Finance Act 2013

PART 5 Miscellaneous

Interpretation

145 In this Schedule—

• “corporation tax” includes any amount assessable or chargeable as if it were corporation tax;

• “country” includes a state or territory;

• “cross-border trip” is defined in paragraph 30;

• “double taxation arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010;

• “employment”—

  (a)

  has the meaning given in section 4 of ITEPA 2003, and

  (b)

  includes an office within the meaning of section 5(3) of that Act;

• “enactment” means an enactment whenever passed (including this Act) and includes—

  (a)

  an Act of the Scottish Parliament,

  (b)

  a Measure or Act of the National Assembly for Wales,

  (c)

  any Northern Ireland legislation as defined by section 24(5) of the Interpretation Act 1978, and

  (d)

  any Orders in Council, orders, rules, regulations, schemes warrants, byelaws and other instruments made under an enactment (including anything mentioned in paragraphs (a) to (c) of this definition);

• “home” is to be construed in accordance with paragraph 25;

• “individual” means an individual acting in any capacity (including as trustee or personal representative);

• “overseas” means anywhere outside the UK;

• “parenting leave” means maternity leave, paternity leave, adoption leave or parental leave (whether statutory or otherwise);

• “relevant job on board a vehicle, aircraft or ship” is defined in paragraph 30;

• “ship” includes any kind of vessel (including a hovercraft);

• “significant break from overseas work” is defined in paragraph 29;

• “significant break from UK work” is defined in paragraph 29;

• “split year”, as respects an individual, means a tax year that is, as respects that individual, a split year within the meaning of Part 3 of this Schedule;

• “trade” also includes—

  (a)

  a profession or vocation,

  (b)

  anything that is treated as a trade for income tax purposes, and

  (c)

  the commercial occupation of woodlands (within the meaning of section 11(2) of ITTOIA 2005);

• “work” is defined in paragraph 26;

• “UK” means the United Kingdom, including the territorial sea of the United Kingdom;

• “UK tie” is defined in paragraph 31;

• “whole month” means the whole of January, the whole of February and so on, except that the period from the start of a tax year to the end of April is to count as a whole month.

146 In relation to an individual who carries on a trade—

(a) a reference in this Schedule to annual leave or parenting leave is to reasonable amounts of time off from work for the same purposes as the purposes for which annual leave or parenting leave is taken, and

(b) what are “reasonable amounts” is to be assessed having regard to the annual leave or parenting leave to which an employee might reasonably expect to be entitled if doing similar work.

147 A reference in this Schedule to a number of days being less than a specified number includes a case where the number of days is zero.

Consequential amendments

148 (1) TCGA 1992 is amended as follows.

(2) Omit section 9.

(3) In section 288 (interpretation)—

(a) in subsection (1), insert the following definition at the appropriate place—

• ““resident” means resident in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013;”, and

(b) in the Table in subsection (8), omit the entry for the expressions “resident” and “ordinarily resident”.

149 In section 27 of ITEPA 2003 (UK-based earnings for year when employee not UK resident), in subsection (1), for “in which” substitute “for which”.

150 In section 465 of ITTOIA 2005 (gains from contracts for life insurance etc: liability of individuals), in subsection (1), for “in the tax year” substitute “for the tax year”.

151 (1) Chapter 4 of Part 2 of FA 2005 (trusts with vulnerable beneficiary) is amended as follows.

(2) In section 28 (vulnerable person’s liability: VQTI), for subsection (4) substitute—

“(4) Where the vulnerable person is non-UK resident for the tax year, his or her income tax liability for the purposes of determining TLV1 and TLV2 is to be computed in accordance with the Income Tax Acts on the assumption that—

(a) he or she is UK resident for the tax year,

(b) that year is not, as respects him or her, a split year within the meaning of Part 3 of Schedule 45 to FA 2013, and

(c) he or she is domiciled in the United Kingdom throughout that year.”

(3) In section 30 (qualifying trusts gains: special capital gains tax treatment)—

(a) in subsection (2)(a) and (b), for “during” substitute “for”, and

(b) omit subsection (5).

(4) In section 31 (UK resident vulnerable persons: amount of relief), in subsection (1), for “during” substitute “for”.

(5) In section 32 (non-UK resident vulnerable persons: amount of relief), in subsection (1), for “during” substitute “for”.

(6) In section 41—

(a) in subsection (1), insert the following definitions in the appropriate places—

• ““non-UK resident” means not resident in the United Kingdom in accordance with the statutory residence test in Part 1 of Schedule 45 to FA 2013,”, and

• ““UK resident” means resident in the United Kingdom in accordance with the statutory residence test in Part 1 of Schedule 45 to FA 2013.”, and

(b) omit subsection (2).

152 (1) ITA 2007 is amended as follows.

(2) In section 809B (claim for remittance basis to apply), in subsection (1)(a), for “in that year” substitute “for that year”.

(3) In section 809D (application of remittance basis without claim where unremitted foreign income and gains under £2,000), in subsection (1)(a), for “in that year” substitute “for that year”.

(4) In section 809E (application of remittance basis without claim: other cases), in subsection (1)(a), for “in that year” substitute “for that year”.

(5) In section 810 (limits on liability to income tax of non-UK residents: overview of Chapter), after subsection (3) insert—

“(4) In relation to an individual—

(a) a reference in this Chapter to a non-UK resident’s liability to income tax is a reference to the liability of someone who is non-UK resident for the tax year for which the liability arises, and

(b) accordingly, enactments under which income arising to a UK resident in the overseas part of a split year is treated as arising to a non-UK resident are of no relevance to this Chapter.”

(6) Omit sections 829 to 832.

Commencement

153 (1) Parts 1 and 2 of this Schedule have effect for determining whether individuals are resident or not resident in the UK for the tax year 2013-14 or any subsequent tax year.

(2) Part 3 of this Schedule has effect in calculating an individual’s liability to income tax or capital gains tax for the tax year 2013-14 or any subsequent tax year.

(3) Part 4 of this Schedule has effect if the year of departure (as defined in that Part) is the tax year 2013-14 or a subsequent tax year.

Transitional and saving provision

154 (1) This paragraph applies if—

(a) year X or, in Part 3 of this Schedule, the relevant year is the tax year 2013-14, 2014-15, 2015-16, 2016-17 or 2017-18, and

(b) it is necessary to determine under this Schedule whether an individual was resident or not resident in the UK for a tax year before the tax year 2013-14 (a “pre-commencement tax year”).

(2) The question under this Schedule is to be determined in accordance with the rules in force for determining an individual’s residence for that pre-commencement tax year (and not in accordance with the statutory residence test).

(3) But an individual may by notice in writing to Her Majesty’s Revenue and Customs elect, as respects one or more pre-commencement tax years, for the question under this Schedule to be determined instead in accordance with the statutory residence test.

(4) A notice under sub-paragraph (3)—

(a) must be given no later than the first anniversary of the end of year X or, in a Part 3 case, the relevant year, and

(b) is irrevocable.

(5) Unless, in relation to a pre-commencement tax year, an election is made under sub-paragraph (3) as respects that year—

(a) paragraph 10(b) of this Schedule has effect in relation to that year as if the words “by virtue of meeting the automatic residence test” were omitted,

(b) paragraph 16 of this Schedule has effect in relation to that year as if—

(i) in sub-paragraph (1)(b), the words “because P met the third automatic overseas test for each of those years” were omitted, and

(ii) in sub-paragraph (2)(a), the words “because P met the third automatic overseas test for that year” were omitted, and

(c) paragraph 49 of this Schedule has effect in relation to that year as if in sub-paragraph (2)(a) for the words from “because” to the end there were substituted “in circumstances where the taxpayer was working overseas full-time for the whole of that year.”

155 (1) This paragraph applies if—

(a) year X or, for Part 3 of this Schedule, the tax year for which an individual’s liability to tax is being calculated is the tax year 2013-14 or a subsequent tax year, and

(b) it is necessary to determine under a provision of this Schedule, or a provision inserted by Part 3 of this Schedule, whether a tax year before the tax year 2013-14 (a “pre-commencement tax year”) was a split year as respects the individual.

(2) The provision is to have effect as if—

(a) the reference to a split year were to a tax year to which the relevant ESC applied, and

(b) any reference to the UK part or the overseas part of such a year were to the part corresponding as far as possible, in accordance with the terms of the relevant ESC, to the UK part or the overseas part of a split year.

(3) Where the provision also refers to cases involving actual or deemed departure from the UK, the reference is to be read and given effect so far as possible in accordance with the terms of the relevant ESC.

(4) “The relevant ESC” means whichever of the extra-statutory concessions to which effect is given by Part 3 of this Schedule is relevant in the individual’s case.

156 (1) Sub-paragraph (2) applies in determining whether the test in paragraph 50(3) is met where the relevant year is the tax year 2013-14.

(2) The circumstances of a partner of the taxpayer are to be treated as falling within Case 6 for the previous tax year if the partner was eligible for split year treatment in relation to that tax year under the relevant ESC on the grounds that he or she returned to the United Kingdom after a period working overseas full-time.

(3) Where the circumstances of a partner are treated as falling within Case 6 under sub-paragraph (2), the reference in paragraph 50(7)(b) to the UK part of the relevant year as defined for Case 6 is a reference to the part corresponding, so far as possible, in accordance with the terms of the relevant ESC, to the UK part of that year.

(4) “The relevant ESC” means whichever of the extra-statutory concessions to which effect is given by Part 3 of this Schedule is relevant in the partner’s case.

157 (1) This paragraph applies in determining whether the test in paragraph 110(1)(c) is met in relation to a tax year before the tax year 2013-14 (a “pre-commencement tax year”).

(2) Paragraph 110(1) is to have effect as if for paragraph (c) there were substituted—

“(c) at least 4 out of the 7 tax years immediately preceding the year of departure was a tax year meeting the following conditions—

(i) the individual was resident in the UK for that year, and

(ii) there was no time in that year when the individual was Treaty non-resident (see paragraph 112(3)).”

(3) Whether an individual was resident in the UK for a pre-commencement tax year is to be determined in accordance with the rules in force for determining an individual’s residence for that pre-commencement tax year (and not in accordance with the statutory residence test).

158 (1) The existing temporary non-resident provisions, as in force immediately before the day on which this Act is passed, continue to have effect on and after that day in any case where the year of departure (as defined in Part 4 of this Schedule) is a tax year before the tax year 2013-14.

(2) Where those provisions continue to have effect by virtue of sub-paragraph (1)—

(a) the question of whether a person is or is not resident in the UK for the tax year 2013-14 or a subsequent tax year is to be determined for the purposes of those provisions in accordance with Part 1 of this Schedule, but

(b) the effect of Part 3 is to be ignored.

(3) The existing temporary non-resident provisions are—

(a) section 10A of TCGA 1992 (chargeable gains),

(b) section 576A of ITEPA 2003 (income withdrawals under certain foreign pensions),

(c) section 579CA of that Act (income withdrawals under registered pension schemes), and

(d) section 832A of ITTOIA (relevant foreign income charged on remittance basis).

159 Section 13 of FA 2012 (Champions League final 2013) is to be read and given effect, on and after the day on which this Act is passed, as if section 218 and this Schedule had not been enacted.