

(3) Omit paragraph 4.

(4) In paragraph 7(1), for “paragraphs 4 and 6” substitute “ paragraph 6 ”.

21 U.K. In consequence of section 8 and paragraphs 1 to 20, omit—

(a) paragraphs 27 to 29 of Schedule 17 to FA 1995,

(b) paragraphs 24 and 25 of Schedule 4 to F(No.2)A 1997,

(c) in FA 1998—

(i) section 120, and

(ii) paragraph 6(1) of Schedule 21,

(d) section 26 of FA 1999,

(e) section 37 of FA 2000,

(f) paragraph 3 of Schedule 11 to FA 2002,

(g) paragraph 2 of Schedule 21 to FA 2004,

(h) paragraphs 427 and 428 of Schedule 1 to ITTOIA 2005,

(i) section 44(2) of FA 2005,

(j) paragraphs 3, 13, 29, 31 and 48(1) of Schedule 12 to FA 2006, and

(k) paragraphs 295, 296 and 301 of Schedule 1 to ITA 2007.

22 U.K. The amendments made by paragraphs 1 to 21 have effect for the tax year 2008-09 and subsequent tax years.