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Finance Act 2012

  • Explanatory Notes Table of contents

Please note:

All reference to 'Parts' and 'sections' are from the Finance Act 2012. For other versions of these Explanatory Notes, see More Resources.

  1. Introduction

    1. Section 1: Charge for 2012-13 and Rates for 2012-13 and Subsequent Tax Years

      1. Summary

      2. Details of the Section

      3. Background Note

    2. Section 2: Basic Rate Limit for 2012-13

      1. Summary

      2. Details of the Section

      3. Background Note

    3. Section 3: Personal Allowance for 2012-13 for Those Aged under 65

      1. Summary

      2. Details of the Section

      3. Background Note

    4. Section 4: Personal Allowances from 2013

      1. Summary

      2. Details of the Section

      3. Background Note

    5. Section 5: Main Rate of Corporation Tax for Financial Year 2012

      1. Summary

      2. Details of the Section

      3. Background Note

    6. Section 6: Corporation Tax: Charge and Main Rate for Financial Year 2013

      1. Summary

      2. Details of the Section

      3. Background Note

    7. Section 7: Corporation Tax: Small Profits Rate and Fractions for Financial Year 2012

      1. Summary

      2. Details of the Section

      3. Background Note

    8. Section 8 Schedule 1: High Income Child Benefit Charge

      1. Summary

      2. Details of the Schedule

      3. Background Note

    9. Section 9: Post-Cessation Trade Or Property Relief: Tax-Generated Payments Or Events

      1. Summary

      2. Details of the Section

      3. Background Note

    10. Section 10: Property Loss Relief Against General Income: Tax-Generated Agricultural Expenses

      1. Summary

      2. Details of the Section

      3. Background Note

    11. Section 11: Gains from Contracts for Life Insurance Etc

      1. Summary

      2. Details of the Section

      3. Background Note

    12. Section 12: Settlements: Income Originating from Settlors Other Than Individuals

      1. Summary

      2. Details of the Section

      3. Background Note

    13. Section 13: Champions League Final 2013

      1. Summary

      2. Details of the Section

      3. Background Note

    14. Section 14: Cars: Security Features Not to Be Regarded as Accessories

      1. Summary

      2. Details of the Section

      3. Background Note

    15. Section 15: Termination Payments to Mps Ceasing to Hold Office.

      1. Summary

      2. Details of the Section

      3. Background Note

    16. Section 16: Employment Income Exemptions: Armed Forces

      1. Summary

      2. Details of the Section

      3. Background Note

    17. Section 17: Taxable Benefits: “the Appropriate Percentage” for Cars for 2014-15

      1. Summary

      2. Details of the Section

      3. Background Note

    18. Section 18: Qualifying Time Deposits

      1. Summary

      2. Details of the Section

      3. Background Note

    19. Section 19 Schedule 2: Profits Arising from the Exploitation of Patents Etc

      1. Summary

      2. Details of the Schedule

        1. Part 1: Amendments of CTA 2010

          1. Chapter 1: Reduced Corporation Tax rate for profits from patents etc

          2. Chapter 2: Qualifying companies

          3. Chapter 3: Relevant IP profits

          4. Chapter 4: Streaming

          5. Chapter 5: Companies with relevant IP losses: set-off amount

          6. Chapter 6: Anti-avoidance

          7. Chapter 7: Supplementary

        2. Part 2: Amendments of TIOPA 2010

        3. Part 3: Commencement and transitional provisions

      3. Background Note

    20. Section 20 Schedule 3: Relief for Expenditure on R&D

      1. Summary

      2. Details of the Schedule

      3. Background Note

    21. Section 21 Schedule 4: Real Estate Investment Trusts

      1. Summary

      2. Details of the Schedule

      3. Background Note

    22. Section 22: Treatment of the Receipt of Manufactured Overseas Dividends

      1. Summary

      2. Details of the Section

      3. Background Note

    23. Section 23: Loan Relationships: Debts Becoming Held by Connected Company

      1. Summary

      2. Details of the Section

      3. Background Note

    24. Section 24: Companies Carrying on Businesses of Leasing Plant Or Machinery

      1. Summary

      2. Details of the Section

      3. Background Note

    25. Section 25: Corporate Members of Lloyd’s: Stop-Loss Insurance and Quota Share Contracts

      1. Summary

      2. Details of the Section

      3. Background Note

    26. Section 26: Abolition of Relief for Equalisation Reserves: General Insurers

      1. Summary

      2. Details of the Section

      3. Background Note

    27. Section 27: Election to Accelerate Receipts under s.26(4)

      1. Summary

      2. Details of the Section

      3. Background Note

    28. Section 28: Deemed Receipts under s.26(4): Double Taxation Relief

      1. Summary

      2. Details of the Section

      3. Background Note

    29. Section 29: Transfer of Whole Or Part of the Business

      1. Summary

      2. Details of the Section

      3. Background Note

    30. Section 30: Abolition of Relief for Equalisation Reserves: Lloyd’s Corporate Members Etc.

      1. Summary

      2. Details of the Section

      3. Background Note

    31. Section 31 Schedule 5: Tax Treatment of Financing Costs and Income

      1. Summary

      2. Details of the Section and Schedule

      3. Background Note

    32. Section 32: Group Relief: Meaning of “Normal Commercial Loan”

      1. Summary

      2. Details of the Section

      3. Background Note

    33. Section 33: Company Distributions

      1. Summary

      2. Details of the Section

      3. Background Note

    34. Section 34: Annual Exempt Amount

      1. Summary

      2. Details of the Section

      3. Background Note

    35. Section 35: Foreign Currency Bank Accounts

      1. Summary

      2. Details of the Section

        1. New section 252 TCGA

      3. Background Note

    36. Section 36: Collective Investment Schemes: Chargeable Gains

      1. Summary

      2. Details of the Section

      3. Background Note

    37. Section 37: Roll-Over Relief

      1. Summary

      2. Details of the Section

      3. Background Note

    38. Section 38 Schedule 6: Seed Enterprise Investment Scheme

      1. Summary

      2. Details of the Schedule

        1. Part 1 of the Schedule

          1. Chapter 1 of New Part 5A of ITA

          2. Chapter 2

          3. Chapter 3

          4. Chapter 4

          5. Chapter 5

          6. Chapter 6

          7. Chapter 7

          8. Chapter 8

        2. Part 2 of the Schedule

          1. New Schedule 5BB TCGA

        3. Part 3 of the Schedule

      3. Background Note

    39. Section 39 Schedule 7: Enterprise Investment Scheme

      1. Summary

      2. Details of Schedule

        1. Part 1

        2. Part 2: Enterprise Investment Scheme: Chargeable gains

      3. Background Note

    40. Section 40 Schedule 8: Venture Capital Schemes

      1. Summary

      2. Details of Schedule

      3. Background Note

    41. Section 41 Schedule 9: Capital Allowances: Restricting the Exception for Manufacturers and Suppliers

      1. Summary

      2. Details of the Section

      3. Background Note

    42. Section 42 Schedule 9: Capital Allowances for Plant and Machinery: Anti-Avoidance

      1. Summary

      2. Details of the Schedule

      3. Background Note

    43. Section 43 Schedule 10 Plant and Machinery Allowances: Fixtures

      1. Summary

      2. Details of the Schedule

        1. New Section 187A Effect of changes in ownership of a fixture

        2. New Section 187B Supplementary provision

        3. 186A Fixtures on which a business premises renovation allowance has been made

      3. Background Note

    44. Section 44 Schedule 11 Expenditure on Plant and Machinery for Use in Designated Assisted Areas

      1. Summary

      2. Details of the Schedule

        1. Section 45K Expenditure on plant and machinery for use in designated assisted areas.

        2. Section 45L Exclusion of plant and machinery partly for use outside designated assisted areas.

        3. Section 45M Exclusions from allowances under section 45K

        4. Section 45N Effect of plant or machinery subsequently being primarily for use outside designated assisted area.

        5. Section 212U Cap on first-year allowances: expenditure on plant and machinery for use in designated assisted areas

      3. Background Note

    45. Section 45: Allowances for Energy-Saving Plant and Machinery

      1. Summary

      2. Details of the Section

      3. Background Note

    46. Section 46: Plant and Machinery Long Funding Leases

      1. Summary

      2. Details of the Section

        1. Section 70E of CAA 2001

      3. Background Note

    47. Section 47 Schedule 12: Foreign Income and Gains

      1. Summary

      2. Details of the Schedule

        1. Increased remittance basis charge

        2. Remittance for Investment Purposes

        3. Sales of Exempt Property

        4. Nominated Income

      3. Background Note

        1. Increased Remittance Basis Charge

        2. Remittance for Investment Purposes

        3. Sales of Exempt Property

        4. Nominated Income

    48. Section 48 Schedule 13: Employer Asset-Backed Pension Contributions Etc

      1. Summary

      2. Details of the Schedule

        1. Part 1 – sections 196B to 196I and paragraphs 2-3

          1. The simple case – new section 196B

          2. The complex case – new sections 196C and 196D

          3. Anti-avoidance – new section 196F

          4. Relief recovery for a financial liability reduction by an event other than the making of payments – new sections 196G and 196H

          5. Treatment of advances that fall within the SFA rules – new section 196I

          6. Supplementary provisions and application – new section 196J and paragraph 2

          7. Commencement and application of new sections 196B to 196J – paragraph 3

        2. Part 2 - Transitional rules (paragraphs 4 to 14)

          1. Detail of transitional rules

            1. Paragraphs 4 to 8 – application and interpretation

            2. Paragraphs 9 to 11 – certain tax consequences not to have effect

            3. Paragraphs 12 to 14 adjustments

        3. Part 3 – sections 196B to 196L and paragraphs 16-17

          1. The simple case – new sections 196B and 196C

          2. The complex case – new sections 196D to 196G

          3. Revenue protection provisions – new sections 196I and 196J

          4. Treatment of advances under acceptable SFAs – new section 196K

          5. Supplementary provisions and application – new section 196L and paragraph 16

          6. Commencement and application of new sections 196B to 196L – paragraph 17

        4. Part 4 - Transitional rules (paragraphs 18 to 31)

          1. Detail of transitional rules

            1. Paragraphs 18 to 22 – application and interpretation

            2. Paragraphs 23 to 28 – certain tax consequences not to have effect

            3. Paragraphs 29 to 31 adjustments

        5. Part 5 – Related changes to structured finance legislation (paragraphs 32 to 42)

      3. Background Note

    49. Section 49 Schedule 14: Gifts to the Nation

      1. Summary

      2. Details of the Section

      3. Background Note

    50. Section 50: Gift Aid: Giving through Self-Assessment Return

      1. Summary

      2. Details of the Section

      3. Background Note

    51. Section 51 Schedule 15: Relief for Gift Aid and Other Income of Charities Etc

      1. Summary

      2. Details of the Section

      3. Details of the Schedule

      4. Background Note

    52. Section 52: Meaning of “Community Amateur Sports Club”

      1. Summary

      2. Details of the Section

      3. Background Note

    53. Section 53: Site Restoration Payments

      1. Summary

      2. Details of the Section

      3. Background Note

    54. Section 54: Changes of Accounting Policy

      1. Summary

      2. Details of the Section

      3. Background Note

    55. Sections 55 to 179 Schedules 16 to 19: Solvency Ii and the Taxation of Life Insurance Companies

      1. Summary

      2. Details of the Sections

        1. Part 2

          1. Chapter 1

          2. Chapter 2

          3. Chapter 3

          4. Chapter 4

          5. Chapter 5

          6. Chapter 6

          7. Chapter 7

          8. Chapter 8

          9. Chapter 9

          10. Chapter 10

          11. Chapter 11

          12. Chapter 12

        2. Part 3

        3. Schedule 16

        4. Schedule 17

          1. Schedule 17 Part 1

          2. Schedule 17 Part 2

          3. Schedule 17 Part 3

      3. Background Note

    56. Section 180 Schedule 20: Controlled Foreign Companies and Foreign Permanent Establishments

      1. Summary

      2. Details of the Section

      3. Details of the Schedule

        1. Controlled Foreign Companies

          Part 1

          1. Chapter 1 – Introduction

          2. Chapter 2 – The CFC Charge

          3. Chapter 3 - The CFC charge gateway: determining which (if any) of Chapters 4 to 8 apply

          4. Chapter 4 - the CFC charge gateway: profits attributable to UK Activities

            1. Example of Application of IP Condition

          5. Chapter 5 – The CFC charge gateway: non-trading finance profits

          6. Chapter 6 – The CFC charge gateway: trading finance profits

          7. Chapter 7 – The CFC charge gateway - captive insurance business

          8. Chapter 8 -The CFC charge gateway: solo consolidation

          9. Chapter 9 - Exemptions for profits from qualifying loan relationships

          10. Chapter 10- The exempt period exemption

          11. Chapter 11 - The excluded territories exemption

          12. Chapter 12 - The low profits exemption

          13. Chapter 13- The low profit margin exemption

          14. Chapter 14 - The tax exemption

          15. Chapter 15 – Relevant Interests in a CFC

          16. Chapter 16 - Creditable tax of a CFC

          17. Chapter 17- Apportionment of a CFC’s chargeable profits and creditable tax

          18. Chapter 18 – Control etc

          19. Chapter 19 - Assumed taxable total profits, assumed total profits and the corporation tax assumptions

          20. Chapter 20 - Residence of CFCs

          21. Chapter 21 – Management

          22. Chapter 22 – Supplementary Provision

        2. Part 2

          Foreign Permanent Establishments

        3. Part 3

          Other Amendments

        4. Part 4

          Commencement Provision

        5. Part 5

          Transitional Provision

      4. Background Note

    57. Section 181: Transfers Within a Group by Companies Carrying on Ring Fence Trade

      1. Summary

      2. Details of the Section

      3. Background Note

    58. Section 182: Supplementary Charge

      1. Summary

      2. Details of the Section

      3. Background Note

    59. Section 183 Schedule 21: Relief in Respect of Decommissioning Expenditure

      1. Summary

      2. Details of the Schedule

      3. Background Note

    60. Section 184 Schedule 22 Reduction of Supplementary Charge for Certain Oil Fields

      1. Summary

      2. Details of the Schedule

      3. Background Note

    61. Section 185: Rates of Tobacco Products Duty

      1. Summary

      2. Details of the Section

      3. Background Note

    62. Section 186: Rates of Alcoholic Liquor Duties

      1. Summary

      2. Details of the Section

      3. Background Note

    63. Section 187: Repeal of Drawback on British Compounds and Spirits of Wine

      1. Summary

      2. Details of the Section

      3. Background Note

    64. Section 188: Rates of duty and rebates from 1 August 2012 to 31 December 2012

      1. Summary

      2. Details of the Section

      3. Background Note

    65. Section 189: Rebated Fuel: Private Pleasure Craft

      1. Summary

      2. Details of the Section

      3. Background Note

    66. Section 190 Schedule 23: Air Passenger Duty

      1. Summary

      2. Details of the Schedule

      3. Background Note

        1. Part 1 of Schedule 23 - Northern Ireland direct long haul rates of duty from 1 November 2011 to 31 March 2012

        2. Part 2 of Schedule 23 - Rates of duty from 1 April 2012

        3. Part 3 of Schedule 23 - - Devolution of Northern Ireland direct long haul rates of duty

        4. Part 4 of Schedule 23 - Other Provisions

    67. Section 191 Schedule 24: Machine Games Duty

      1. Summary

      2. Details of the Schedule

        1. Part 1 Imposition of Machine Games Duty

        2. Part 2 Removal of Amusement Machine Licence Duty

        3. Part 3 VAT Exemption

        4. Part 4: Miscellaneous

      3. Background Note

    68. Section 192: Amusement Machine Licence Duty

      1. Summary

      2. Details of the Section

      3. Background Note

    69. Section 193: Rates of Gaming Duty

      1. Summary

      2. Details of the Section

      3. Background Note

    70. Section 194 Schedule 25: Remote Gambling: Double Taxation Relief

      1. Summary

      2. Details of the Schedule

      3. Background Note

    71. Section 195: Ved Rates for Light Passenger Vehicles, Light Goods Vehicles, Motorcycles Etc

      1. Summary

      2. Details of the Section

      3. Background Note

    72. Section 196 and Schedule 27: Anti-Forestalling Charge to Value Added Tax

      1. Summary

      2. Details of the Schedule

      3. Background Note

    73. Section 197: Exempt Supplies

      1. Summary

      2. Details of the Section

      3. Background Note

    74. Section 198: Supply of Goods Or Services by Public Bodies

      1. Summary

      2. Details of the Section

      3. Background Note

    75. Section 199: Relief from Vat on Low Value Goods: Restriction Relating to Channel Islands

      1. Summary

      2. Details of the Section

      3. Background Note

    76. Section 200: Group Supplies Using an Overseas Member

      1. Summary

      2. Details of the Section

      3. Background Note

    77. Section 201: Face Value Vouchers

      1. Summary

      2. Details of the Section

      3. Background Note

    78. Section 202: Power to Require Notification of Arrival of Means of Transport in Uk

      1. Summary

      2. Details of the Section

      3. Background Note

    79. Section 203: Non-Established Taxable Persons

      1. Summary

      2. Details of the Schedule

        1. Details of the new Schedule 1A to VATA

        2. Other amendments of VATA 1994

      3. Background Note

    80. Section 204 Schedule 29: Administration of Vat

      1. Summary

      2. Details of the Schedule

        1. Amendment of Finance Acts 1996 and 2009

      3. Background Note

    81. Section 205: Standard Rate of Landfill Tax

      1. Summary

      2. Details of the Section

      3. Background Note

    82. Section 206: Landfill Sites in Scotland

      1. Summary

      2. Details of the Section

      3. Background Note

    83. Section 207 Schedules 30 to 32: Climate Change Levy

      1. Summary

        1. Schedule 30 – Climate change levy

        2. Schedule 31 – Climate change levy: climate change agreements

        3. Schedule 32 – Climate change levy: supplies subject to the carbon price support rates and combined heat and power stations

      2. Details of the Schedules

        1. Schedule 30 – Climate change levy

        2. Schedule 31 – Climate change levy: climate change agreements

        3. Schedule 32 – Climate change levy: supplies subject to the carbon price support rates and combined heat and power stations

      3. Background Note

    84. Section 208: Indexation of Rate Bands

      1. Summary

      2. Details of the Section

      3. Background Note

    85. Section 209 Schedule 33: Gifts to Charities Etc

      1. Summary

      2. Details of the Schedule

        1. Details of the new Schedule 1A to IHTA

        2. Consequential amendments

      3. Background Note

    86. Section 210: Settled Property: Effect of Certain Arrangements

      1. Summary

      2. Details of the Section

      3. Background Note

    87. Section 211 Schedule 34: the Bank Levy

      1. Summary

      2. Details of the Section

        1. Rates 2012

        2. Rates 2013

        3. Joint ventures

        4. Double taxation relief

        5. Transitional provisions

      3. Background Note

        1. Joint ventures

        2. Double taxation relief

        3. Transitional provisions

    88. Section 212: Prevention of Avoidance: Subsales Etc

      1. Summary

      2. Details of the Section

      3. Background Note

    89. Section 213: Rate in Respect of Residential Property Where Consideration Over £2m

      1. Summary

      2. Details of the Section

      3. Background Note

    90. Section 214 Schedule 35: Higher Rates for Certain Transactions

      1. Summary

      2. Details of the Section

      3. Details of the Schedule

      4. Details of the Section

      5. Background Note

    91. Section 215: Disclosure of Stamp Duty Land Tax Avoidance Schemes

      1. Summary

      2. Details of the Section

      3. Background Note

    92. Section 216: Health Service Bodies

      1. Summary

      2. Details of the Section

      3. Background Note

    93. Section 217: Collective Investment Schemes: Stamp Duty and Stamp Duty Reserve Tax

      1. Summary

      2. Details of the Section

      3. Background Note

    94. Section 218 Schedule 36: Agreement between Uk and Switzerland

      1. Summary

      2. Details of the Section

      3. Details of the Schedule

        1. Part 1: Introduction

        2. Part 2: The Past

        3. Part 3: The Future: income tax and capital gains tax

        4. Part 4: The future: inheritance tax

        5. Part 5: General provisions

      4. Background Note

    95. Section 219: Penalties: Offshore Income Etc

      1. Summary

      2. Details of the Section

      3. Background Note

    96. Section 220 Schedule 37: International Military Headquarters, Eu Forces, Etc

      1. Summary

      2. Details of the Schedule

      3. Background Note

    97. Section 221: Tax Consequences of Financial Sector Regulation

      1. Summary

      2. Details of the Section

      3. Background Note

    98. Section 222: Removal of Special Provision for Incapacitated Persons and Minors

      1. Summary

      2. Details of the Section

      3. Background Note

    99. Section 223 Schedule 38: Tax Agents: Dishonest Conduct

      1. Summary

      2. Details of the Section

      3. Details of the Schedule

        1. Part 1: Introduction

        2. Part 2: Establishing dishonest conduct

        3. Part 3: Power to obtain tax agent’s files etc

        4. Part 4: Sanctions for dishonest conduct

        5. Part 5: Penalties under this Schedule: Assessment etc

        6. Part 6: Miscellaneous provision and interpretation

        7. Part 7: Consequential provisions

      4. Background Note

    100. Section 224: Information Powers

      1. Summary

      2. Details of the Section

      3. Background Note

    101. Section 225: Paye Regulations: Information

      1. Summary

      2. Details of the Section

      3. Background Note

    102. Section 226: New Tax on Ownership of High-Value Residential Properties Or Dwellings

      1. Summary

      2. Details of the Section

      3. Background Note

    103. Section 227 Schedule 39: Repeal of Miscellaneous Reliefs Etc

      1. Summary

      2. Details of Schedule 39

        1. Part 1: Stamp Duty and Stamp Duty Land Tax

          1. Nationalisation schemes

          2. Visiting forces and allied headquarters

          3. Shared ownership transactions

          4. Instruments subject to duty of fixed amount

          5. Acquisitions

          6. Transfers to registered social landlords

          7. Land in disadvantaged areas

          8. Leases granted by registered social landlords

          9. Application and transitional provision

        2. Part 2: Repeal of harbour reorganisation scheme reliefs

        3. Part 3: Payments relating to reductions in pool betting duty

        4. Part 4: Life assurance

          1. Abolition of income tax relief for life assurance premiums under section 266 of ICTA

          2. Removal of claw-backs on relief given under section 266 of ICTA

          3. Abolition of income tax relief relating to certain payments made for benefit of family members etc

        5. Part 5: Capital allowances

          1. Safety at sports grounds

          2. Flat conversion allowances

        6. Part 6: Mineral leases or agreements

          1. Income tax

          2. Corporation tax on income

          3. Chargeable gains

        7. Part 7: Miscellaneous

          1. Deeply discounted securities: incidental expenses

          2. Grants for giving up agricultural land

          3. Reduction for meal vouchers

          4. Black beer

          5. Angostura bitters

          6. Tax reserve certificates

          7. Tax assessors

      3. Background Note

  2. Hansard References

  • Explanatory Notes Table of contents

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Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

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