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Finance Act 2019

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Finance Act 2019

2019 CHAPTER 1

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.

[12th February 2019]

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:—

PART 1Direct taxes

Charge to tax

1Income tax charge for tax year 2019-20

Income tax is charged for the tax year 2019-20.

2Corporation tax charge for financial year 2020

Corporation tax is charged for the financial year 2020.

Income tax rates, allowances and limits

3Main rates of income tax for tax year 2019-20

For the tax year 2019-20 the main rates of income tax are as follows—

(a)the basic rate is 20%;

(b)the higher rate is 40%;

(c)the additional rate is 45%.

4Default and savings rates of income tax for tax year 2019-20

(1)For the tax year 2019-20 the default rates of income tax are as follows—

(a)the default basic rate is 20%;

(b)the default higher rate is 40%;

(c)the default additional rate is 45%.

(2)For the tax year 2019-20 the savings rates of income tax are as follows—

(a)the savings basic rate is 20%;

(b)the savings higher rate is 40%;

(c)the savings additional rate is 45%.

5Basic rate limit and personal allowance

(1)For the tax years 2019-20 and 2020-21, the amount specified in section 10(5) of ITA 2007 (basic rate limit) is “£37,500”.

(2)For the tax years 2019-20 and 2020-21, the amount specified in section 35(1) of ITA 2007 (personal allowance) is “£12,500”.

(3)In consequence of the amendment made by subsection (2), omit section 4 of F(No.2)A 2015 (which has effect only if the personal allowance is less than £12,500).

(4)Omit the following (which relate to the link between the personal allowance and the national minimum wage)—

(a)sections 57(8), 57A and 1014(5)(b)(iia) of ITA 2007, and

(b)section 3 of F(No.2)A 2015.

(5)In consequence of the provision made by this section—

(a)section 21 of ITA 2007 (indexation of basic rate limit and starting rate limit for savings) does not apply in relation to the basic rate limit, and

(b)section 57 of ITA 2007 (indexation of allowances) does not apply in relation to the amount specified in section 35(1) of that Act,

for the tax years 2019-20 and 2020-21.

6Starting rate limit for savings for tax year 2019-20

Section 21 of ITA 2007 (indexation) does not apply in relation to the starting rate limit for savings for the tax year 2019-20 (so that the starting rate limit for savings remains at £5,000 for that tax year).

Employment and social security income

7Optional remuneration arrangements: arrangements for cars and vans

(1)ITEPA 2003 is amended as follows.

(2)In section 120A (optional remuneration arrangements: benefit of a car)—

(a)in subsection (3)(b), for the words from “the amount” to “year is” substitute “the total foregone amount in connection with the car for the tax year is”, and

(b)after subsection (3) insert—

(4)In this section, and in section 121A, the total foregone amount in connection with the car for a tax year is the total of—

(a)the amount foregone (see section 69B) with respect to the benefit of the car for that year, and

(b)the amount foregone (see section 69B) with respect to each other benefit that—

(i)is connected with the car,

(ii)is provided in that year for the employee, or a member of the employee’s household, pursuant to optional remuneration arrangements, and

(iii)is neither the provision of a driver nor the provision of fuel.

(3)In section 121A (optional remuneration arrangements: method of calculating relevant amount)—

(a)in subsection (1), for step 1 substitute—

  • Step 1

    Take the total foregone amount in connection with the car for the tax year (see section 120A(4))., and

(b)in subsection (2)—

(i)for ““amount foregone” under” substitute ““total foregone amount” for the purposes of”, and

(ii)for “the benefit of the car” substitute “a benefit mentioned in section 120A(4)(a) or (b)”.

(4)In section 132A (capital contributions by employee: optional remuneration arrangements)—

(a)for subsection (3) substitute—

(3)The amount of the deduction allowed in any tax year is found by—

(a)first multiplying the capped amount by the appropriate percentage, and

(b)then multiplying the result by the availability factor., and

(b)after subsection (4) insert—

(4A)For the purposes of subsection (3), “the availability factor” is given by the formula—

where—

  • Y is the number of days in the tax year, and

  • U is the number of days in the tax year on which the car is unavailable.

(4B)For the purposes of subsection (4A), the car is unavailable on any day if the day—

(a)falls before the first day on which the car is available to the employee,

(b)falls after the last day on which the car is available to the employee, or

(c)falls within a period of 30 days or more throughout which the car is not available to the employee.

(5)In section 154A (optional remuneration arrangements: benefit of a van)—

(a)in subsection (2)(b), for the words from “the amount” to “section 69B)” substitute “the total foregone amount in connection with the van”,

(b)in subsection (3), for step 1 substitute—

  • Step 1

    Take the total foregone amount in connection with the van for the tax year.,

(c)in subsection (7), for “the benefit of the van” substitute “a benefit mentioned in subsection (8)(a) or (b)”, and

(d)after subsection (7) insert—

(8)In this section the total foregone amount in connection with the van for a tax year is the total of—

(a)the amount foregone (see section 69B) with respect to the benefit of the van for that year, and

(b)the amount foregone (see section 69B) with respect to each other benefit that—

(i)is connected with the van,

(ii)is provided in that year for the employee, or a member of the employee’s household, pursuant to optional remuneration arrangements, and

(iii)is neither the provision of a driver nor the provision of fuel.

(6)In section 239 (exemptions for payments and benefits relating to taxable cars, vans and exempt HGVs), in subsection (3)—

(a)after “by virtue of” insert “section 120A (optional remuneration arrangements: benefit of a car),”, and

(b)before “or section 160” insert “, section 154A (optional remuneration arrangements: benefit of a van)”.

(7)The amendments made by this section have effect for the tax year 2019-20 and subsequent tax years.

8Exemption for benefit in form of vehicle-battery charging at workplace

(1)In Chapter 3 of Part 4 of ITEPA 2003 (employment income: travel-related exemptions), after section 237 insert—

237AVehicle-battery charging

(1)No liability to income tax arises in respect of the provision, at or near an employee’s workplace, of facilities for charging a battery of a vehicle used by the employee (including a vehicle used by the employee as a passenger).

(2)Subsection (1) applies only if the facilities are made available generally to the employer’s employees at that workplace.

(3)In this section—

  • “facilities”—

    (a)

    includes electricity, but

    (b)

    does not include workplace parking,

  • “taxable”, in relation to a car or van, has the meaning given by section 239(6),

  • “vehicle” means a vehicle—

    (a)

    to which Chapter 2 applies (see section 235), and

    (b)

    which is neither a taxable car nor a taxable van, and

  • “workplace parking” has the meaning given by section 237(3).

(2)The amendment made by subsection (1) has effect for the tax year 2018-19 and subsequent tax years.

9Exemptions relating to emergency vehicles

(1)Section 248A of ITEPA 2003 (emergency vehicles) is amended in accordance with subsections (2) and (3).

(2)In subsection (1)—

(a)in paragraph (a), for “for the person’s private use” substitute “mainly for use for the person’s business travel”;

(b)in paragraph (b), omit “engaged in on-call”.

(3)In subsection (8)—

(a)in the opening words, omit “engaged in on-call”;

(b)in paragraph (a), for “it” substitute “the vehicle”;

(c)omit paragraph (b) (and the “and” before it).

(4)In section 205 of ITEPA 2003 (cost of the benefit: asset made available without transfer), after subsection (4) insert—

(5)Where the asset is an emergency vehicle, the expense of providing fuel for it in a tax year is not an additional expense by virtue of subsection (4) so long as—

(a)the person incurring that expense incurs no expense in that tax year in the provision of fuel for the vehicle which is used for the employee’s private travel (“private fuel expense”), or

(b)all private fuel expense that the person does incur in that tax year is made good by the employee on or before 6 July following the tax year.

(6)For the purposes of this section—

  • “emergency vehicle” has the same meaning as in section 248A;

  • “fuel” includes electrical energy;

  • “private travel” means travelling the expenses of which, if incurred and paid by the employee, would not be deductible under Chapter 2 or 5 of Part 5.

(5)The amendments made by subsections (1) to (4) have effect for the tax year 2017-18 and subsequent tax years.

(6)For the tax year 2017-18, the tax year 2018-19 and the tax year 2019-20, sections 205 and 205A of ITEPA 2003 (taxable benefits: assets made available without transfer) have effect, where the asset mentioned in section 205(1)(a) is an emergency vehicle, with the modifications in subsections (7) and (8).

(7)Section 205(1C) has effect as if—

(a)in paragraph (a), at the beginning, there were inserted “the private use proportion of”;

(b)after paragraph (b), and on a new line, there were inserted—

(8)Section 205A(2) has effect as if paragraphs (c) and (d) were omitted.

(9)For the purposes of subsection (6), “emergency vehicle” has the same meaning as in section 248A of ITEPA 2003.

10Exemption for expenses related to travel

(1)Section 289A of ITEPA 2003 (exemption for paid or reimbursed expenses) is amended as follows.

(2)After subsection (2) insert—

(2A)No liability to income tax arises in respect of an amount paid or reimbursed by a person (“the payer”) to an employee (whether or not an employee of the payer) for expenses in the course of qualifying travel if—

(a)the amount has been calculated and paid or reimbursed in accordance with regulations made by the Commissioners for Her Majesty’s Revenue and Customs,

(b)the payment or reimbursement is not provided pursuant to relevant salary sacrifice arrangements, and

(c)condition C is met.

(3)After subsection (4) insert—

(4A)Condition C is that—

(a)the payer or another person operates a system for checking that the employee has undertaken the qualifying travel in relation to which the amount is paid or reimbursed, and

(b)neither the payer nor any other person operating the system knows or suspects, or could reasonably be expected to know or suspect, that the travel was not undertaken.

(4)In subsection (5)—

(a)for ““Relevant” substitute “In this section “relevant”, and

(b)before “in respect of” insert “for or”.

(5)After subsection (5) insert—

(5A)In this section “qualifying travel” means travel for which a deduction from the employee’s earnings would be allowed under Chapter 2 or 5 of Part 5.

(6)In subsection (6), for “this section” substitute “subsection (2)”.

(7)In subsection (7), after “subsection” insert “(2A)(a) or”.

(8)After subsection (7) insert—

(8)Regulations made under subsection (2A)(a) may contain provision about calculating amounts that is framed by reference to rates (for expenses) published from time to time by the Commissioners for Her Majesty’s Revenue and Customs.

(9)The amendments made by this section have effect for the tax year 2019-20 and subsequent tax years.

(10)For the tax year 2019-20 and subsequent tax years, the Income Tax (Approved Expenses) Regulations 2015 (S.I. 2015/1948)—

(a)have effect as if made under section 289A(2A)(a) of ITEPA 2003 (and may be revoked, or amended, accordingly), and

(b)have effect as if in regulation 2(1)—

(i)the reference to section 289A of ITEPA 2003 were to section 289A(2A)(a) of that Act,

(ii)for the words “in an approved way” there were substituted “in accordance with these regulations”, and

(iii)the words “purchased by the employee” were omitted.

11Beneficiaries of tax-exempt employer-provided pension benefits

(1)In section 307(2) of ITEPA 2003 (“death or retirement benefit” is a benefit for employee or others on employee’s retirement or death), for “or a member of the employee’s family or household” substitute “, or paid or given in respect of the employee to any other individual or to a charity,”.

(2)The amendment made by subsection (1) has effect for the tax year 2019-20 and subsequent tax years.

12Tax treatment of social security income

(1)Part 10 of ITEPA 2003 (social security income) is amended as follows.

(2)In Table A in section 660 (taxable UK benefits), at the appropriate place insert—

Carer’s allowance supplementSS(S)A 2018Sections 24 and 28.

(3)In section 658 (amount charged to tax), in subsection (4), after “carer’s allowance,” insert “carer’s allowance supplement,”.

(4)In section 661 (taxable social security income), in subsection (1), after “carer’s allowance,” insert “carer’s allowance supplement,”.

(5)In Part 1 of Table B in section 677(1) (UK social security benefits wholly exempt from tax: benefits payable under primary legislation), insert each of the following at the appropriate place—

Best start grantSS(S)A 2018Sections 24 and 32
Discretionary housing paymentSS(S)A 2018Section 88
Discretionary support awardDSR(NI) 2016Regulation 2
Funeral expense assistanceSS(S)A 2018Sections 24 and 34
Flexible support fund paymentETA 1973Section 2
Payment under a council tax reduction scheme: EnglandLGFA 1992Section 13A(2)
Young carer grant SS(S)A 2018Sections 24 and 28.

(6)In the heading of Part 1 of Table B in section 677(1), after “Northern Ireland welfare supplementary payments” insert “etc”.

(7)In Part 2 of Table B in section 677(1) (UK social security benefits wholly exempt from tax: benefits payable under regulations), insert each of the following at the appropriate place—

Discretionary housing paymentCSPSSA 2000Section 69
Payment under a council tax reduction scheme: WalesLGFA 1992Section 13A(4).

(8)In Part 1 of Schedule 1 to ITEPA 2003 (abbreviations of Acts and instruments), insert each of the following at the appropriate place—

LGFA 1992Local Government Finance Act 1992
CSPSSA 2000Child Support, Pensions and Social Security Act 2000
DSR(NI) 2016Discretionary Support Regulations (Northern Ireland) 2016 (S.R. (N.I.) 2016 No. 270)
SS(S)A 2018Social Security (Scotland) Act 2018.

Chargeable gains: interests in UK land etc

13Disposals by non-UK residents etc

(1)Schedule 1 substitutes a new Part 1 of TCGA 1992 which—

(a)extends the cases in which gains accruing to persons not resident in the United Kingdom are chargeable to tax, and

(b)abolishes the specific charge to tax on ATED-related chargeable gains.

(2)Schedule 1 also—

(a)repeals other provisions contained in the previous version of Part 1 of TCGA 1992 or in Part 2 of that Act and restates their effect in rewritten form (whether in the new Part 1 or elsewhere),

(b)makes provision in relation to collective investment vehicles that (directly or indirectly) hold interests in land in the United Kingdom, and

(c)makes provision connected with the matters mentioned in subsection (1) or this subsection.

14Disposals of UK land etc: payments on account of capital gains tax

(1)Schedule 2 makes provision for the purposes of capital gains tax requiring returns, and payments on account of that tax, to be made where there is—

(a)any direct or indirect disposal of UK land which meets the non-residence condition (whether or not a gain accrues), or

(b)any other direct disposal of UK land on which a residential property gain accrues.

(2)Subsection (1) is to be read as if contained in Part 1 of that Schedule.

International matters

15Offshore receipts in respect of intangible property

Schedule 3 contains provision about offshore receipts in respect of intangible property.

16Avoidance involving profit fragmentation arrangements

Schedule 4 contains provision about profit fragmentation arrangements.

17Non-UK resident companies carrying on UK property businesses etc

Schedule 5 contains provision for non-UK resident companies to be chargeable to corporation tax on—

(a)profits of UK property businesses,

(b)profits consisting of other UK property income, and

(c)profits arising from certain loan relationships and derivative contracts.

18Diverted profits tax

Schedule 6 contains provision about diverted profits tax.

19Hybrid and other mismatches: scope of Chapter 8 and “financial instrument”

(1)Part 6A of TIOPA 2010 (hybrid and other mismatches) is amended as follows.

(2)In section 259HA (circumstances in which Chapter 8 applies)—

(a)for subsection (5) substitute—

(5)Condition C is that—

(a)the payer is within the charge to corporation tax for the payment period, or

(b)the multinational company—

(i)is UK resident for the payment period, and

(ii)under the law of the parent jurisdiction, is regarded as carrying on a business in the PE jurisdiction through a permanent establishment in that territory but, under the law of the PE jurisdiction, is not regarded as doing so., and

(b)in subsection (9)(a), for “company” substitute “payee”.

(3)For section 259HC (counteraction of the multinational payee deduction/non-inclusion mismatch) substitute—

259HCCounteraction of the multinational payee deduction/non-inclusion mismatch

For corporation tax purposes—

(a)if paragraph (b) of Condition C in subsection (5) of section 259HA is met, an amount equal to the multinational payee deduction/non-inclusion mismatch mentioned in subsection (6) of that section is to be treated as income arising to the multinational company in the United Kingdom (and nowhere else) for the payment period, and

(b)in any other case, the relevant deduction that may be deducted from the payer’s income for that period is to be reduced by that amount.

(4)In section 259N (meaning of “financial instrument”)—

(a)in subsection (3), for paragraph (b) substitute—

(b)anything of a description specified in regulations made by the Treasury., and

(b)omit subsection (4).

(5)The amendments made by subsections (2)(a) and (3) have effect in relation to—

(a)payments made on or after 1 January 2020, and

(b)quasi-payments in relation to which the payment period begins on or after that date.

(6)For the purposes of subsection (5)(b), where a payment period begins before 1 January 2020 and ends after that date (“the straddling period”)—

(a)so much of the straddling period as falls before that date, and so much of it as falls on or after that date, are to be treated as separate taxable periods, and

(b)if it is necessary to apportion an amount for the straddling period to the two separate taxable periods, it is to be apportioned—

(i)on a time basis according to the respective length of the separate taxable periods, or

(ii)if that would produce a result that is unjust or unreasonable, on a just and reasonable basis.

(7)The amendment made by subsection (2)(b) is to be regarded as always having had effect.

(8)The first regulations under section 259N(3)(b) may have effect in relation to times before they come into force, but not times before 1 January 2019.

(9)Until those regulations come into force section 259N continues to have effect (other than for the purposes of making those regulations) as if—

(a)the amendments made by subsection (4) had not been made, and

(b)the Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209) had not been revoked by paragraph 1 of Schedule 20 to this Act.

20Controlled foreign companies: finance company exemption and control

(1)Part 9A of TIOPA 2010 (controlled foreign companies) is amended as follows.

(2)In section 371IA (exemptions for profits from qualifying loan relationships), in subsection (4), for the words from “the profits” to the end substitute

so much of the profits of all its qualifying loan relationships taken together as are non-trading finance profits which—

(a)fall within section 371EC (capital investment from the UK), and

(b)do not fall within section 371EB (UK activities).

(3)In section 371RA (overview of Chapter 18), in subsection (2), for “Section 371RC sets” substitute “Sections 371RC and 371RG set”.

(4)After section 371RF insert—

371RGCompanies in which a UK resident company has more than a 50% investment

(1)If a UK resident company (whether alone or together with any associated enterprises) directly or indirectly has more than a 50% investment in a non-UK resident company, the non-UK resident company is to be taken to be a CFC (if it would not otherwise be).

(2)A person (“P”) is an “associated enterprise” in relation to a UK resident company if—

(a)P directly or indirectly has a 25% investment in the company (or vice versa), or

(b)another person directly or indirectly has a 25% investment in each of P and the company.

(3)Section 259ND (meaning of “50% investment” and “25% investment”) applies for the purposes of determining for the purposes of this section—

(a)whether a person has “more than a 50% investment” in another person, and

(b)whether a person has a “25% investment” in another person,

and, accordingly, references in section 259ND to “X%” are to be read as references to more than 50% or to 25% (as appropriate) and references in that section to “X% or more” are to be read as references to more than 50% or to 25% or more (as appropriate).

(5)The amendments made by this section have effect in relation to accounting periods of CFCs beginning on or after 1 January 2019.

(6)For the purposes of subsection (5), if a CFC has an accounting period beginning before, and ending on or after, that date (“the straddling period”)—

(a)so much of the straddling period as falls before that date, and so much of it as falls on or after that date, are treated as separate accounting periods, and

(b)if it is necessary to apportion an amount for the straddling period to the two separate periods, it is to be apportioned—

(i)on a time basis according to the respective length of the separate periods, or

(ii)if that would produce a result that is unjust or unreasonable, on a just and reasonable basis.

(7)In this section “CFC” has the same meaning as in Part 9A of TIOPA 2010.

21Permanent establishments: preparatory or auxiliary activities

(1)Section 1143 of CTA 2010 (permanent establishments: preparatory or auxiliary activities) is amended as follows.

(2)In subsection (2), at the end insert “and are not part of a fragmented business operation”.

(3)After subsection (2) insert—

(2A)Activities are “part of a fragmented business operation” if—

(a)they are carried on (whether at the same place or at different places in the same territory) by the company or a person closely related to the company,

(b)they constitute complementary functions that are part of a cohesive business operation, and

(c)subsection (2B) applies.

(2B)This subsection applies if—

(a)the overall activity resulting from the combination of the functions mentioned in subsection (2A)(b) is not activity that is only of a preparatory or auxiliary character, or

(b)the company or a person closely related to the company has a permanent establishment in the territory by reason of carrying on any of those functions.

(2C)A person who is not a company is to be treated for the purposes of subsection (2B)(b) as having a permanent establishment in a territory if, were the person a company, the person would have a permanent establishment in the territory.

(2D)For the purposes of this section, one person (“A”) is closely related to another person (“B”) if—

(a)A is able to secure that B acts in accordance with A’s wishes (or vice versa),

(b)B can reasonably be expected to act, or typically acts, in accordance with A’s wishes (or vice versa),

(c)a third person is able to secure that A and B act in accordance with the third person’s wishes,

(d)A and B can reasonably be expected to act, or typically act, in accordance with a third person’s wishes, or

(e)the 50% investment condition is met in relation to A and B.

(2E)The 50% investment condition is met in relation to A and B if—

(a)A has a 50% investment in B (or vice versa), or

(b)a third person has a 50% investment in each of A and B,

and section 259ND of TIOPA 2010 (meaning of “50% investment”) applies for the purposes of determining whether a person has a “50% investment.

(4)In subsection (3), for “For this purpose” substitute “In this section”.

(5)The amendments made by this section have effect in relation to accounting periods beginning on or after 1 January 2019.

(6)For the purposes of subsection (5), if a company has an accounting period beginning before, and ending on or after, that date (“the straddling period”)—

(a)so much of the straddling period as falls before that date, and so much of it as falls on or after that date, are treated as separate accounting periods, and

(b)if it is necessary to apportion an amount for the straddling period to the two separate periods, it is to be apportioned—

(i)on a time basis according to the respective length of the separate periods, or

(ii)if that would produce a result that is unjust or unreasonable, on a just and reasonable basis.

22Payment of CGT exit charges

Schedule 7 contains provision about CGT exit charge payment plans.

23Corporation tax exit charges

Schedule 8—

(a)amends provisions concerning CT exit charge payment plans,

(b)repeals certain provisions that enable the postponement of exit charges, and

(c)contains amendments concerning the treatment of assets that are the subject of EU exit charges.

24Group relief etc: meaning of “UK related” company

(1)In section 134 of CTA 2010 (group relief: meaning of “UK related” company) in paragraph (b) for the words from “carrying on” to the end substitute “within the charge to corporation tax”.

(2)In section 188CJ of CTA 2010 (group relief for carried-forward losses: meaning of “UK related” company) in paragraph (b) for the words from “carrying on” to the end substitute “within the charge to corporation tax”.

(3)The amendments made by this section have effect for the purpose of determining whether a company is a UK related company at any time on or after 5 July 2016.

(4)In its application in relation to a claim for group relief or group relief for carried-forward losses made in reliance on this section, paragraph 74 of Schedule 18 to FA 1998 (time limit for claims) has effect as if the list of dates in sub-paragraph (1) of that paragraph included 31 December 2019.

Corporation tax: miscellaneous

25Intangible fixed assets: restrictions on goodwill and certain other assets

Schedule 9 contains provision about the debits to be brought into account for corporation tax purposes in respect of goodwill and certain other assets.

26Intangible fixed assets: exceptions to degrouping charges etc

(1)Part 8 of CTA 2009 (intangible fixed assets) is amended as follows.

(2)In section 780 (deemed realisation etc on company leaving group) in subsection (5) (exceptions) after paragraph (a) insert—

(aa)section 782A (company leaving group because of relevant share disposal),.

(3)After section 782 insert—

782ACompany leaving group because of relevant share disposal

(1)Section 780 does not apply if a company ceases to be a member of a group because of a relevant disposal of shares by another company.

(2)A disposal of shares by a company is “relevant” if—

(a)the company would not be chargeable to corporation tax in respect of any gain accruing on the disposal by reason of the exemption conferred by paragraph 1 of Schedule 7AC to TCGA 1992 (assuming the company was within the charge to corporation tax), and

(b)the disposal is not part of an arrangement under which the recipient of the shares is to dispose of any of them to another person.

(3)For the purposes of subsection (2)(a) ignore paragraph 6 of Schedule 7AC to TCGA 1992 (cases in which exemptions do not apply).

(4)In section 785 (principal company becoming member of another group)—

(a)in subsection (2)(b) for the words from “both” to “effective 51%” substitute “a relevant”, and

(b)after subsection (2) insert—

(2A)For the purposes of subsection (2)(b) the transferee is a “relevant subsidiary” of a member of the second group (“A”) if, but for sections 767 to 770, the transferee would be a member of another group of which A would be the principal company.

(2B)Subsection (2) does not apply if the transferee ceases to meet the qualifying condition by reason of a relevant disposal of shares by another company (within the meaning given by section 782A(2)).

(5)The amendments made by this section have effect in relation to a company that ceases to be a member of a group or ceases to meet the condition in section 785(2)(b) of CTA 2009 (as amended by subsection (4)) on or after 7 November 2018.

(6)In its application in relation to a company that ceases to be a member of a group or ceases to meet the condition in section 785(2)(b) of CTA 2009 before 21 December 2018, section 782A of CTA 2009 has effect as if subsection (3) of that section was omitted.

27Corporation tax relief for carried-forward losses

Schedule 10 makes provision about corporation tax relief for losses and other amounts that are carried forward.

28Corporate interest restriction

Schedule 11 contains provision amending Part 10 of TIOPA 2010 (corporate interest restriction).

29Debtor relationships of company where money lent to connected companies

Schedule 12 makes provision for preventing a mismatch for corporation tax purposes in a case where—

(a)a company has a debtor relationship which is dealt with in its accounts on the basis of fair value accounting, and

(b)the money it receives under that relationship is wholly or mainly used to lend money to companies that are connected with it (and, accordingly, those creditor relationships are required to be dealt with for corporation tax purposes on an amortised cost basis of accounting).

Capital allowances

30Construction expenditure on buildings and structures

(1)The Treasury may by regulations amend CAA 2001 so as to provide for allowances under that Act to be available where—

(a)expenditure has been incurred, on or after 29 October 2018, on the construction of a building,

(b)the building is in qualifying use, and

(c)the expenditure incurred on the construction of the building, or other expenditure, is qualifying expenditure.

(2)Regulations under this section (“the regulations”) must—

(a)specify what is qualifying use;

(b)specify what is qualifying expenditure;

(c)provide for a writing-down allowance to be available at an annual rate of 2% of the qualifying expenditure;

(d)specify the persons to whom allowances may be made;

(e)make provision about how effect is to be given to allowances.

(3)The regulations must secure that—

(a)allowances are not available for expenditure on the acquisition of land or rights in or over land;

(b)qualifying use is restricted to use for prescribed business purposes.

(4)The regulations may provide for allowances not to be available or to be restricted—

(a)in the case of a building that is wholly or partly used as a dwelling-house or for purposes that are ancillary to the purposes of a dwelling-house;

(b)in respect of a building that is used wholly or partly for holiday or overnight accommodation of a prescribed kind;

(c)in respect of a building that is only partly in qualifying use or in respect of periods when a building is not in qualifying use;

(d)in prescribed cases or circumstances.

(5)The regulations may provide that if a person incurs expenditure for the purposes of a qualifying activity before (but not more than 7 years before) the date on which the person starts to carry on that activity, the expenditure is to be treated as if it were incurred by the person on that date.

(6)The regulations may provide that if—

(a)allowances have been available to a person (A) in respect of expenditure on the construction of a building, and

(b)A sells A’s interest in the building to another person (B),

allowances are available to B in respect of the residue of the qualifying expenditure.

(7)The regulations may make provision about leases, including provision for the grant of a lease to be treated in prescribed circumstances in the same way as the sale of the grantor’s interest.

(8)The regulations may make—

(a)provision under which expenditure is apportioned;

(b)provision for balancing adjustments (and about how effect is to be given to them);

(c)provision for qualifying expenditure to be written off;

(d)special provision about highway undertakings;

(e)provision about additional VAT liability and additional VAT rebate (within the meaning given by section 547 of CAA 2001);

(f)anti-avoidance provision;

(g)supplementary or incidental provision;

(h)consequential provision (including provision amending enactments other than CAA 2001).

(9)The regulations may make transitional provision, including provision under which expenditure incurred on or after 29 October 2018 is treated as incurred before that date—

(a)where the expenditure is associated or connected with expenditure incurred before that date,

(b)where the expenditure relates to a contract entered into before that date, or

(c)in other prescribed cases.

(10)Subsections (2) to (9) are not to be read as limiting subsection (1).

(11)A statutory instrument containing the regulations may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

(12)A reference in this section to expenditure on the construction of a building includes a reference to capital expenditure—

(a)on repairs to the building, or

(b)on the renovation or conversion of the building.

(13)In this section—

  • “building” includes structure;

  • “dwelling-house” has the meaning given by the regulations;

  • “prescribed” means prescribed by the regulations.

31Special rate expenditure on plant and machinery

(1)Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

(2)In section 104D(1) (writing-down allowances in respect of special rate expenditure) for “8%” substitute “6%”.

(3)Accordingly, in—

(a)section 56(2)(a),

(b)the heading of section 104D, and

(c)section 104E(1)(a),

for “8%” substitute “6%”.

(4)The amendments made by subsections (2) and (3) have effect in relation to chargeable periods beginning on or after the relevant day.

(5)In relation to a chargeable period that begins before and ends on or after the relevant day, section 104D(1) of CAA 2001 has effect as if the reference to 8% was a reference to X%.

(6)For the purposes of subsection (5), X is—

where—

  • BRD is the number of days in the chargeable period before the relevant day,

  • ARD is the number of days in the chargeable period on or after the relevant day, and

  • CP is the number of days in the chargeable period.

(7)Where X would be a figure with more than 2 decimal places it is to be rounded up to the nearest second decimal place.

(8)In this section “the relevant day” is—

(a)for corporation tax purposes, 1 April 2019, and

(b)for income tax purposes, 6 April 2019.

32Temporary increase in annual investment allowance

(1)In relation to expenditure incurred during the period of two years beginning with 1 January 2019, section 51A of CAA 2001 (entitlement to annual investment allowance) has effect as if in subsection (5) the amount specified as the maximum allowance were £1,000,000.

(2)Schedule 13 contains provision about chargeable periods which straddle 1 January 2019 or 1 January 2021.

33First-year allowances and first-year tax credits

(1)In Part 2 of CAA 2001 (plant and machinery allowances), the following provisions are repealed—

(a)sections 45A to 45C (energy-saving plant or machinery),

(b)sections 45H to 45J (environmentally beneficial plant or machinery), and

(c)section 262A and Schedule A1 (first-year tax credits).

(2)In consequence of subsection (1)

(a)in TMA 1970, in the second column of the Table in section 98, in the entry relating to requirements imposed by provisions of CAA 2001, omit “45B(5) and (6),” and “, 45I(5) and (6)”,

(b)in CAA 2001—

(i)in section 2(3), for “262A” substitute “262”,

(ii)in section 3—

(a)in subsection (1), omit “, and no first-year tax credit is to be paid under Schedule A1,”, and

(b)omit subsection (2B),

(iii)in the list in section 39, omit—

(a)the entry relating to section 45A, and

(b)the entry relating to section 45H,

(iv)in section 46—

(a)in the list in subsection (1), omit the entry relating to section 45A and the entry relating to section 45H, and

(b)omit subsections (5) and (6), and

(v)in the table in section 52(3), omit—

(a)the entry relating to expenditure qualifying under section 45A, and

(b)the entry relating to expenditure qualifying under section 45H, and

(c)the following provisions are repealed—

(i)in FA 2001, section 65 and Schedule 17,

(ii)in FA 2003, paragraphs 2(c), 3, 4(1)(c) and (2) and 5 to 7 of Schedule 30,

(iii)in FA 2006, paragraph 11 of Schedule 9,

(iv)in FA 2008, section 79 and Schedule 25,

(v)in CTA 2009, paragraph 521 of Schedule 1,

(vi)in CTA 2010, paragraph 364 of Schedule 1,

(vii)in FA 2011, paragraph 12(16) of Schedule 14,

(viii)in the Welfare Reform Act 2012—

(a)paragraph 14 of Schedule 3, and

(b)in the table in Part 1 of Schedule 4, the entry relating to CAA 2001,

(ix)in FA 2012—

(a)section 45(2) and (3), and

(b)paragraph 106 of Schedule 16,

(x)in FA 2013—

(a)section 67,

(b)section 68(2), and

(c)paragraph 6 of Schedule 18,

(xi)in FA 2014, paragraph 7 of Schedule 4,

(xii)in FA 2016, paragraph 7 of Schedule 8,

(xiii)in F(No.2)A 2017—

(a)paragraph 126 of Schedule 4, and

(b)paragraph 7 of Schedule 6, and

(xiv)in FA 2018, section 29.

(3)The following orders were made under powers contained in provisions repealed by subsection (1) and are therefore revoked—

(a)the Capital Allowances (Environmentally Beneficial Plant and Machinery) Order 2003 (S.I. 2003/2076), and

(b)any instrument amending that order.

(4)The Capital Allowances (Energy-saving Plant and Machinery) Order 2018 (S.I. 2018/268) is revoked.

(5)The amendments made by this section have effect in relation to expenditure incurred on or after—

(a)for corporation tax purposes, 1 April 2020, and

(b)for income tax purposes, 6 April 2020.

34First-year allowance: expenditure on electric vehicle charge points

In section 45EA of CAA 2001 (expenditure on plant or machinery for electric vehicle charging point), in subsection (3) (the relevant period) for “2019”, in both places it occurs, substitute “2023”.

35Qualifying expenditure: buildings, structures and land

(1)Chapter 3 of Part 2 of CAA 2001 (qualifying expenditure) is amended as follows.

(2)In each of sections 21 and 22 (buildings, structures, assets and works), at the end of subsection (4) insert “(but any reference in list C in subsection (4) of that section to “plant” does not include anything where expenditure on its provision is excluded by this section)”.

(3)The amendments made by this section—

(a)are treated as always having had effect, but

(b)do not have effect in relation to claims for capital allowances made before 29 October 2018.

Leases

36Changes to accounting standards etc

Schedule 14 contains provision relating to the taxation of leases.

Oil activities and petroleum revenue tax

37Oil activities: transferable tax history

Schedule 15 makes provision for a company which sells an interest in an oil licence and a company which buys that interest to make a joint election for an amount of the seller’s profits to be treated, in accordance with the provisions of the Schedule, as if it were an amount of the purchaser’s profits.

38Petroleum revenue tax: post-transfer decommissioning expenditure

(1)Schedule 3 to OTA 1975 (petroleum revenue tax: miscellaneous provisions) is amended in accordance with this section.

(2)After paragraph 11 insert—

Transfers of interests in oil fields: post-transfer decommissioning expenditure

11A(1)This paragraph applies if—

(a)there is, for the purposes of Schedule 17 to FA 1980, a transfer by a participator in an oil field of the whole or part of an interest in the field, and

(b)on or after 1 November 2018, the OGA gives consent for the transfer.

(2)Paragraph 8(1) (certain subsidised expenditure to be disregarded) does not apply to any decommissioning expenditure that—

(a)is incurred by the new participator, and

(b)has been, or is to be, met directly or indirectly out of a payment made by the old participator.

(3)Sub-paragraph (4) applies if, at the end of the transfer period, the old participator is no longer a licensee or a participator in respect of any licensed area wholly or partly included in the oil field.

(4)Decommissioning expenditure that is incurred by the old participator, after the end of the transfer period, is to be treated for the purposes of this Act as having been incurred by the new participator (and paragraph 8(1) does not apply to any such expenditure).

(5)If the old participator has transferred the whole or part of another interest in the oil field to the new participator, but the condition in sub-paragraph (1)(b) was not met in respect of the transfer, references in sub-paragraphs (2) and (4) to decommissioning expenditure are references to such proportion of that expenditure as is just and reasonable.

(6)In this paragraph—

(a)“decommissioning expenditure” means—

(i)expenditure that is incurred, in relation to the oil field mentioned in sub-paragraph (1)(a), for a purpose within section 3(1)(i) or (j) (decommissioning or restoration), and

(ii)is allowable under that section;

(b)“the old participator”, “the new participator” and “the transfer period” have the same meaning as in Schedule 17 to FA 1980 (see paragraph 1(3) of that Schedule).

(7)If there is, for the purposes of Schedule 17 to FA 1980, a subsequent transfer of the whole or part of an interest in the oil field mentioned in sub-paragraph (1)(a), references in this paragraph to “the old participator” include references to each participator whose interest, or part of it, in the oil field is the subject of a transfer to which this paragraph applies.

(3)In paragraph 8, at the end insert—

(3)This paragraph is subject to paragraph 11A (transfers of interests in oil fields: post-transfer decommissioning expenditure).

Miscellaneous reliefs

39Entrepreneurs’ relief

Schedule 16 contains provision amending Part 5 of TCGA 1992 (transfer of business assets, entrepreneurs’ relief and investors’ relief) in connection with entrepreneurs’ relief.

40Gift aid etc: restrictions on associated benefits

(1)In section 418 of ITA 2007 (gifts to charities by individuals: restrictions on associated benefits) in subsection (2) (the variable limit) for paragraphs (a) to (c) substitute—

(a)in a case where the amount of the gift is £100 or less, 25% of that amount, and

(b)in a case where the amount of the gift exceeds £100, the sum of £25 and 5% of the amount of the excess.

(2)The amendment made by subsection (1) has effect in relation to gifts made on or after 6 April 2019.

(3)In section 197 of CTA 2010 (payments to charities by companies: restrictions on associated benefits) in subsection (2) (the variable limit) for paragraphs (a) to (c) substitute—

(a)in a case where the amount of the payment is £100 or less, 25% of that amount, and

(b)in a case where the amount of the payment exceeds £100, the sum of £25 and 5% of the amount of the excess.

(4)The amendment made by subsection (3) has effect in relation to payments made on or after 6 April 2019.

41Charities: exemption for small trades etc

(1)In section 528 of ITA 2007 (exemption for small trades of charitable trust: condition that trading incoming resources etc do not exceed requisite limit) in subsection (6)(b) (the requisite limit)—

(a)for “£5,000” substitute £8,000”, and

(b)for “£50,000” substitute “£80,000”.

(2)The amendments made by subsection (1) have effect for the tax year 2019-20 and subsequent tax years.

(3)Section 482 of CTA 2010 (exemption for small trades of charitable company: condition that trading incoming resources etc do not exceed requisite limit) is amended as follows.

(4)In subsection (6)(b) (the requisite limit)—

(a)for “£5,000” substitute “£8,000”, and

(b)for “£50,000” substitute “£80,000”.

(5)In subsection (7)—

(a)for “£5,000” substitute £8,000”, and

(b)for “£50,000” substitute “£80,000”.

(6)The amendments made by subsections (3) to (5) have effect in relation to accounting periods beginning on or after 1 April 2019.

PART 2Other taxes

Stamp duty land tax

42Relief for first-time buyers in cases of shared ownership

(1)Schedule 9 to FA 2003 (stamp duty land tax: shared ownership leases etc) is amended as follows.

(2)In paragraph 4 (shared ownership lease: election where staircasing allowed), after sub-paragraph (4) insert—

(4A)See paragraph 15 for further provision in connection with relief for first-time buyers.

(3)After paragraph 14 insert—

Relief for first-time buyers: shared ownership lease where election made

15Where—

(a)paragraph 4 applies, and

(b)relief is claimed under paragraph 1 of Schedule 6ZA in respect of the grant of the lease concerned,

no tax is chargeable in respect of so much of the chargeable consideration for the grant as consists of rent.

(4)After paragraph 15 (as inserted by subsection (3)) insert—

Relief for first-time buyers: shared ownership lease where no election made

15A(1)This paragraph applies where—

(a)a shared ownership lease is granted, and

(b)no election is made for tax to be charged in accordance with paragraph 2 or 4.

(2)For the purpose of determining whether the second condition in paragraph 1 of Schedule 6ZA is met in respect of the grant, the chargeable consideration for the grant is to be treated as being the amount stated in the lease in accordance with paragraph 2(2)(e) or paragraph 4(2)(e)(i) or (ii).

(3)If relief is claimed in respect of the grant under paragraph 1 of Schedule 6ZA no tax is chargeable in respect of so much of the chargeable consideration for the grant as consists of rent.

(4)In this paragraph “shared ownership lease” has the same meaning as in paragraph 4A.

Relief for first-time buyers: shared ownership trust where no election made

15B(1)This paragraph applies where—

(a)a shared ownership trust is declared, and

(b)no election is made for tax to be charged in accordance with paragraph 9.

(2)For the purpose of determining whether the second condition in paragraph 1 of Schedule 6ZA is met in respect of the declaration, the chargeable consideration for the declaration is to be treated as being the sum specified in the trust in accordance with paragraph 7(4)(f).

(3)If relief is claimed in respect of the declaration under paragraph 1 of Schedule 6ZA no tax is chargeable in respect of any rent-equivalent payment treated by reason of paragraph 11(b) as rent.

(5)For the italic cross-heading before paragraph 16 substitute “No relief for first-time buyers for staircasing transactions etc”.

(6)In paragraph 16 (cases where first-time buyer’s relief is not available)—

(a)in sub-paragraph (1), omit paragraphs (a), (b) and (d) (but not “or” at the end of paragraph (d)), and

(b)in sub-paragraph (2), omit paragraphs (a) and (c) (but not “or” at the end of paragraph (c)).

(7)The amendments made by this section have effect in relation to—

(a)any land transaction of which the effective date is on or after 29 October 2018, and

(b)any land transaction of which the effective date is before 29 October 2018 and in respect of which a land transaction return has not been given by that date.

43Repayment to first-time buyers in cases of shared ownership

(1)Until 29 October 2019, a claim for the repayment of tax may be made in respect of a land transaction within subsection (2) or (3).

(2)A transaction is within this subsection if the amount of tax chargeable in respect of the transaction would have been less had the amendment made by section 42(3) been in force from the effective date of the transaction.

(3)A transaction is within this subsection if first-time buyer’s relief—

(a)could not have been claimed for the transaction, but

(b)could have been claimed had the amendments made by section 42(4), (5) and (6) been in force from the effective date of the transaction.

(4)Where a claim is made under this section, HMRC must repay—

(a)in a case where the transaction is within subsection (2), so much of the tax paid as exceeds the amount that would have been chargeable had the amendment made by section 42(3) been in force from the effective date of the transaction, and

(b)in a case where the transaction is within subsection (3), so much of the tax paid as exceeds the amount that would have been chargeable had the amendments made by section 42(4), (5) and (6) been in force from the effective date of the transaction and had a claim for first-time buyer’s relief been made.

(5)A claim under this section must be made by amendment of the land transaction return.

(6)Sub-paragraphs (2A) and (3) of paragraph 6 of Schedule 10 to FA 2003 do not apply in the case of an amendment of a land transaction return made for the purpose of making a claim under this section.

(7)In this section—

(a)the expressions used have the same meaning as in Part 4 of FA 2003;

(b)“first-time buyer’s relief” means relief under Schedule 6ZA to FA 2003.

44Higher rates of tax for additional dwellings etc

(1)Schedule 4ZA to FA 2003 (stamp duty land tax: higher rates for additional dwellings and dwellings purchased by companies) is amended as follows.

(2)In paragraph 2 (meaning of “higher rates transaction” etc) after sub-paragraph (4) insert—

(5)References in this Schedule to a major interest in a dwelling include an undivided share in a major interest in a dwelling.

(3)The amendment made by subsection (2) has effect in relation to any land transaction of which the effective date is on or after 29 October 2018.

(4)In paragraph 8(3) (period during which land transaction return may be amended to take account of subsequent disposal of main residence) for the words from “whichever” to the end substitute “the period of 12 months beginning with—

(a)the effective date of the subsequent transaction, or

(b)if later, the filing date for the return.

(5)The amendment made by subsection (4) has effect in a case where the effective date of the subsequent transaction is on or after 29 October 2018.

45Exemption in respect of financial institutions in resolution

(1)In FA 2003, after section 66 insert—

66AResolution of financial institutions

(1)A land transaction is exempt from charge if it is effected by—

(a)an instrument listed in subsection (2), or

(b)an instrument made under an instrument listed in subsection (2).

(2)The instruments are—

(a)a property transfer instrument made in accordance with section 12(2) of the Banking Act 2009 (transfer to a bridge bank),

(b)a property transfer instrument made in accordance with section 12ZA(3) of that Act (transfer to asset management vehicle),

(c)a supplemental property transfer instrument made in accordance with section 42(2) of that Act where the original instrument was made in accordance with section 12(2), 12ZA(3) or 41A(2) of that Act,

(d)a property transfer instrument made in accordance with section 41A(2) of that Act (transfer of property subsequent to resolution instrument),

(e)a bridge bank supplemental property transfer instrument made in accordance with section 44D(2) of that Act,

(f)a property transfer order made in accordance with section 45(2) of that Act (temporary public ownership: property transfer), or

(g)a third-country instrument made in accordance with section 89H(2) or 89I(4) of that Act.

(3)References in subsection (2) to a provision of the Banking Act 2009 include references to that provision as applied by or under any other provision of that Act (including where it is applied with modifications or in a substituted form).

(2)The amendment made by this section has effect in relation to any land transaction the effective date of which is on or after the day on which this Act is passed.

46Changes to periods for delivering returns and paying tax

(1)FA 2003 is amended as follows.

(2)In section 76(1) (duty to deliver land transaction return), for “30 days” substitute “14 days”.

(3)For section 80(2) (adjustment where contingency ceases or consideration is ascertained) substitute—

(2)If the effect of the new information is that a transaction becomes notifiable, the purchaser must make a return to HMRC within 14 days.

(2A)If the effect of the new information is that—

(a)tax is payable in respect of a transaction where none was payable before and subsection (2) does not apply, or

(b)additional tax is payable in respect of a transaction,

the purchaser must make a further return to HMRC within 30 days.

(2B)For the purposes of subsections (2) and (2A), any tax or additional tax payable is calculated according to the effective date of the transaction.

(2C)If a purchaser is required to make a return under subsection (2) or a further return under subsection (2A)

(a)that return must contain a self-assessment of the tax chargeable in respect of the transaction on the basis of the information contained in the return, and

(b)the tax or additional tax payable must be paid not later than the filing date for that return.

(4)In section 81 (further return where relief withdrawn)—

(a)in subsection (1B)—

(i)after paragraph (c) insert—

(ca)in the case of relief under paragraph 5CA of that Schedule (acquisition under a regulated home reversion plan), the first day in the period mentioned in paragraph 5IA(2) of that Schedule on which the purchaser holds the higher threshold interest otherwise than for the purposes of the regulated home reversion plan, unless paragraph 5IA(3)(a) and (b) applies;, and

(ii)after paragraph (d) insert—

(da)in the case of relief under paragraph 5EA of that Schedule (acquisition by management company of flat for occupation by caretaker), the first day in the period mentioned in paragraph 5JA(2) of that Schedule on which the purchaser holds the higher threshold interest otherwise than for the purpose of making the flat available for use as caretaker accommodation;, and

(b)in subsection (2A), after “subsection (1)” insert “or (1A)”.

(5)For section 81A(1) (return or further return in consequence of later linked transaction) substitute—

(1)Where the effect of a transaction (“the later transaction”) that is linked to an earlier transaction is that the earlier transaction becomes notifiable, the purchaser under the earlier transaction must deliver a return in respect of that transaction before the end of the period of 14 days after the effective date of the later transaction.

(1A)Where the effect of a transaction (“the later transaction”) that is linked to an earlier transaction is that—

(a)tax is payable in respect of the earlier transaction where none was payable before and subsection (1) does not apply, or

(b)additional tax is payable in respect of the earlier transaction,

the purchaser under the earlier transaction must deliver a further return in respect of that transaction before the end of the period of 30 days after the effective date of the later transaction.

(1B)For the purposes of subsections (1) and (1A), any tax or additional tax payable is calculated according to the effective date of the earlier transaction.

(1C)Where a purchaser is required to deliver a return under subsection (1) or a further return under subsection (1A)

(a)that return must include a self-assessment of the amount of tax chargeable as a result of the later transaction, and

(b)the tax or additional tax payable must be paid not later than the filing date for that return.

(6)In section 86(2) (payment of tax), before paragraph (a) insert—

(za)any of paragraphs 5G to 5K of Schedule 4A (higher rate for certain transactions),.

(7)In section 87 (interest on unpaid tax)—

(a)after subsection (1) insert—

(1A)But where the relevant date is determined by subsection (3)(aa), (aaa), (ab) or (c), and a return is required to be delivered before the end of the period of 14 days after that relevant date, interest is instead payable on the amount of any unpaid tax from the end of that period until the tax is paid.,

(b)in subsection (2), after “subsection (1)” insert “or (1A)”, and

(c)in subsection (3), before paragraph (a) insert—

(za)in the case of an amount payable because relief is withdrawn under any of paragraphs 5G to 5K of Schedule 4A (higher rate for certain transactions), the date which is the relevant date for the purposes of section 81(1A);.

(8)In Schedule 17A (further provisions relating to leases)—

(a)for paragraph 3(3) substitute—

(3)Where the effect of sub-paragraph (2) in relation to the continuation of the lease for a period (or further period) of one year after the end of a fixed term is that a transaction becomes notifiable, the purchaser must deliver a return in respect of that transaction before the end of the period of 14 days after the end of that one year period.

(3ZA)Where the effect of sub-paragraph (2) in relation to the continuation of the lease for a period (or further period) of one year after the end of a fixed term is that—

(a)tax is payable in respect of a transaction where none was payable before and sub-paragraph (3) does not apply, or

(b)additional tax is payable in respect of a transaction,

the purchaser must deliver a further return in respect of that transaction before the end of the period of 30 days after the end of that one year period.

(3ZB)For the purposes of sub-paragraphs (3) and (3ZA), any tax or additional tax payable is calculated according to the effective date of the transaction.

(3ZC)Where a purchaser is required to deliver a return under sub-paragraph (3) or a further return under sub-paragraph (3ZA)

(a)that return must include a self-assessment of the amount of tax chargeable in respect of the transaction on the basis of the information contained in the return, and

(b)the tax or additional tax payable must be paid not later than the filing date for that return.,

(b)for paragraph 4(3) substitute—

(3)Where the effect of sub-paragraph (1) in relation to the continuation of the lease after the end of a deemed fixed term is that a transaction becomes notifiable, the purchaser must deliver a return in respect of that transaction before the end of the period of 14 days after the end of that term.

(3A)Where the effect of sub-paragraph (1) in relation to the continuation of the lease after the end of a deemed fixed term is that—

(a)tax is payable in respect of a transaction where none was payable before and sub-paragraph (3) does not apply, or

(b)additional tax is payable in respect of a transaction,

the purchaser must deliver a further return in respect of that transaction before the end of the period of 30 days after the end of that term.

(3B)For the purposes of sub-paragraphs (3) and (3A), any tax or additional tax payable is calculated according to the effective date of the transaction.

(3C)Where a purchaser is required to deliver a return under sub-paragraph (3) or a further return under sub-paragraph (3A)

(a)that return must include a self-assessment of the amount of tax chargeable in respect of the transaction on the basis of the information contained in the return, and

(b)the tax or additional tax payable must be paid not later than the filing date for that return., and

(c)for paragraph 8(3) substitute—

(3)If the result as regards the rent paid or payable in respect of the first five years of the term of the lease is that a transaction becomes notifiable, the purchaser must make a return to HMRC within 14 days of the date referred to in sub-paragraph (1)(a) or (b).

(3A)If the result as regards the rent paid or payable in respect of the first five years of the term of the lease is that—

(a)tax is payable in respect of a transaction where none was payable before and sub-paragraph (3) does not apply, or

(b)additional tax is payable in respect of a transaction,

the purchaser must make a further return to HMRC within 30 days of the date referred to in sub-paragraph (1)(a) or (b).

(3B)If a purchaser is required to make a return under sub-paragraph (3) or a further return under sub-paragraph (3A)

(a)that return must contain a self-assessment of the tax chargeable in respect of the transaction on the basis of the information contained in the return,

(b)the tax so chargeable is to be calculated by reference to the rates in force at the effective date of the transaction, and

(c)the tax or additional tax payable must be paid not later than the filing date for that return.

(9)In Schedule 61 to FA 2009 (alternative finance investment bonds)—

(a)in paragraph 7(5) (interest due on first transaction where relief is withdrawn) for “30 days” substitute “14 days”, and

(b)in paragraph 20(3)(a) (no relief where bond-holder acquires control of underlying asset) for “30 days” substitute “14 days”.

(10)The amendments made by this section are to be treated as having effect in relation to—

(a)any land transaction with an effective date on or after 1 March 2019, and

(b)any land transaction with an effective date before 1 March 2019 which becomes notifiable on or after 1 March 2019.

Stamp duty and SDRT

47Stamp duty: transfers of listed securities and connected persons

(1)This section applies if—

(a)an instrument transfers listed securities to a company or a company’s nominee (whether or not for consideration), and

(b)the person transferring the securities is connected with the company or is the nominee of a person connected with the company.

(2)“Listed securities” are stock or marketable securities which are regularly traded on—

(a)a regulated market,

(b)a multilateral trading facility, or

(c)a recognised foreign exchange,

and expressions used in paragraphs (a) to (c) have the same meaning as in section 80B of FA 1986 (intermediaries: supplementary).

(3)For the purposes of the enactments relating to stamp duty—

(a)in a case where listed securities are transferred for consideration which consists of money or any stock or security, or to which section 57 of the Stamp Act 1891 applies, the amount or value of the consideration is to be treated as being equal to—

(i)the amount or value of the consideration for the transfer, or

(ii)if higher, the value of the listed securities;

(b)in any other case, the transfer of listed securities effected by the instrument is to be treated as being for an amount of consideration in money equal to the value of the listed securities.

(4)For the purposes of subsection (3)

(a)“the enactments relating to stamp duty” means the Stamp Act 1891 and any enactment amending that Act or that is to be construed as one with that Act, and

(b)the value of listed securities is to be taken to be the price which they might reasonably be expected to fetch on a sale in the open market at the date the instrument is executed.

(5)Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this section.

(6)The Treasury may by regulations made by statutory instrument provide for this section not to apply in relation to particular cases.

(7)Regulations under subsection (6) may have effect in relation to instruments executed before the regulations come into force.

(8)A statutory instrument containing regulations under subsection (6) is subject to annulment in pursuance of a resolution of the House of Commons.

(9)This section is to be construed as one with the Stamp Act 1891.

(10)This section has effect in relation to instruments executed on or after 29 October 2018.

48SDRT: listed securities and connected persons

(1)This section applies if a person is connected with a company and—

(a)the person or the person’s nominee agrees to transfer listed securities to the company or the company’s nominee (whether or not for consideration), or

(b)the person or the person’s nominee transfers such securities to the company or the company’s nominee for consideration in money or money’s worth.

(2)“Listed securities” are chargeable securities which are regularly traded on—

(a)a regulated market,

(b)a multilateral trading facility, or

(c)a recognised foreign exchange,

and expressions used in paragraphs (a) to (c) have the same meaning as in section 88B of FA 1986 (intermediaries: supplementary).

(3)For the purposes of stamp duty reserve tax chargeable under section 87 of FA 1986 (the principal charge)—

(a)in a case where the agreement is one to transfer listed securities for consideration in money or money’s worth, the amount or value of the consideration is to be treated as being equal to—

(i)the amount or value of the consideration for the transfer, or

(ii)if higher, the value of the listed securities at the time the agreement is made;

(b)in any other case, the agrement to transfer listed securities is to be treated as being one for an amount of consideration in money equal to the value of the listed securities at the time the agreement is made.

(4)Subsection (5) has effect for the purposes of stamp duty reserve tax chargeable under section 93 (depositary receipts) or 96 (clearance services) of FA 1986.

(5)If the amount or value of the consideration for any transfer of listed securities is less than the value of those securities at the time they are transferred, the transfer is to be treated as being for an amount of consideration in money equal to that value.

(6)For the purposes of this section, the value of listed securities at any time is the price which they might reasonably be expected to fetch on a sale in the open market at that time.

(7)Section 1122 of CTA 2010 (connected persons) has effect for the purposes of this section.

(8)The Treasury may by regulations made by statutory instrument provide for this section not to apply in relation to particular cases.

(9)Regulations under subsection (8) may have effect in relation to transactions entered into before the regulations come into force.

(10)A statutory instrument containing regulations under subsection (8) is subject to annulment in pursuance of a resolution of the House of Commons.

(11)This section is to be construed as one with Part 4 of FA 1986.

(12)This section has effect—

(a)in relation to the charge to tax under section 87 of FA 1986 where—

(i)the agreement to transfer securities is conditional and the condition is satisfied on or after 29 October 2018, or

(ii)in any other case, the agreement is made on or after that date;

(b)in relation to the charge to tax under section 93 or 96 of that Act, where the transfer is on or after 29 October 2018 (whenever the arrangement was made).

49Stamp duty: exemption in respect of financial institutions in resolution

(1)In FA 1986, after section 85 insert—

Resolution of financial institutions
85AResolution of financial institutions

(1)Stamp duty is not chargeable on the transfer of stock or marketable securities by—

(a)an instrument listed in subsection (2), or

(b)an instrument made under an instrument listed in subsection (2).

(2)The instruments are—

(a)a mandatory reduction instrument made in accordance with section 6B of the Banking Act 2009 (mandatory write-down, conversion etc of capital instruments),

(b)a share transfer instrument or property transfer instrument made in accordance with section 12(2) of that Act (transfer to a bridge bank),

(c)a property transfer instrument made in accordance with section 12ZA(3) of that Act (transfer to asset management vehicle),

(d)a resolution instrument made in accordance with section 12A of that Act (bail-in),

(e)a share transfer order or share transfer instrument made in accordance with section 13(2) of that Act (share transfer),

(f)a supplemental share transfer instrument made in accordance with section 26 of that Act, where the original instrument was made in accordance with section 12(2) or 13(2) of that Act,

(g)a supplemental share transfer order made in accordance with section 27 of that Act,

(h)a property transfer instrument made in accordance with section 41A(2) of that Act (transfer of property subsequent to resolution instrument),

(i)a supplemental property transfer instrument made in accordance with section 42(2) of that Act where the original instrument was made in accordance with section 12(2), 12ZA(3) or 41A(2) of that Act,

(j)a bridge bank supplemental property transfer instrument made in accordance with section 44D(2) of that Act,

(k)a property transfer order made in accordance with section 45(2) of that Act,

(l)a supplemental resolution instrument made in accordance with section 48U(2) of that Act,

(m)an onward transfer resolution instrument made in accordance with section 48V of that Act in the circumstances set out in subsection (3),

(n)an order under section 85 of that Act (temporary public ownership: building societies), or

(o)a third-country instrument made in accordance with section 89H(2) or 89I(4) of that Act.

(3)The circumstances referred to in subsection (2)(m) are that the transfer—

(a)is to a person within section 67(6), (7) or (8) or section 70(6), (7) or (8) of this Act (depositary receipt issuers, clearance services), and

(b)is made by way of compensation to a creditor of the financial institution in respect of which the original instrument (within the meaning of section 48V of the Banking Act 2009) was made.

(4)References in this section to a provision of the Banking Act 2009 include references to that provision as applied by or under any other provision of that Act (including where it is applied with modifications or in a substituted form).

(2)The amendment made by this section has effect in relation to instruments—

(a)within section 85A(2) of FA 1986, or

(b)made under an instrument within section 85A(2) of FA 1986,

which are executed on or after the day on which this Act is passed.

50Stamp duty and SDRT: exemptions in respect of share incentive plans

(1)In section 95 of FA 2001 (exemptions in relation to approved share incentive plans)—

(a)in subsections (1) and (2), and in the heading, omit “approved”, and

(b)in subsection (3), for “an approved share incentive plan” substitute “a Schedule 2 SIP”.

(2)The amendments made by subsection (1) are to be treated as having effect from 6 April 2014.

Value added tax

51Duty of customers to account for tax on supplies

In section 55A of VATA 1994 (customers to account for tax on certain supplies of goods or services), after subsection (9) insert—

(9A)An order made under subsection (9) may modify the application of subsection (3) in relation to any description of goods or services specified in the order.

52Treatment of vouchers

Schedule 17 makes provision about the VAT treatment of vouchers.

53Groups: eligibility

(1)Schedule 18 contains provision about the eligibility of individuals and partnerships to be treated as members of a group for the purposes of value added tax.

(2)That Schedule comes into force on such day as the Treasury may by regulations made by statutory instrument appoint.

Alcohol

54Rates of duty on cider, wine and made-wine

(1)ALDA 1979 is amended as follows.

(2)In section 62(1A) (rates of duty on cider) in paragraph (a) (rate of duty on sparkling cider of a strength exceeding 5.5%), for “£279.46” substitute “£288.10”.

(3)For Part 1 of the table in Schedule 1 substitute—

WINE OR MADE-WINE OF A STRENGTH NOT EXCEEDING 22%
Description of wine or made-wineRates of duty per hectolitre £
Wine or made-wine of a strength not exceeding 4%91.68
Wine or made-wine of a strength exceeding 4% but not exceeding 5.5%126.08
Wine or made-wine of a strength exceeding 5.5% but not exceeding 15% and not being sparkling297.57
Sparkling wine or sparkling made-wine of a strength exceeding 5.5% but less than 8.5%288.10
Sparkling wine or sparkling made-wine of a strength of at least 8.5% but not exceeding 15%381.15
Wine or made-wine of a strength exceeding 15% but not exceeding 22%396.72

(4)The amendments made by this section are treated as having come into force on 1 February 2019.

55Excise duty on mid-strength cider

(1)ALDA 1979 is amended as follows.

(2)In section 62(1A) (rates of excise duty on cider)—

(a)omit the “and” at the end of paragraph (b), and

(b)after paragraph (b) insert—

(ba)£50.71 per hectolitre in the case of cider of a strength of not less than 6.9 per cent but not exceeding 7.5 per cent which is not sparkling cider; and.

(3)In section 62B (cider labelled as strong cider)—

(a)in the heading, after “strong cider” insert “or mid-strength cider”,

(b)in subsection (1)—

(i)in the opening words, after “standard cider” insert “or mid-strength cider”,

(ii)for paragraph (a) substitute—

(a)is in a container which is up-labelled as a container of strong cider, or,

(iii)in paragraph (b), for “an up-labelled container” substitute “a container which is up-labelled as a container of strong cider,”, and

(iv)in the words after paragraph (b), after “standard cider” insert “or mid-strength cider”,

(c)after subsection (1), insert—

(1A)For the purposes of this Act, any liquor which would apart from this section be standard cider and which—

(a)is in a container which is up-labelled as a container of mid-strength cider, or

(b)has, at any time after 31 January 2019 when it was in the United Kingdom, been in a container which is up-labelled as a container of mid-strength cider,

shall be deemed to be mid-strength cider, and not standard cider.,

(d)for subsection (2) substitute—

(2)Accordingly, references in this Act to making cider include references to—

(a)putting standard or mid-strength cider in a container which is up-labelled as a container of strong cider;

(b)causing a container in which there is standard or mid-strength cider to be up-labelled as a container of strong cider;

(c)putting standard cider in a container which is up-labelled as a container of mid-strength cider; or

(d)causing a container in which there is standard cider to be up-labelled as a container of mid-strength cider.,

(e)in subsection (4)—

(i)in paragraph (a), for “not exceeding 7.5 per cent” substitute “of less than 6.9 per cent”,

(ii)omit the “and” at the end of that paragraph, and

(iii)after paragraph (a), insert—

(aa)“mid-strength cider” means cider which is not sparkling and is of a strength of not less than 6.9 per cent but not exceeding 7.5 per cent; and,

(f)in subsection (5), in the opening words, after “up-labelled” insert “as a container of strong cider”, and

(g)after subsection (6), insert—

(7)For the purposes of this section a container is up-labelled as a container of mid-strength cider if there is anything on—

(a)the container itself,

(b)a label or leaflet attached to or used with the container, or

(c)any packaging used for or in association with the container,

which states or tends to suggest that the strength of any liquor in that container falls within the mid-strength cider strength range.

(8)For the purposes of subsection (7), a strength falls within the mid-strength cider strength range if it is not less than 6.9 per cent but does not exceed 7.5 per cent.

(9)Where liquor is no longer in a container which is an up-labelled container, and it falls within subsection (1)(b) and within subsection (1A)(b), then it is deemed to be cider of the strength range stated or suggested by the labelling for the up-labelled container in which it was first contained.

(10)For the purposes of subsection (9)

(a)an “up-labelled container” means—

(i)a container which is up-labelled as a container of strong cider as mentioned in subsection (1)(b), or

(ii)a container which is up-labelled as a container of mid-strength cider as mentioned in subsection (1A)(b), and

(b)references to the labelling for any container are references to anything on—

(i)the container itself,

(ii)a label or leaflet attached to or used with the container, or

(iii)any packaging used for or in association with the container.

(4)The amendments made by this section are to be treated as having come into force on 1 February 2019.

Tobacco

56Rates

(1)TPDA 1979 is amended as follows.

(2)For the table in Schedule 1 substitute—

TABLE
1 Cigarettes

An amount equal to the higher of—

(a)

16.5% of the retail price plus £228.29 per thousand cigarettes, or

(b)

£293.95 per thousand cigarettes.

2 Cigars£284.76 per kilogram
3 Hand-rolling tobacco£234.65 per kilogram
4 Other smoking tobacco and chewing tobacco£125.20 per kilogram

(3)The amendment made by this section is treated as having come into force at 6pm on 29 October 2018.

57Tobacco for heating

(1)TPDA 1979 is amended as follows.

(2)In section 1 (tobacco products), in subsection (1)—

(a)in paragraph (d), omit the final “and”;

(b)after paragraph (e) insert and

(f)tobacco for heating,.

(3)In that section, in subsection (3), for “and chewing tobacco” substitute “, chewing tobacco and tobacco for heating”.

(4)In the table in Schedule 1 (as substituted by section 56), at the end insert—

5. Tobacco for heating£234.65 per kilogram.

(5)The Commissioners for Her Majesty’s Revenue and Customs may by regulations made by statutory instrument make consequential, supplementary, incidental or transitional provision in relation to the provision made by subsections (2) to (4) (including provision amending any enactment).

(6)A statutory instrument containing regulations under subsection (5) is subject to annulment in pursuance of a resolution of the House of Commons.

(7)The amendments made by subsections (2) and (4) come into force on such day as the Treasury may by regulations made by statutory instrument appoint.

Vehicle duties

58VED: rates for light passenger vehicles, light goods vehicles, motorcycles etc

(1)Schedule 1 to VERA 1994 (annual rates of vehicle excise duty) is amended as follows.

(2)In paragraph 1 (general rate)—

(a)in sub-paragraph (2) (vehicle not covered elsewhere in Schedule with engine cylinder capacity exceeding 1,549cc), for “£255” substitute “£265”, and

(b)in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for “£155” substitute “£160”.

(3)In paragraph 1B (graduated rates for light passenger vehicles registered before 1 April 2017)—

(a)for the Table substitute—

CO2 emissions figureRate
(1)(2)(3)(4)
ExceedingNot exceedingReduced rateStandard rate
g/kmg/km££
1001101020
1101202030
120130115125
130140135145
140150150160
150165190200
165175225235
175185250260
185200290300
200225315325
225255545555
255560570;

(b)in the sentence immediately following the Table, for paragraphs (a) and (b) substitute—

(a)in column (3), in the last two rows, “315” were substituted for “545” and “560”, and

(b)in column (4), in the last two rows, “325” were substituted for “555” and “570”.

(4)In paragraph 1GC (graduated rates for first licence for light passenger vehicles registered on or after 1 April 2017)—

(a)for Table 1 (vehicles other than higher rate diesel vehicles) substitute—

CO2 emissions figureRate
(1)(2)(3)(4)
ExceedingNot exceedingReduced rateStandard rate
g/kmg/km££
050010
50751525
7590100110
90100120130
100110140150
110130160170
130150200210
150170520530
170190845855
19022512701280
22525518051815
25521252135, and

(b)for Table 2 (higher rate diesel vehicles) substitute—

CO2 emissions figureRate
(1)(2)(3)
ExceedingNot exceedingRate
g/kmg/km£
05025
5075110
7590130
90100150
100110170
110130210
130150530
150170855
1701901280
1902251815
2252552135
2552135.

(5)In paragraph 1GD (rates for any other licence for light passenger vehicles registered on or after 1 April 2017), in sub-paragraph (1)—

(a)in paragraph (a) (the reduced rate) for “£130” substitute “£135”, and

(b)in paragraph (b) (the standard rate) for “£140” substitute “£145”.

(6)In paragraph 1GE (rates for light passenger vehicles registered on or after 1 April 2017 with a price exceeding £40,000), in sub-paragraph (4) for “£310” substitute “£320”.

(7)In paragraph 1J (rates for light goods vehicles), in paragraph (a) for “£250” substitute “£260”.

(8)In paragraph 2(1) (rates for motorcycles)—

(a)in paragraph (a) for “£19” substitute “£20”,

(b)in paragraph (b) for “£42” substitute “£43”,

(c)in paragraph (c) for “£64” substitute “£66”, and

(d)in paragraph (d) for “£88” substitute “£91”.

(9)The amendments made by this section have effect in relation to licences taken out on or after 1 April 2019.

59VED: taxis capable of zero emissions

(1)Part 1AA of Schedule 1 to VERA 1994 (annual rates of duty: light passenger vehicles first registered on or after 1 April 2017) is amended as follows.

(2)In paragraph 1GE (higher rates for vehicles with price above £40,000), after sub-paragraph (4) insert—

(5)Sub-paragraphs (2) and (4) do not apply to a vehicle if when it is first registered, whether that is under this Act or under the law of a country or territory outside the United Kingdom, it is a taxi capable of zero emissions (see paragraph 1GG).

(3)After paragraph 1GF insert—

Meaning of “taxi capable of zero emissions”

1GG(1)The Secretary of State may by regulations make provision about the meaning of “taxi capable of zero emissions” in paragraph 1GE.

(2)In the following provisions of this paragraph “regulations” means regulations under sub-paragraph (1).

(3)Regulations may (in particular) make provision of any one or more of the following kinds—

(a)that a vehicle is a taxi capable of zero emissions if the vehicle is of a description specified in regulations;

(b)that a vehicle is at any particular time a taxi capable of zero emissions if the vehicle is of a model specified at that time in a list maintained by the Secretary of State;

(c)that a vehicle is a taxi capable of zero emissions if conditions specified in regulations are met.

(4)Where regulations make provision of the kind mentioned in sub-paragraph (3)(b)—

(a)regulations may (in particular) provide that a model of vehicle may be specified in the list only if it appears to the Secretary of State that vehicles of that model are of a description specified in regulations;

(b)regulations must provide for publication of the list;

(c)regulations may allow a model of vehicle to be included in the list with backdated effect.

(5)A description of a kind mentioned in sub-paragraph (3)(a) or (4)(a) may be framed (in particular) by reference to a scheme, or an instrument or other document, as it has effect from time to time.

(6)Regulations made before 1 April 2020 that do not increase the amount of vehicle excise duty for which any person is liable may have effect in relation to vehicle licences taken out at times before the regulations come into force (including times before the regulations are made).

(4)The amendments made by this section have effect in relation to licences taken out on or after 1 April 2019.

(5)The new paragraph 1GE(5) has effect, in the case of a vehicle first registered in the two years beginning with 1 April 2017, as if the reference to when the vehicle is first registered were to the start of the first period beginning on or after 1 April 2019 for which a vehicle licence for the vehicle is taken out.

60HGV road user levy

(1)The HGV Road User Levy Act 2013 is amended in accordance with subsections (2) to (6).

(2)In section 5(5) (payment of levy for UK heavy goods vehicles) for “in Schedule 1” substitute “or Table 1A in Schedule 1 (depending on which of those Tables applies to the vehicle)”.

(3)In section 6(4) (payment of levy for non-UK heavy goods vehicles) for “in Schedule 1” substitute “or Table 1A in Schedule 1 (depending on which of those Tables applies to the vehicle)”.

(4)In section 7 (rebate of levy), after subsection (2) insert—

(2A)A rebate entitlement also arises where—

(a)HGV road user levy has been paid in respect of a vehicle at the rate applicable to a vehicle that does not meet Euro 6 emissions standards, and

(b)the vehicle becomes a vehicle that meets those standards.

(5)In section 19 (interpretation)—

(a)in subsection (3)—

(i)in paragraph (b), for “under section 7” substitute “as a result of an entitlement arising under section 7(2)”, and

(ii)after paragraph (b) insert—

(c)where a person receives a rebate of levy in respect of a vehicle as a result of an entitlement arising under section 7(2A), the person is treated as not having paid levy in respect of the vehicle for the period starting with the first day of the month after the month in which the application for a rebate was made and ending with the end of the levy period., and

(b)after subsection (3), insert—

(4)For the purposes of subsection (3)(c), a month starts on the day of the month on which the levy period started.

(6)In Schedule 1 (rates of HGV road user levy)—

(a)for paragraph 1 substitute—

1(1)Table 1 applies to a heavy goods vehicle that meets Euro 6 emissions standards.

(2)Table 1A applies to a heavy goods vehicle that does not meet Euro 6 emissions standards.

(3)Tables 1 and 1A set out the rates of levy for each of the Bands given by Tables 2 to 5 and by paragraph 4.;

(b)in paragraph 5, after paragraph (b) insert—

(c)a heavy goods vehicle meets Euro 6 emissions standards if it complies with the emission limits set out in Annex 1 of Regulation (EC) No. 595/2009 of the European Parliament and of the Council of 18th June 2009 on type approval of motor vehicles and engines with respect to emissions from heavy duty vehicles (Euro VI) and on access to repair and maintenance information.;

(c)for Table 1 substitute—

TABLE 1: VEHICLES MEETING EURO 6 EMISSIONS STANDARDS - RATES FOR EACH BAND
BandDaily rateWeekly rateMonthly rateHalf-yearly rateYearly rate
A£1.53£3.83£7.65£45.90£76.50
B£1.89£4.73£9.45£56.70£94.50
C£4.32£10.80£21.60£129.60£216.00
D£6.30£15.75£31.50£189.00£315.00
E£9.00£28.80£57.60£345.60£576.00
F£9.00£36.45£72.90£437.40£729.00
G£9.00£45.00£90.00£540.00£900.00
B(T)£2.43£6.08£12.15£72.90£121.50
C(T)£5.58£13.95£27.90£167.40£279.00
D(T)£8.10£20.25£40.50£243.00£405.00
E(T)£9.00£37.35£74.70£448.20£747.00
TABLE 1A: VEHICLES NOT MEETING EURO 6 EMISSIONS STANDARDS - RATES FOR EACH BAND
BandDaily rateWeekly rateMonthly rateHalf-yearly rateYearly rate
A£2.04£5.10£10.20£61.20£102.00
B£2.52£6.30£12.60£75.60£126.00
C£5.76£14.40£28.80£172.80£288.00
D£8.40£21.00£42.00£252.00£420.00
E£10.00£38.40£76.80£460.80£768.00
F£10.00£48.60£97.20£583.20£972.00
G£10.00£60.00£120.00£720.00£1,200.00
B(T)£3.24£8.10£16.20£97.20£162.00
C(T)£7.44£18.60£37.20£223.20£372.00
D(T)£10.00£27.00£54.00£324.00£540.00
E(T)£10.00£49.80£99.60£597.60£996.00

(7)The HGV Road User Levy (Rate for Prescribed Vehicles) Regulations 2018 (S.I. 2018/417) are revoked.

(8)In section 19 of VERA 1994 (rebates)—

(a)in subsection (3), after paragraph (g) insert—

(h)a relevant application for a vehicle licence for the vehicle has been received by the Secretary of State.,

(b)after subsection (3ZA) insert—

(3ZB)An application for a vehicle licence is a relevant application for the purposes of subsection (3)(h) if—

(a)there is an unexpired licence for the vehicle in respect of which the application is made,

(b)when the unexpired licence was taken out, the vehicle was chargeable to HGV road user levy under section 5 of the HGV Road User Levy Act 2013 at a rate applicable to a vehicle that does not meet Euro 6 emissions standards, and

(c)the vehicle now meets those standards, and an application for a rebate of HGV road user levy has been made under section 7 of that Act as a result of an entitlement arising under subsection (2A) of that section.,

(c)in subsection (7), after “rebate conditions” insert “(other than the condition in subsection (3)(h))”, and

(d)after subsection (7) insert—

(7A)Where the rebate condition in subsection (3)(h) is satisfied in relation to a licence, the licence ceases to be in force immediately before the first day of the period for which the relevant person is treated as not having paid levy in respect of the vehicle as a result of section 19(3)(c) of the HGV Road User Levy Act 2013.

(9)The amendments and revocation made by subsections (1) to (7) are to be treated as having effect in relation to HGV road user levy that—

(a)becomes due on or after 1 February 2019, and

(b)is paid on or after that date.

(10)The amendments made by subsection (8) are to be treated as having effect in relation to licences taken out on or after 1 February 2019.

Air passenger duty

61Rates of duty from 1 April 2020

(1)In section 30 of FA 1994 (air passenger duty: rates), in subsection (4A) (long haul rates of duty)—

(a)in paragraph (a) for “£78” substitute “£80”, and

(b)in paragraph (b) for “£172” substitute “£176”.

(2)Those amendments have effect in relation to the carriage of passengers beginning on or after 1 April 2020.

Gaming

62Remote gaming duty: rate

(1)In section 155(3) of FA 2014 (rate of remote gaming duty) for “15%” substitute “21%”.

(2)That amendment has effect in relation to accounting periods beginning on or after 1 April 2019.

(3)The amount of remote gaming duty charged in respect of an accounting period that begins before and ends on or after 1 April 2019 is the sum of—

(a)the amount of that duty that would have been charged in respect of the accounting period had it consisted only of those days within the period that fell before that date, and

(b)the amount of that duty that would have been charged in respect of the accounting period had it consisted only of those days within the period that fell on or after that date and had the amendment made by subsection (1) had effect in relation to it.

63Gaming duty

Schedule 19 contains provision about gaming duty.

Environmental taxes

64Climate change levy: exemption for mineralogical and metallurgical processes

(1)Paragraph 12A of Schedule 6 to FA 2000 (exemption: mineralogical and metallurgical processes) is amended as follows.

(2)In sub-paragraph (1)—

(a)omit “to a person”, and

(b)omit “by the person”.

(3)In sub-paragraph (2), for the words from “has the same meaning” to the end substitute “means a process falling within Division 23 of NACE Rev 2.”

(4)In sub-paragraph (4), the words after paragraph (c) become sub-paragraph (4A).

(5)In that sub-paragraph, for “sub-paragraph” substitute “paragraph”.

65Landfill tax rates

(1)Section 42 of FA 1996 (amount of landfill tax) is amended as follows.

(2)In subsection (1)(a) (standard rate), for “£88.95” substitute “£91.35”.

(3)In subsection (2) (reduced rate for certain disposals), in the words after paragraph (b)—

(a)for “£88.95” substitute “£91.35”, and

(b)for “£2.80” substitute “£2.90”.

(4)The amendments made by this section have effect in relation to disposals made (or treated as made) on or after 1 April 2019.

Inheritance tax

66Residence nil-rate band

(1)IHTA 1984 is amended as follows.

(2)In section 8FA(2)(b) and (5) (conditions for entitlement to downsizing addition), for “VT”, in each place it occurs, substitute “the value transferred by the transfer of value under section 4 on the person’s death”.

(3)In section 8FE(9) (calculation of downsizing addition in section 8FA cases), in Step 2, for “VT” substitute “the value transferred by the transfer of value under section 4 on the person’s death”.

(4)In section 8E(1) (which, in relation to the person mentioned in section 8D(1), refers to the transfer of value under section 4), after “section 4” insert “on the person’s death”.

(5)In section 8J(6) (meaning of “inherited”: property disposed of before death by gift subject to a reservation), for the words after “by way of” substitute gift—

(a)subsections (2) to (5) do not apply, and

(b)B inherits the property if the property originally comprised in the gift became comprised in B’s estate on the making of the disposal.

(6)The amendments made by this section apply for the purpose of calculating the amount of the charge to inheritance tax under section 4 of IHTA 1984 on a person’s death if the person dies after 29 October 2018.

Soft drinks industry levy

67Application of penalty provisions

(1)In Schedule 10 to F(No.3)A 2010 (which prospectively amends Schedule 55 to FA 2009 (penalties for failure to make returns etc)) in paragraph 7, in the inserted paragraph 13A(1), after “7B” insert “, 13A”.

(2)The amendments to Schedule 55 to FA 2009 made by Schedule 10 to F(No.3)A 2010 (including the amendment made by subsection (1)) are taken to have come into force for the purposes of soft drinks industry levy on the day on which this section comes into force.

(3)In Schedule 11 to F(No.3)A 2010 (which prospectively amends Schedule 56 to FA 2009 (penalties for failure to make payments)) in paragraph 5(3), in the substituted text of paragraph 3(1)(a) of Schedule 56 to FA 2009, for “11” substitute “11ZA”.

68Isle of Man

(1)In section 1(1) of the Isle of Man Act 1979 (common duties), at the end insert—

(f)soft drinks industry levy chargeable under the law of the United Kingdom or the Isle of Man.

(2)Part 2 of FA 2017 (soft drinks industry levy) is amended in accordance with subsections (3) and (4).

(3)After section 58 insert—

58AIsle of Man: import and export of chargeable soft drinks

(1)Subsections (2) and (3) apply if—

(a)chargeable soft drinks are imported into the United Kingdom from the Isle of Man, and

(b)a charge to soft drinks industry levy (the “corresponding charge”) arises in relation to the soft drinks under the law of the Isle of Man.

(2)If the corresponding charge arises at a rate equal to, or greater than, the UK rate, the soft drinks are not to be treated as being imported into the United Kingdom for the purposes of section 33 (chargeable events: imported soft drinks).

(3)If the corresponding charge arises at a rate lower than the UK rate, the amount of soft drinks industry levy charged under this Part in relation to the soft drinks is to be reduced by an amount equal to the corresponding charge.

(4)In this section “the UK rate”, in relation to chargeable soft drinks, is the rate of soft drinks industry levy that would (apart from this section) be chargeable in relation to the soft drinks under this Part.

(5)For the purposes of section 39(1)(a) (tax credits: exported soft drinks) or regulations made under that provision, chargeable soft drinks are not to be treated as being exported from the United Kingdom if the soft drinks are exported to the Isle of Man.

(4)At the end of section 33, insert—

(10)This section is subject to section 58A (Isle of Man: import and export of chargeable soft drinks).

(5)In section 39, after subsection (5) insert—

(5A)This section is subject to section 58A (Isle of Man: import and export of chargeable soft drinks).

(6)This section comes into force on 1 April 2019.

PART 3Carbon emissions tax

Introductory

69Carbon emissions tax

(1)A tax called “carbon emissions tax” is to be charged in accordance with this Part.

(2)The Commissioners are responsible for the collection and management of carbon emissions tax.

Charge to tax

70Charge to carbon emissions tax

(1)Carbon emissions tax is charged, in relation to a regulated installation, if the amount of reported carbon emissions for a reporting period exceeds the emissions allowance for the period.

(2)The amount of “taxable carbon emissions” in relation to the installation for the reporting period is the amount of the excess.

(3)Carbon emissions tax is charged on taxable carbon emissions at the rate of £16 per tonne of carbon dioxide equivalent.

71“Reported carbon emissions”

(1)The amount of “reported carbon emissions” in relation to an installation for a reporting period is the total amount of emissions from the installation, in tonnes of carbon dioxide equivalent, that is stated—

(a)in the emissions determination (or, if there is more than one, the latest emissions determination) for the period, or

(b)if there is no such determination, in the emissions report for the period.

(2)In subsection (1), “emissions determination” means the regulator’s estimate of the total amount of emissions from the installation for the period, determined in accordance with—

(a)article 70 of the Monitoring and Reporting Regulation, or

(b)regulation 44 of the Emissions Regulations.

72“Emissions report” and “reporting period”

(1)In this Part, “emissions report” means a report of emissions that is submitted to the regulator for the purpose of complying with—

(a)the monitoring and reporting requirements or, in the case of an excluded installation, the monitoring and reporting conditions, or

(b)a requirement of a notice of surrender or of a revocation notice.

(2)“Reporting period”, in relation to a regulated installation, means—

(a)a scheme year, or

(b)such shorter period for which an emissions report for the installation is required by a notice of surrender or a revocation notice.

73“Emissions allowance”

The “emissions allowance”, in relation to an installation for a reporting period, is the amount of emissions, in tonnes of carbon dioxide equivalent, specified by or under, or determined in accordance with, regulations made by the Commissioners under this section.

74Liability to pay carbon emissions tax

(1)Carbon emissions tax in relation to an installation is payable by the person who, at the end of the reporting date, holds the permit for the installation.

(2)The “reporting date”, in relation to a reporting period, means the day on which the emissions report for that period is required to be submitted to the regulator under the Emissions Regulations.

Administration etc.

75Power to make further provision about carbon emissions tax

(1)The Commissioners may by regulations—

(a)make provision about the assessment, payment, collection and recovery of carbon emissions tax, including provision about the recovery of overpayments;

(b)require persons to keep, for purposes connected with carbon emissions tax, records of specified matters, and to preserve those records for a specified period;

(c)make provision for the review of, and a right of appeal against, specified decisions of HMRC in connection with carbon emissions tax;

(d)make provision about the enforcement of carbon emissions tax;

(e)permit or require the sharing of information between HMRC, authorities and regulators for purposes in connection with carbon emissions tax;

(f)make provision about the form, manner and content of any notice, application or other communication with HMRC in connection with carbon emissions tax (including provision about communications in electronic form);

(g)make provision in relation to cases where an individual liable for carbon emissions tax dies or becomes incapacitated, or where a person (whether or not an individual) is subject to an insolvency procedure.

(2)The Commissioners may by regulations make provision for purposes in connection with carbon emissions tax—

(a)about the submission of emissions reports to a regulator;

(b)about emissions determinations, including provision permitting or requiring a regulator to make an emissions determination in specified circumstances;

(c)specifying conditions to be included in a permit granted by a regulator;

(d)for the review of, and a right of appeal against, specified decisions of a regulator;

(e)about the performance of a function of a regulator;

(f)about the form, manner and content of any notice, application or other communication with a regulator (including provision about communications in electronic form).

(3)Regulations under this section may, in particular—

(a)make provision that is equivalent to, or applies with or without modification, any provision of an enactment relating to tax;

(b)amend the Monitoring and Reporting Regulation or the Verification Regulation.

76Consequential provision

(1)In section 1 of the Provisional Collection of Taxes Act 1968 (temporary statutory effect of House of Commons resolutions), in subsection (1), after “petroleum revenue tax” insert “, carbon emissions tax,”.

(2)In regulation 52 of the Emissions Regulations (penalty for carrying out a regulated activity without a permit), after paragraph (2) insert—

(2A)In paragraph (2), the reference to “costs” includes a reference to carbon emissions tax.

(3)Section 4(1) of the European Union (Withdrawal) Act 2018 does not apply, for the purposes of carbon emissions tax, in relation to any rights, powers, liabilities, obligations, restrictions, remedies and procedures so far as they arise under—

(a)Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty, or

(b)Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity.

(4)The Commissioners may by regulations make such provision as they consider appropriate in consequence of this Part.

(5)Regulations under subsection (4) may amend, repeal or revoke any enactment (whenever passed or made).

General

77Interpretation

(1)In this Part—

  • “the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;

  • “emissions allowance” has the meaning given by section 73;

  • “emissions determination” has the meaning given by section 71;

  • “the Emissions Regulations” means the Greenhouse Gas Emissions Trading Scheme Regulations 2012 (S.I. 2012/3038);

  • “emissions report” has the meaning given by section 72;

  • “enactment” includes an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1978;

  • “HMRC” means Her Majesty’s Revenue and Customs;

  • “installation” has the meaning given by regulation 3 of the Emissions Regulations (and references to an installation include references to an offshore installation, as defined in those Regulations);

  • “the Monitoring and Reporting Regulation” means Commission Regulation (EU) No 601/2012 of 21 June 2012 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council (as amended from time to time);

  • “operator” has the meaning given by regulation 3 of the Emissions Regulations (as read with Schedule 1 to those Regulations);

  • “reporting period” has the meaning given by section 72 (subject to section 79(4));

  • “specified” means specified in regulations under this Part;

  • “the Verification Regulation” means Commission Regulation (EU) No 600/2012 of 21 June 2012 on the verification of greenhouse gas emission reports and tonne-kilometre reports and the accreditation of verifiers pursuant to Directive 2003/87/EC of the European Parliament and of the Council (as amended from time to time).

(2)In this Part, the following terms have the meaning given by regulation 3 of the Emissions Regulations—

  • “authority”,

  • “emissions”,

  • “excluded installation”,

  • “monitoring and reporting conditions”,

  • “monitoring and reporting requirements”,

  • “notice of surrender”,

  • “permit”,

  • “regulator”,

  • “revocation notice”,

  • “scheme year”, and

  • “tonne of carbon dioxide equivalent”.

(3)An “installation” is a “regulated installation” for a reporting period if, at any time during the period, the operator holds a permit for the installation.

(4)References in this Part to the Verification Regulation or the Monitoring and Reporting Regulation include references to any EU regulation which replaces either of them and forms part of the law of the United Kingdom as a result of section 3 of the European Union (Withdrawal) Act 2018 (and accordingly the reference in section 71(2)(a) to article 70 of the Monitoring and Reporting Regulation includes a reference to the corresponding provision in any such replacement of that Regulation).

78Regulations

(1)Regulations under section 73, 75 or 76 may—

(a)make provision conferring functions or discretions on an authority, a regulator or any other person;

(b)impose charges as a means of recovering costs incurred by a person in exercising a function conferred under the regulations;

(c)make provision by reference to matters determined or published by HMRC, the Secretary of State, an authority or a regulator (whether before or after the regulations are made);

(d)make different provision for different purposes;

(e)include incidental, consequential, supplementary, transitional or transitory provision.

(2)Regulations under this Part are to be made by statutory instrument.

(3)A statutory instrument containing regulations under section 76(4) that makes provision amending or repealing any provision of an Act of Parliament may not be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

(4)Any other statutory instrument containing regulations under this Part is subject to annulment in pursuance of a resolution of the House of Commons.

(5)But subsection (4) does not apply to a statutory instrument containing only regulations under section 79 (commencement).

79Commencement and transitional provision

(1)This Part comes into force on such day as the Commissioners may by regulations appoint.

(2)Regulations under subsection (1) may—

(a)appoint different days for different purposes;

(b)include transitional or transitory provision.

(3)Section 72(2) (reporting period) is subject to subsection (4).

(4)For the purposes of the application of this Part in relation to the scheme year 2019, the “reporting period”, in relation to a regulated installation, means—

(a)the period beginning with 1 April 2019 and ending with 31 December 2019, or

(b)such shorter period beginning on or after 1 April 2019 for which an emissions report is required by a notice of surrender or a revocation notice.

(5)For the purposes of the scheme year 2019, the provisions of the Emissions Regulations, the Monitoring and Reporting Regulation and the Verification Regulation apply, and anything done under those provisions has effect—

(a)as if, for the purposes of reporting or determining emissions from an installation, references to a period corresponding to a scheme year were references to the reporting period for 2019 (and accordingly as if references to a period beginning with 1 January were references to a period beginning with 1 April 2019), and

(b)with such other modifications as are necessary for the purposes of the charge to carbon emissions tax for a reporting period beginning in 2019.

PART 4Administration and enforcement

Time limits for assessments etc

80Offshore matters or transfers: income tax and capital gains tax

(1)TMA 1970 is amended as follows.

(2)After section 36 insert—

36ALoss of tax involving offshore matter or offshore transfer

(1)This section applies in a case involving a loss of income tax or capital gains tax, where—

(a)the lost tax involves an offshore matter, or

(b)the lost tax involves an offshore transfer which makes the lost tax significantly harder to identify.

(2)An assessment on a person (“the taxpayer”) may be made at any time not more than 12 years after the end of the year of assessment to which the lost tax relates.

This is subject to section 36(1A) above and any other provision of the Taxes Acts allowing a longer period.

(3)Lost income tax or capital gains tax “involves an offshore matter” if it is charged on or by reference to—

(a)income arising from a source in a territory outside the United Kingdom,

(b)assets situated or held in a territory outside the United Kingdom,

(c)income or assets received in a territory outside the United Kingdom,

(d)activities carried on wholly or mainly in a territory outside the United Kingdom, or

(e)anything having effect as if it were income, assets or activities of a kind described above.

(4)Lost income tax or capital gains tax “involves an offshore transfer” if—

(a)it does not involve an offshore matter, and

(b)the income or the proceeds of the disposal on or by reference to which it is charged, or any part of the income or proceeds, is transferred to a territory outside the United Kingdom before the relevant date.

(5)In subsection (4)—

  • “relevant date” means—

    (a)

    in a case where the taxpayer (or a person acting on the taxpayer’s behalf) delivered a return under the Taxes Acts to HMRC for the year of assessment to which the lost tax relates and in which information relating to the lost tax was required to be provided, the date on which the return was delivered, and

    (b)

    in any other case, 31 January in the year of assessment after that to which the lost tax relates;

    references to income or proceeds transferred include references to assets derived from or representing the income or proceeds.

(6)Where lost tax involves an offshore transfer, the cases in which the transfer makes the lost tax significantly harder to identify include any case where, because of the transfer—

(a)HMRC was significantly less likely to become aware of the lost tax, or

(b)HMRC was likely to become aware of the lost tax only at a significantly later time.

(7)But an assessment may not be made under subsection (2) if—

(a)before the time limit that would otherwise apply for making the assessment, HMRC received relevant overseas information on the basis of which HMRC could reasonably have been expected to become aware of the lost tax, and

(b)it was reasonable to expect the assessment to be made before that time limit.

(8)In subsection (7)(a) “relevant overseas information” means information which is provided to HMRC by an authority in a territory outside the United Kingdom under—

(a)any provision of EU law relating to any tax, or

(b)an agreement to which the United Kingdom and that territory are parties, with or without other parties.

(9)An assessment may also not be made under subsection (2) to the extent that liability to the lost tax arises as a result of an adjustment under Part 4 of TIOPA 2010 (transfer pricing adjustments).

(10)In this section “assets” has the meaning given in section 21(1) of the 1992 Act, but also includes sterling.

(11)Section 36(2) to (3A) applies for the purposes of this section (as if references to section 36(1) or (1A) were to subsection (1) of this section).”

(3)In section 37A (effect of assessment where allowances transferred), after “or (1A)” insert “or 36A”.

(4)In section 40 (personal representatives), in subsection (1), for “or 36” substitute “, 36 or 36A”.

(5)The amendments made by this section have effect—

(a)in relation to assessments on a person relating to the 2013-14 year of assessment and subsequent years of assessment, where the loss of tax is brought about carelessly by that person or by a person acting on that person’s behalf, and

(b)in any other case, in relation to assessments relating to the 2015-16 year of assessment and subsequent years of assessment.

81Offshore matters or transfers: inheritance tax

(1)IHTA 1984 is amended as follows.

(2)In section 240 (underpayments), in subsection (3), at the end insert “and to section 240B (underpayments involving offshore matter etc).”

(3)After section 240A insert—

240BUnderpayments involving offshore matters etc

(1)This section applies in a case within section 240(2) which involves a loss of tax in relation to a chargeable transfer, where—

(a)the lost tax involves an offshore matter, or

(b)the lost tax involves an offshore transfer which makes the lost tax significantly harder to identify.

(2)Proceedings for the recovery of the lost tax may be brought at any time not more than 12 years after the later of the dates in section 240(2)(a) and (b).

(3)Lost tax “involves an offshore matter” if it is charged on or by reference to property which is situated or held in a territory outside the United Kingdom at, or immediately after, the time of the chargeable transfer.

(4)Lost tax “involves an offshore transfer” if—

(a)it does not involve an offshore matter, and

(b)the property is transferred to a territory outside the United Kingdom at a relevant time.

(5)In subsection (4)(b) “relevant time” means a time after the chargeable transfer but before—

(a)the date on which an account under section 216 is delivered to HMRC in relation to the chargeable transfer, or

(b)any later date on which an account under section 217 is so delivered.

(6)Where lost tax involves an offshore transfer, the cases in which the transfer makes the lost tax significantly harder to identify include any case where, because of the transfer—

(a)HMRC was significantly less likely to become aware of the lost tax, or

(b)HMRC was likely to become aware of the lost tax only at a significantly later time.

(7)But proceedings may not be brought under this section if—

(a)before the last date on which the proceedings could otherwise be brought, HMRC received relevant overseas information on the basis of which HMRC could reasonably have been expected to become aware of the lost tax, and

(b)it was reasonable to expect the proceedings to be brought before that date.

(8)In subsection (7)(a) “relevant overseas information” means information which is provided to HMRC by an authority in a territory outside the United Kingdom under—

(a)any provision of EU law relating to any tax, or

(b)an agreement to which the United Kingdom and that territory are parties, with or without other parties.

(9)This section is subject to any provision of this Act which allows for a longer period for the bringing of proceedings.

(4)The amendments made by this section have effect—

(a)in a case involving loss of tax brought about carelessly by a person liable for the tax (or a person acting on behalf of such a person), in relation to chargeable transfers taking place on or after 1 April 2013, and

(b)in any other case, in relation to chargeable transfers taking place on or after 1 April 2015.

(5)Section 240(8) of IHTA 1984 applies to the reference to “person liable for the tax” in subsection (4)(a).

Security deposits

82Construction industry scheme and corporation tax etc

(1)In Chapter 3 of Part 3 of FA 2004 (construction industry scheme)—

(a)in the italic heading before section 69, after “returns” insert “, security”;

(b)after section 70 insert—

70ASecurity for payments to HMRC

(1)The Commissioners for Her Majesty’s Revenue and Customs may by regulations make provision for and in connection with requiring the giving, by prescribed persons and in prescribed circumstances, of security for the payment of amounts that a person is or may be liable to pay to the Commissioners under this Chapter.

(2)Regulations under this section must provide that security may be required only where an officer of Revenue and Customs considers it necessary for the protection of the revenue.

(3)Regulations under this section must provide for a right of appeal against—

(a)decisions to require security to be given;

(b)decisions as to the amount, terms or duration of any security required.

(4)A person commits an offence if—

(a)the person fails to comply with a requirement to give security that is imposed by regulations under this section, and

(b)the failure continues for such period as is prescribed.

(5)A person who commits an offence under subsection (4) is liable on summary conviction—

(a)in England and Wales, to a fine;

(b)in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.

(6)In this section—

  • “prescribed” means prescribed in regulations under this section;

  • “security” includes further security.

(2)In Schedule 18 to FA 1998 (company tax returns, assessments and related matters), after paragraph 88 insert—

Security for payments

88A(1)The Commissioners for Her Majesty’s Revenue and Customs may by regulations make provision for and in connection with requiring the giving, by prescribed persons and in prescribed circumstances, of security for the payment of tax that a company is or may be liable to pay.

(2)Regulations under this paragraph must provide that security may be required only where an officer of Revenue and Customs considers it necessary for the protection of the revenue.

(3)Regulations under this paragraph must provide for a right of appeal against—

(a)decisions to require security to be given;

(b)decisions as to the amount, terms or duration of any security required.

(4)A person commits an offence if—

(a)the person fails to comply with a requirement to give security that is imposed by regulations under this paragraph, and

(b)the failure continues for such period as is prescribed.

(5)A person who commits an offence under sub-paragraph (4) is liable on summary conviction—

(a)in England and Wales, to a fine;

(b)in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.

(6)In this paragraph—

  • “prescribed” means prescribed in regulations under this paragraph;

  • “security” includes further security.

(3)In section 684(4A) of ITEPA 2003 (failure to comply with requirement under PAYE regulations to give security), for “on summary conviction to a fine not exceeding level 5 on the standard scale” substitute

on summary conviction—

(a)in England and Wales, to a fine;

(b)in Scotland or Northern Ireland, to a fine not exceeding level 5 on the standard scale.

International agreements

83Resolution of double taxation disputes

In Chapter 2 of Part 2 of TIOPA 2010 (double taxation relief: miscellaneous provisions) after section 128 insert—

International dispute-resolution instruments and agreements
128APower by regulations to give effect to international obligations etc

(1)The Treasury may make regulations for, or in connection with, giving effect to or enabling effect to be given to—

(a)Council Directive (EU) 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the European Union (“the Directive”);

(b)any instrument modifying or supplementing the Directive;

(c)any international agreements or arrangements that deal with—

(i)matters dealt with by the Directive,

(ii)matters that are similar to any of those dealt with by the Directive, or

(iii)any other matters that relate to or are connected with the resolution of disputes in relation to double taxation arrangements.

(2)The provision that may be made by regulations under this section includes (in particular)—

(a)provision as to the effect of any arrangements that the Commissioners for Her Majesty’s Revenue and Customs may make with authorities of territories outside the United Kingdom;

(b)provision conferring or imposing functions, rights or obligations, or authorising the conferral or imposition of functions, rights or obligations, on a person (including a commission, tribunal or court);

(c)provision under which the Commissioners or other persons may exercise discretions;

(d)provision about procedure in relation to the resolution of disputes;

(e)provision about costs, expenses and fees;

(f)provision imposing penalties or creating criminal offences;

(g)provision about appeals;

(h)provision about the form and manner in which, or time within which, things are to be done;

(i)provision supplementing section 128B.

(3)The regulations may—

(a)make provision having effect in relation to periods before the regulations come into force;

(b)make provision by reference to an instrument or document as it has effect from time to time;

(c)make provision about things done, or to be done, in territories outside the United Kingdom;

(d)make different provision for different purposes;

(e)make consequential, incidental, supplemental, transitional, transitory or saving provision;

(f)make provision amending, repealing, revoking or disapplying, or modifying the effect of, any enactment (whenever passed or made).

(4)The regulations may not create a criminal offence punishable on indictment with imprisonment for more than two years.

(5)Regulations under this section containing anything that amends or repeals a provision of primary legislation may not be made unless a draft of the regulations has been laid before, and approved by a resolution of, the House of Commons.

In this subsection “primary legislation” means—

(a)an Act,

(b)an Act of the Scottish Parliament,

(c)a Measure or Act of the National Assembly for Wales, or

(d)Northern Ireland legislation.

(6)In subsections (2) and (3) and sections 128B and 128C, a reference to a commission, tribunal, court or other person includes a reference to a commission, tribunal, court or other person in a territory outside the United Kingdom.

128BGiving effect to requirements under section 128A regulations

(1)Subsection (2) applies if anything in regulations under section 128A requires the Commissioners for Her Majesty’s Revenue and Customs to give effect to an agreement, decision or opinion made or given by—

(a)the Commissioners (or their authorised representative),

(b)the competent authority of a territory outside the United Kingdom, or

(c)any commission, tribunal, court or other person.

(2)The Commissioners are to give effect to the agreement, decision or opinion despite anything in any enactment, and any such adjustment as is appropriate in consequence may be made.

(3)An adjustment under subsection (2) may be made by way of discharge or repayment of tax, the allowance of credit against tax payable in the United Kingdom, the making of an assessment or otherwise.

128CDisclosure under international obligations etc

(1)The obligation as to secrecy imposed by any enactment does not prevent—

(a)the Commissioners for Her Majesty’s Revenue and Customs,

(b)a person who is or was an authorised Revenue and Customs official,

(c)a person who is or was a member of a committee or other body established by the Commissioners for Her Majesty’s Revenue and Customs (or jointly by the Commissioners and an authority of a territory outside the United Kingdom), or

(d)a person specified, or of a description specified, in regulations made by the Treasury,

from disclosing information required to be disclosed under a relevant instrument or agreement in pursuance of a request made by any person.

(2)In this section—

  • “relevant instrument or agreement” means an instrument, agreement or arrangement referred to, or of a kind referred to, in section 128A(1);

  • “Revenue and Customs official” means—

    (a)

    a Commissioner for Her Majesty’s Revenue and Customs;

    (b)

    an officer of Revenue and Customs;

    (c)

    a person acting on behalf of the Commissioners for Her Majesty’s Revenue and Customs;

    (d)

    a person acting on behalf of an officer of Revenue and Customs.

84International tax enforcement: disclosable arrangements

(1)The Treasury may, for the purpose of securing compliance with an obligation of the government of the United Kingdom under an international tax provision, make regulations requiring persons who participate in arrangements of a description specified in the regulations to disclose information about those arrangements.

(2)Regulations under this section may—

(a)require information to be disclosed in such form and manner, and at such intervals, as may be specified in the regulations;

(b)require persons to disclose information about arrangements that they participated in before (as well as after) the coming into force of this section;

(c)provide for the imposition of penalties in respect of a contravention of, or non-compliance with, a requirement of the regulations, including provision about appeals in relation to the imposition of a penalty;

(d)make different provision for different purposes.

(3)For the purposes of subsections (1) and (2)—

  • “arrangements” includes any scheme, transaction or series of transactions;

  • “participate”, in relation to arrangements, includes being involved in, or facilitating, the arrangements in any way (for example, by receiving any benefit from them or by designing, marketing or providing services in connection with them, or arranging for others to do so);

  • “international tax provision” means any provision of—

    (a)

    any arrangements specified in an Order in Council made under section 173 of FA 2006 (international tax enforcement arrangements), or

    (b)

    Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC, as amended from time to time.

(4)Regulations under this section may make consequential, supplementary, incidental, transitional or saving provision (and may do so by amending, repealing or revoking an enactment whenever passed or made).

(5)Regulations under this section are to be made by statutory instrument.

(6)A statutory instrument containing regulations under this section which amend or repeal an enactment contained in an Act may not be made unless a draft of the instrument has been laid before, and approved by resolution of, the House of Commons.

(7)A statutory instrument containing any other regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

(8)No regulations may be made under this section unless the Chancellor of the Exchequer has laid before the House of Commons a report on how the powers in this section are to be exercised in each of the scenarios in subsection (9).

(9)The scenarios to be considered in the report under subsection (8) are—

(a)if either—

(i)a negotiated withdrawal agreement, or

(ii)a framework for the future relationship with the European Union,

has not been ratified under section 13 of the European Union (Withdrawal) Act 2018 at the time of the United Kingdom ceasing to be a member of the European Union, and

(b)if both—

(i)a negotiated withdrawal agreement, and

(ii)a framework for the future relationship with the European Union,

have been ratified under section 13 of the European Union (Withdrawal) Act 2018 at the time of the United Kingdom ceasing to be a member of the European Union.

Payment of unlawful advance corporation tax

85Interest in respect of unlawful ACT

(1)This section applies where—

(a)on any date before 12 December 2012, a person started proceedings against the Commissioners in the High Court or the Court of Session,

(b)the proceedings include a claim arising out of a relevant payment, and

(c)the claim has not been settled, discontinued or finally determined.

(2)“Relevant payment” means a payment of unlawful ACT that—

(a)was made by the person on or after 1 January 1996 or in the period of 6 years ending immediately before the date the proceedings were started, and

(b)was set off or repaid (wholly or in part) before the proceedings were started.

(3)The person is entitled to an order requiring the Commissioners to pay to the person—

(a)an amount (“the principal amount”) equal to the amount of interest that would have accrued if simple interest had accrued on the relevant payment at the appropriate rate for the period beginning with the date the payment was made and ending with—

(i)the date as regards which the unlawful ACT was set off, or

(ii)the date the unlawful ACT was repaid, and

(b)simple interest at the appropriate rate on the principal amount for the period beginning with the day after the date mentioned in paragraph (a)(i) or (ii) and ending with the date the principal amount is paid.

(4)“The appropriate rate” is, in relation to any day, the rate specified in the following table in respect of that day.

PeriodRate per year (%)
1 October 1993 to 31 March 19978
1 April 1997 to 5 January 19996
6 January 1999 to 5 March 19995
6 March 1999 to 5 February 20004
6 February 2000 to 5 May 20015
6 May 2001 to 5 November 20014
6 November 2001 to 5 August 20033
6 August 2003 to 5 December 20032
6 December 2003 to 5 September 20043
6 September 2004 to 5 September 20054
6 September 2005 to 5 September 20063
6 September 2006 to 5 August 20074
6 August 2007 to 5 January 20085
6 January 2008 to 5 November 20084
6 November 2008 to 5 December 20083
6 December 2008 to 5 January 20092
6 January 2009 to 26 January 20091
27 January 2009 to 29 October 20180.5
30 October 2018 onwards0.5 or such other rate as the Treasury may by regulations specify in respect of a period specified in the regulations

(5)Where the unlawful ACT was repaid, any amount of interest or repayment supplement paid by the Commissioners on the making of the repayment is to be deducted from the principal amount (and subsection (3)(b) has effect accordingly).

(6)Where part of the unlawful ACT has been set off or repaid at one time, and part of it has been set off or repaid at another time or has not been set off or repaid, for the purposes of this section treat each part as a separate payment.

(7)In this section—

  • “the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs (or, in relation to any time before the commencement of section 5 of the Commissioners for Revenue and Customs Act 2005, the Commissioners of Inland Revenue);

  • “set off or repaid”: references to a payment of unlawful ACT being set off or repaid are—

    (a)

    to it being set against a liability to corporation tax of any person, or

    (b)

    to it being repaid by the Commissioners;

  • “settled” means settled by agreement;

  • “unlawful ACT” means advance corporation tax that was unlawfully levied.

(8)The Treasury may by regulations substitute for the date for the time being specified in subsection (1)(a) such later date as they consider appropriate.

(9)Regulations under this section are to be made by statutory instrument.

(10)A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

86Section 85: supplementary

(1)This section supplements section 85.

(2)Nothing in section 85 limits the remedies that a court may award in respect of the claim.

(3)However—

(a)a person is not entitled to an order under section 85 in respect of a relevant payment if the person has obtained any other relevant remedy in respect of the relevant payment, and

(b)a person who has obtained an order under section 85 in respect of a relevant payment is not entitled to any other relevant remedy in respect of the relevant payment.

(4)In subsection (3) “relevant remedy” means a remedy for the loss of use of the amount of the relevant payment during the period mentioned in section 85(3)(a) (or during some similar period).

(5)Any interest or repayment supplement paid by the Commissioners on the making of—

(a)a repayment of a relevant payment, or

(b)a repayment of corporation tax occurring as a result of a relevant payment,

is not regarded as a relevant remedy in respect of the relevant payment.

(6)Where the right to bring a claim arising out of a payment of unlawful ACT has been transferred from the person who made the payment (“the payor”) to another person (“the successor”)—

(a)in section 85(1) the reference to “a person” is to the payor or the successor;

(b)in section 85(2) the reference to “the person” is to the payor;

(c)in section 85(3) the reference to “the person” is to the successor.

(7)Any amount paid by the Commissioners to a person on a day by virtue of section 85 is to be brought into account when calculating, for tax purposes, the profits (or income) of the person for any period which includes that day.

Voluntary returns

87Voluntary returns

(1)In Part 2 of TMA 1970 (returns of income and gains), after section 12C insert—

Voluntary returns
12DReturns made otherwise than pursuant to a notice

(1)This section applies where—

(a)a person delivers a purported return (“the relevant return”) under section 8, 8A or 12AA (“the relevant section”) for a year of assessment or other period (“the relevant period”),

(b)no notice under the relevant section has been given to the person in respect of the relevant period, and

(c)HMRC treats the relevant return as a return made and delivered in pursuance of such a notice.

(2)For the purposes of the Taxes Acts—

(a)treat a relevant notice as having been given to the person on the day the relevant return was delivered, and

(b)treat the relevant return as having been made and delivered in pursuance of that notice (and, accordingly, treat it as if it were a return under the relevant section).

(3)“Relevant notice” means—

(a)in relation to section 8 or 8A, a notice under that section in respect of the relevant period;

(b)in relation to section 12AA, a notice under section 12AA(3) requiring the person to deliver a return in respect of the relevant period, on or before the day the relevant return was delivered (or, if later, the earliest day that could be specified under section 12AA).

(4)In subsection (1)(a) “purported return” means anything that—

(a)is in a form, and is delivered in a way, that a corresponding return could have been made and delivered had a relevant notice been given, and

(b)purports to be a return under the relevant section.

(5)Nothing in this section affects sections 34 to 36 or any other provisions of the Taxes Acts specifying a period for the making or delivering of any assessment (including self-assessment) to income tax or capital gains tax.

(2)In Schedule 18 to FA 1998 (company tax returns etc) at the end of Part 2 insert—

Voluntary returns

20A(1)This paragraph applies where—

(a)a company delivers a purported return (“the relevant return”) for a period (“the relevant period”),

(b)no notice under paragraph 3 has been given to the company in respect of the relevant period, and

(c)Her Majesty’s Revenue and Customs treats the relevant return as a return made and delivered in pursuance of such a notice.

(2)For the purposes of the Taxes Acts—

(a)treat a relevant notice as having been given to the company on the day the relevant return was delivered, and

(b)treat the relevant return as having been made and delivered in pursuance of that notice (and, accordingly, treat it as if it were a company tax return under paragraph 3).

(3)“Relevant notice” means a notice under paragraph 3 requiring the company to deliver a return for the relevant period.

(4)In sub-paragraph (1)(a) “purported return” means anything that—

(a)is in a form, and is delivered in a way, that a corresponding return could have been made and delivered had a relevant notice been given, and

(b)purports to be a company tax return.

(5)Nothing in this paragraph affects paragraph 46 or any other provisions of the Taxes Acts specifying a time limit for the making of an assessment.

(3)The amendments made by this section are treated as always having been in force.

(4)However, those amendments do not apply in relation to a purported return delivered by a person if, before 29 October 2018—

(a)the person made an appeal under the Taxes Acts, or a claim for judicial review, and

(b)the ground (or one of the grounds) for the making of the appeal or claim was that the purported return was not a return under section 8, 8A or 12AA of TMA 1970 or paragraph 3 of Schedule 18 to FA 1998 because no relevant notice was given.

(5)The Treasury may by regulations—

(a)make such amendments of relevant tax legislation as they consider appropriate in consequence of subsection (1) or (2);

(b)make such amendments of section 12D of TMA 1970 (inserted by subsection (1) of this section) as they consider appropriate in connection with the coming into force of section 61 of, and Schedule 14 to, F(No.2)A 2017 (digital reporting and record keeping for income tax etc).

(6)In subsection (5)(a) “relevant tax legislation” means—

(a)TMA 1970,

(b)Schedule 18 to FA 1998, or

(c)any other enactment relating to income tax, corporation tax or capital gains tax.

(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.

Interest

88Interest under section 178 of FA 1989 and section 101 of FA 2009

(1)Where, before the day on which this Act is passed—

(a)regulations under subsection (1) of section 178 of FA 1989 provide for a rate of interest for the purposes of an enactment to which that section applies, but

(b)no order was made under subsection (7) of that section appointing a day for that enactment,

the rate has effect for any period of time beginning on or after the day on which the regulations came into force even though no such order was made.

(2)In section 178 of FA 1989 (setting of rates of interest)—

(a)in subsection (2), omit paragraph (u);

(b)in subsection (3)(f), after “provide that” insert “rates or”;

(c)omit subsection (7) (but this repeal does not affect any order already made under that subsection).

(3)In Schedule 35 to FA 2014 (promoters of tax avoidance schemes), in paragraph 11 (interest on penalties)—

(a)in sub-paragraph (1), for the words from “at the rate” to the end substitute “in accordance with section 101 of FA 2009”;

(b)omit sub-paragraph (2).

(4)In the Taxes (Interest Rate) Regulations 1989 (S.I. 1989/1297)—

(a)in regulation 3(1), after paragraph (e) insert—

(f)section 14(4) of the Ports Act 1991 (for any period of time beginning on or after the day on which the Finance Act 2019 is passed), and

(g)paragraph 8 of Schedule 1 to the Employment Act 2002 (for any period of time beginning on or after the day on which the Finance Act 2019 is passed),;

(b)after regulation 5 insert—

5AApplicable rate of interest for diverted profits tax

For the purposes of section 79 of the Finance Act 2015, the rate applicable under section 178 of the Finance Act 1989 is—

(a)3% per annum for the period beginning with 1 October 2015 and ending with 5 April 2017, and

(b)2.5% per annum thereafter.

(5)Regulations under section 178(1) of FA 1989 may revoke or amend the provision made in the Taxes (Interest Rate) Regulations 1989 by subsection (4).

(6)Section 101 of FA 2009 is to be regarded as having come into force on 6 May 2014 for the purposes of—

(a)penalties under paragraphs 6B to 6D of Schedule 55 to FA 2009, in the case of returns falling within item 4 in the Table in paragraph 1 of that Schedule (real time information for PAYE);

(b)penalties under paragraphs 5 to 8 of Schedule 56 to FA 2009, in the case of payments of tax falling within item 2 or 4 of the Table in paragraph 1 of that Schedule (PAYE and CIS amounts);

(c)a penalty under section 208 or 226 of FA 2014 (penalties relating to follower notices, accelerated payment notices and partner payment notices), where the penalty relates to income tax payable under PAYE regulations.

PART 5Miscellaneous and final

Regulatory capital securities

89Regulatory capital securities and hybrid capital instruments

Schedule 20—

(a)makes provision revoking the previous rules that applied in relation to regulatory capital securities, and

(b)makes new provision in relation to hybrid capital instruments.

EU withdrawal

90Minor amendments in consequence of EU withdrawal

(1)The Treasury may by regulations make such provision as they consider appropriate—

(a)for the purpose of maintaining the effect of any relevant tax legislation on the withdrawal of the United Kingdom from the EU (and, accordingly, on the United Kingdom ceasing to be an EEA state);

(b)for the purposes of any relevant tax, in connection with any provision made by regulations under section 8 of the European Union (Withdrawal) Act 2018 (power to remedy deficiencies);

(c)in connection with any reference in relevant tax legislation to euros;

(d)amending paragraph 2(4) of Schedule 5 to FA 1997 (indirect taxes: overpayments etc) for the purposes of removing the reference to EU legislation;

(e)amending section 173 of FA 2006 (international tax enforcement) to permit the disclosure of information to the Commissioners by other public authorities and by the Commissioners (subject to conditions about its use) to persons outside the United Kingdom.

(2)The regulations may—

(a)amend any enactment;

(b)contain incidental, transitional or saving provision;

(c)make different provision for different purposes.

(3)Where—

(a)regulations under this section are made after exit day, and

(b)a provision of the regulations is made by virtue of any of paragraphs (a) to (d) of subsection (1),

the regulations may provide that the provision has effect from exit day.

(4)Regulations under this section are to be made by statutory instrument.

(5)A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.

(6)In this section—

  • “the Commissioners” means the Commissioners for Her Majesty’s Revenue and Customs;

  • “enactment” includes an enactment comprised in subordinate legislation;

  • “relevant tax” means any tax (including stamp duty) except—

    (a)

    value added tax,

    (b)

    any duty of customs, or

    (c)

    any excise duty under the Alcoholic Liquor Duties Act 1979, the Hydrocarbon Oil Duties Act 1979 or the Tobacco Products Duty Act 1979;

  • “relevant tax legislation” means any enactment relating to a relevant tax.

(7)The provisions of this section only come into force if—

(a)a negotiated withdrawal agreement and a framework for the future relationship have been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown for the purposes of section 13(1)(b) of the European Union (Withdrawal) Act 2018, or

(b)the Prime Minister has notified the President of the European Council, in accordance with Article 50(3) of the Treaty on European Union, of the United Kingdom’s request to extend the period in which the Treaties shall still apply to the United Kingdom, or

(c)leaving the European Union without a withdrawal agreement and a framework for the future relationship has been approved by a resolution of the House of Commons on a motion moved by a Minister of the Crown.

Preparatory expenditure

91Emissions reduction trading scheme: preparatory expenditure

(1)The Secretary of State may incur expenditure in preparing for the introduction of a scheme for charges to be imposed for the allocation of emissions allowances.

(2)In subsection (1), “emissions allowance” means an allowance under paragraph 5 of Schedule 2 to the Climate Change Act 2008 relating to a trading scheme dealt with under Part 1 of that Schedule (schemes limiting activities relating to emissions of greenhouse gas).

Reviews

92Impact analyses of the anti-avoidance provisions of this Act

(1)The Chancellor of the Exchequer must review the impact of—

(a)section 15 and Schedule 3,

(b)section 16 and Schedule 4,

(c)sections 19 and 20,

(d)section 22 and Schedule 7,

(e)section 23 and Schedule 8,

(f)sections 47 and 48, and

(g)section 84,

of this Act in accordance with this section and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2)A review under this section must consider the impact of those provisions on—

(a)child poverty,

(b)households at different levels of income,

(c)people with protected characteristics (within the meaning of the Equality Act 2010), and

(d)different parts of the United Kingdom and different regions of England.

(3)In this section—

  • “parts of the United Kingdom” means—

    (a)

    England,

    (b)

    Scotland,

    (c)

    Wales, and

    (d)

    Northern Ireland;

  • “regions of England” has the same meaning as that used by the Office for National Statistics.

93Review of effectiveness of provisions on tax avoidance

(1)The Chancellor of the Exchequer must review the effectiveness of the provisions of this Act relating to tax avoidance and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2)In this section, “the provisions of this Act relating to tax avoidance” means—

(a)section 15 and Schedule 3,

(b)section 16 and Schedule 4,

(c)sections 19 and 20,

(d)section 22 and Schedule 7,

(e)section 23 and Schedule 8,

(f)sections 47 and 48,

(g)section 84.

(3)A review under this section must consider in particular—

(a)the effects of those provisions in reducing tax avoidance and evasion,

(b)the effect of those provisions in inducing new tax avoidance measures unanticipated by the Act, and

(c)estimates of the efficacy of the provisions in reducing the tax gap in each tax year from 2018-19 to 2028-29.

94Review of public health effects of gaming provisions

(1)The Chancellor of the Exchequer must review the public health effects of the provisions of section 62 of and Schedule 19 to this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2)A review under this section must consider—

(a)the effects of those provisions in reducing the negative public health effects of gambling, and

(b)the implications for the public finances of the public health effects of—

(i)those provisions,

(ii)the operation of the law relating to remote gaming duty and gaming duty if those provisions were not given effect.

95Review of changes made by sections 80 and 81

(1)The Chancellor of the Exchequer must review the effects of the changes made by sections 80 and 81 to TMA 1970 and IHTA 1984, and lay a report on that review before the House of Commons not later than 30 March 2019.

(2)The review under this section must include a comparison of the time limit on proceedings for the recovery of lost tax that involves an offshore matter with other time limits on proceedings for the recovery of lost tax, including, but not limited to, those provided for by Schedules 11 and 12 to the F(No. 2)A 2017.

(3)The review under this section must also consider the extent to which provisions equivalent to section 36A(7)(b) of TMA 1970 (relating to reasonable expectations) apply to the application of other time limits.

Other

96Interpretation

In this Act the following abbreviations are references to the following Acts.

ALDA 1979Alcoholic Liquor Duties Act 1979
CAA 2001Capital Allowances Act 2001
CTA 2009Corporation Tax Act 2009
CTA 2010Corporation Tax Act 2010
FA, followed by a yearFinance Act of that year
F(No.2)A, followed by a yearFinance (No.2) Act of that year
F(No.3)A, followed by a yearFinance (No.3) Act of that year
IHTA 1984Inheritance Tax Act 1984
ITA 2007Income Tax Act 2007
ITEPA 2003Income Tax (Earnings and Pensions) Act 2003
ITTOIA 2005Income Tax (Trading and Other Income) Act 2005
OTA 1975Oil Taxation Act 1975
TCGA 1992Taxation of Chargeable Gains Act 1992
TIOPA 2010Taxation (International and Other Provisions) Act 2010
TMA 1970Taxes Management Act 1970
TPDA 1979Tobacco Products Duty Act 1979
VATA 1994Value Added Tax Act 1994
VERA 1994Vehicle Excise and Registration Act 1994

97Short title

This Act may be cited as the Finance Act 2019.

SCHEDULES

Section 13

SCHEDULE 1Chargeable gains accruing to non-residents etc

PART 1Extending cases in which non-residents are charged to tax etc

1TCGA 1992 is amended as follows.

2For the sections contained in Part 1 substitute—

PART 1Capital gains tax and corporation tax on chargeable gains

CHAPTER 1Capital gains tax
Charge to capital gains tax
1Capital gains tax

(1)Capital gains tax is charged for a tax year on chargeable gains accruing in the year to a person on the disposal of assets.

(2)As a result of section 4 of CTA 2009, capital gains tax is not charged on gains accruing to a company, but corporation tax is chargeable instead in accordance with—

(a)section 2 of CTA 2009,

(b)Chapter 2 of this Part, and

(c)other relevant provisions of the Corporation Tax Acts.

(3)Capital gains tax is charged on the total amount of chargeable gains accruing to a person in a tax year after deducting—

(a)any allowable losses accruing to the person in the tax year, and

(b)so far as not previously deducted under this subsection, any allowable losses accruing to the person in any previous tax year.

Territorial scope of charge
1ATerritorial scope

(1)A person who is UK resident for a tax year is chargeable to capital gains tax on chargeable gains accruing to the person in the tax year on the disposal of assets wherever situated.

(2)In the case of individuals who are UK resident for a tax year, see also—

(a)Schedule 1 (foreign gains accruing to individuals to whom the remittance basis applies),

(b)section 1G (cases where the tax year is a split year),

(c)sections 1M and 1N (temporary periods of non-residence),

(d)Chapter 3 (gains of non-UK resident close companies attributed to individuals), and

(e)sections 86, 87, 87K, 87L and 89(2) (gains of non-UK resident trustees attributed to individuals).

(3)A person who is not UK resident for a tax year is chargeable to capital gains tax on chargeable gains accruing to the person in the tax year on the disposal of—

(a)assets situated in the United Kingdom that have a relevant connection to the person’s UK branch or agency and are disposed of at a time when the person has that branch or agency (see section 1B),

(b)assets not within paragraph (a) that are interests in UK land (see section 1C), and

(c)assets (wherever situated) not within paragraph (a) or (b) that derive at least 75% of their value from UK land where the person has a substantial indirect interest in that land (see section 1D and Schedule 1A).

(4)For the purposes of this Chapter a person is “UK resident” for a tax year if the person is resident in the United Kingdom during any part of the tax year.

(5)For the relevant residence rules—

(a)in the case of individuals, see Schedule 45 to the Finance Act 2013 (which provides that individuals meeting the applicable tests for a tax year are taken to be resident for the whole of the year),

(b)in the case of the personal representatives of deceased individuals, see section 62(3), and

(c)in the case of trustees of settlements, see section 69.

1BNon-UK residents: UK branch or agency

(1)For the purposes of section 1A(3)(a) a person has a UK branch or agency at any time if, at that time, the person carries on a trade, profession or vocation in the United Kingdom through a branch or agency there.

(2)For the purposes of section 1A(3)(a) an asset has a relevant connection to a person’s UK branch or agency if—

(a)it is, or was, used in or for the purposes of the trade, profession or vocation at or before the time of the disposal,

(b)it is, or was, used or held for the purposes of the branch or agency at or before that time, or

(c)it is acquired for use by or for the purposes of the branch or agency.

(3)Section 1A(3)(a) does not apply to a person who, as a result of Part 2 of TIOPA 2010 (double taxation arrangements), is exempt from income tax for the tax year in respect of the profits or gains of the branch or agency.

(4)In the case of a profession or vocation carried on by a person, an asset does not have a relevant connection to the person’s UK branch or agency if—

(a)the asset was only used in or for the purposes of the profession or vocation before 14 March 1989, or

(b)the asset was only used or held for the purposes of the branch or agency before that date.

(5)In this Act, unless the context otherwise requires, “branch or agency”—

(a)means any factorship, agency, receivership, branch or management, but

(b)does not include any person within any of the exemptions under sections 835G to 835K of ITA 2007 (persons who are not UK representatives).

1CNon-UK residents: disposing of an “interest in UK land”

(1)For the purposes of section 1A(3)(b) an “interest in UK land” means—

(a)an estate, interest, right or power in or over land in the United Kingdom, or

(b)the benefit of an obligation, restriction or condition affecting the value of an estate, interest, right or power in or over land in the United Kingdom,

other than an excluded interest.

(2)The following interests are “excluded interests”—

(a)any interest or right held for securing the payment of money or the performance of any other obligation,

(b)a licence to use or occupy land,

(c)in England and Wales or Northern Ireland, a tenancy at will or an advowson, franchise or manor, and

(d)such other descriptions of interest or right in relation to land in the United Kingdom as may be specified in regulations made by the Treasury.

(3)An interest or right is not within subsection (2)(a) if it is—

(a)a rentcharge, or

(b)in Scotland, a feu duty or a payment mentioned in section 56(1) of the Abolition of Feudal Tenure etc (Scotland) Act 2000.

(4)The grant of an option by a person binding the person to dispose of an interest in UK land is (so far as it would not otherwise be the case) regarded as a disposal of an interest in UK land by the person for the purposes of section 1A(3)(b).

(5)This does not affect the operation of section 144 in relation to the grant of the option (or otherwise).

(6)In this section—

  • “franchise” means a grant from the Crown such as the right to hold a market or fair, or the right to take tolls, and

  • “land” includes—

    (a)

    buildings and structures, and

    (b)

    land under the sea or otherwise covered by water.

1DNon-UK residents: assets deriving 75% of value from UK land etc

(1)For the purposes of section 1A(3)(c) the following questions are determined in accordance with the provision made by Schedule 1A—

(a)whether the asset being disposed of derives at least 75% of its value from UK land, and

(b)whether the person making the disposal has a substantial indirect interest in the UK land at the time of the disposal.

(2)The provision made by Schedule 1A is not to be taken as affecting the meaning of “substantial” in other contexts.

Deduction of allowable losses
1ELosses deductible only when within scope of tax etc

(1)A loss is not an allowable loss if it accrues in a tax year at a time when, had a gain accrued instead, the gain would not have been chargeable to capital gains tax under this Act for the tax year (and see also sections 16(2) and 16A).

(2)In addition, the only allowable losses that qualify for deduction from chargeable gains under section 1A(3) (non-UK residents) are those accruing to the person on disposals of assets within that subsection.

(3)An allowable loss counts for the purposes of subsection (2) even if it accrues in a tax year in which the person was UK resident.

(4)No allowable losses may be deducted from chargeable gains treated as accruing to an individual as a result of section 87, 87K, 87L or 89(2) (read, where appropriate, with section 1M).

(5)If—

(a)amounts (or elements of amounts) treated as accruing to an individual as a result of section 86 relate to different settlements, and

(b)the deduction of allowable losses does not reduce the amounts or elements to nil,

the deduction applicable to each amount is the proportion that the amount concerned bears to the total of the amounts.

(6)The deduction of allowable losses also has effect subject to Schedule 1 (UK resident individuals not domiciled in UK).

(7)For the only case in which an allowable loss accruing in a tax year may be carried back to an earlier tax year, see section 62 (death).

1FAllowable losses to be used in most beneficial way etc

(1)Allowable losses may (subject to express provision to the contrary) be deducted from gains in whichever way is most beneficial to a person chargeable to capital gains tax.

(2)Accordingly, an allowable loss may be deducted from a chargeable gain irrespective of the rate of tax at which the gain would otherwise have been charged.

(3)Allowable losses that are deducted from gains may not be deducted any further than is necessary to eliminate the gains.

(4)No part of an allowable loss may be relieved under this Act more than once.

(5)So far as an amount has been relieved under the Income Tax Acts, it may not be further relieved under this Act.

UK resident individuals with split tax years
1GGains accruing to UK resident individuals in split years

(1)If, as respects any individual, a tax year is a split year, sections 1A(1) and 1E have effect subject to the modifications made by this section.

(2)Gains accruing to the individual in the overseas part of the tax year are chargeable to capital gains tax only if they accrue on the disposal of assets within section 1A(3).

(3)Losses are deductible from gains accruing to the individual in the overseas part of the tax year on the disposal of assets within section 1A(3)(b) or (c) only if the losses accrue to the individual on the disposal of—

(a)assets that are within section 1A(3)(b) or (c), or

(b)assets that would be within section 1A(3)(b) or (c) if they did not have a relevant connection to the individual’s UK branch or agency.

(4)But losses accruing in the overseas part of the tax year on disposals of assets within section 1A(3)(b) or (c) are (so far as not deducted as mentioned in subsection (3)) deductible from gains accruing in the UK part of the tax year.

Rates of CGT
1HThe main rates of CGT

(1)This section makes provision about the rates at which capital gains tax is charged but has effect subject to—

(a)section 169N (entrepreneurs’ relief: rate of 10%), and

(b)section 169VC (investors’ relief: rate of 10%).

(2)Chargeable gains accruing in a tax year to an individual that are—

(a)residential property gains (see Schedule 1B), or

(b)carried interest gains (see subsections (9) to (11)),

are charged to capital gains tax at a rate of 18% or 28%.

(3)Other chargeable gains accruing in a tax year to an individual are charged to capital gains tax at a rate of 10% or 20%.

(4)The question as to which of the rates applies to the gains concerned is determined by section 1I (income taxed at higher rates or gains exceeding unused basic rate band).

(5)Chargeable gains accruing in a tax year to the personal representatives of a deceased individual that are—

(a)residential property gains, or

(b)carried interest gains,

are charged to capital gains tax at a rate of 28%.

(6)Other chargeable gains accruing in a tax year to the personal representatives of a deceased individual are charged to capital gains tax at a rate of 20%.

(7)Residential property gains accruing in a tax year to the trustees of a settlement are charged to capital gains tax at a rate of 28%.

(8)Other chargeable gains accruing in a tax year to the trustees of a settlement are charged to capital gains tax at a rate of 20%.

(9)For the purposes of this section chargeable gains are “carried interest gains” if they accrue to an individual (“X”)—

(a)under section 103KA(2) or (3) (investment management services), or

(b)as a result of carried interest arising to X under arrangements not involving a partnership under which X performs investment management services directly or indirectly in respect of an investment scheme.

(10)A gain is not a carried interest gain under subsection (9)(b) if the carried interest constitutes a co-investment repayment or return.

(11)Expressions used in subsection (9) or (10) have the same meaning as they have in Chapter 5 of Part 3.

1IIncome taxed at higher rates or gains exceeding unused basic rate band

(1)If any of an individual’s income for a tax year is chargeable to income tax at a higher income tax rate, gains accruing to the individual in the tax year are charged—

(a)at the rate of 28%(if they are residential property gains or carried interest gains), or

(b)at the rate of 20% (if they are other kinds of gains).

(2)If—

(a)none of an individual’s income for a tax year is chargeable to income tax at a higher income tax rate, but

(b)the individual is chargeable to capital gains tax for the tax year on an amount that exceeds the unused part of the individual’s basic rate band,

the excess (“the higher rate excess”) is charged at the rate of 28%(so far as comprising residential property gains or carried interest gains) or at the rate of 20% (so far as comprising other kinds of gains).

(3)The remainder of this section sets out special rules which apply depending on the nature of the gains within subsection (2)(b).

(4)If—

(a)the gains consist of or include gains (“entrepreneur or investor gains”) chargeable at the rate of 10% under section 169N(3) or 169VC(2), and

(b)the total amount of the entrepreneur or investor gains exceeds the unused part of the individual’s basic rate band,

that unused part is used fully against those gains.

(5)The effect of so doing is that other gains comprised in the higher rate excess are then charged—

(a)at the rate of 28%(if they are residential property gains or carried interest gains), or

(b)at the rate of 20% (if they are other kinds of gains).

(6)If the total amount of the entrepreneur or investor gains does not exceed the unused part of the individual’s basic rate band—

(a)so much of that unused part as is equal to that total amount is used against those gains, and

(b)accordingly, the higher rate excess consists only of gains other than entrepreneur or investor gains.

(7)The individual may allocate so much of the unused part of the individual’s basic rate band as then remains to—

(a)any residential property gains or carried interest gains, or

(b)any other gains.

(8)The effect of the allocation is that the gains to which the allocation is made are charged—

(a)at the rate of 18%(if they are residential property gains or carried interest gains), or

(b)at the rate of 10% (if they are other kinds of gains).

(9)Any gains to which no allocation is made are charged—

(a)at the rate of 28%(if they are residential property gains or carried interest gains), or

(b)at the rate of 20% (if they are other kinds of gains).

1JSection 1I: definitions and other supplementary provision

(1)For the purposes of section 1I

  • a “higher income tax rate” means—

    (a)

    the higher rate or the default higher rate,

    (b)

    the savings higher rate, or

    (c)

    the dividend upper rate, and

  • “the unused part of the individual’s basic rate band” means the amount by which the basic rate limit exceeds the individual’s Step 3 income.

(2)If an individual is entitled to relief for a tax year under section 539 of ITTOIA 2005 (contracts for life insurance) by reference to the amount of a deficiency, the individual’s Step 3 income for the tax year is treated for the purposes of this section as reduced by the amount of the deficiency.

(3)If, as a result of section 669(1) and (2) of ITTOIA 2005 (inheritance tax on accrued income), there is a reduction in the residuary income of an estate for a tax year that reduces an individual’s income by any amount, the individual’s Step 3 income for the tax year is treated for the purposes of this section as reduced by the amount of that reduction in the individual’s income.

(4)If an individual has life insurance gains for a tax year, the individual’s Step 3 income for the tax year is treated for the purposes of this section as if the amount of those gains were limited to—

(a)the annual equivalent within the meaning of section 536(1) of ITTOIA 2005, or

(b)the total annual equivalent within the meaning of section 537 of that Act,

as the case may be.

(5)If—

(a)an individual has life insurance gains for a tax year,

(b)relief is given under section 535 of ITTOIA 2005 for the tax year, and

(c)the calculation under section 536(1) or 537 of that Act for the tax year does not involve the higher rate,

the individual is treated for the purposes of section 1I as if none of the individual’s income were chargeable to income tax at the higher rate, the default higher rate or the dividend upper rate.

(6)In the application of section 1I in the case of any individual it is to be assumed that the individual is not a Scottish or Welsh taxpayer.

(7)In this section—

  • “the individual’s Step 3 income” means so much of the individual’s total income for the tax year as is left after taking Step 3 under section 23 of ITA 2007 (income tax liability calculation), and

  • “life insurance gains”, in relation to an individual, means the amount or amounts treated as the individual’s income as a result of section 465 of ITTOIA 2005 (gains from contracts for life insurance).

(8)Expressions used in this section which have a meaning when used in the Income Tax Acts have the same meaning in this section.

Annual exempt amount
1KAnnual exempt amount

(1)If an individual is (or, apart from this section, would be) chargeable to capital gains tax for a tax year on chargeable gains, the annual exempt amount for the year is to be deducted from those gains (but no further than necessary to eliminate them).

(2)The annual exempt amount for a tax year is £12,000.

(3)The annual exempt amount may not be deducted from chargeable gains to which paragraph 2 of Schedule 1 applies (foreign gains of non-UK domiciled individuals accruing in one year and remitted in later year).

(4)The deduction of the annual exempt amount—

(a)is made after the deduction of allowable losses accruing in the tax year, but

(b)is made before the deduction of allowable losses accruing in a previous tax year or, if section 62 applies, in a subsequent tax year.

(5)The annual exempt amount may be deducted from gains in whatever way is most beneficial to a person chargeable to capital gains tax (irrespective of the rate of tax at which the gains would otherwise have been charged).

(6)An individual is not entitled to an annual exempt amount for a tax year if section 809B of ITA 2007 (claim for remittance basis) applies to the individual for the year.

(7)For the tax year in which an individual dies and for the next two tax years, this section applies to the individual’s personal representatives as if references to the individual were to those personal representatives.

(8)This section applies in relation to trustees in accordance with the provision made by Schedule 1C.

1LIncreasing annual exempt amount to reflect increases in CPI

(1)If the consumer prices index for the September before the start of a tax year is higher than it was for the previous September—

(a)the annual exempt amount is increased by the same percentage as the rise in that index (rounded up to the nearest £100), and

(b)section 1K(2) has effect for the tax year (and subsequent tax years) as if it referred to the increased amount.

(2)If, as a result of this section, the annual exempt amount for a tax year increases, the Treasury must before the start of the tax year make an order showing the increased amount.

Temporary periods of non-residence
1MTemporary non-residents

(1)If, in the case of the disposal of an asset by an individual who is temporarily non-resident—

(a)a gain or loss accrues to the individual in the temporary period of non-residence, and

(b)the asset is not excluded from this subsection by section 1N (certain assets acquired in that period),

the gain or loss is treated instead as accruing to the individual in the period of return.

(2)If—

(a)a gain is, as a result of subsection (1), treated as accruing to an individual in a tax year for which the remittance basis applies to the individual,

(b)the tax year consists of or includes the period of return, and

(c)the gain was remitted to the United Kingdom in the temporary period of non-residence,

the gain is treated instead as remitted to the United Kingdom in the period of return.

(3)If—

(a)an individual is temporarily non-resident, and

(b)a gain would, as a result of section 86, have accrued to the individual in a tax year falling wholly or partly in the temporary period of non-residence if the individual had been resident in the United Kingdom for that year,

the gain is treated instead as accruing to the individual in the period of return (but see also section 86A).

(4)Nothing in any double taxation arrangements prevents a charge to capital gains tax arising as a result of this section.

(5)Nothing in this section is to affect a gain or loss which, apart from this section, would be chargeable to capital gains tax or would be an allowable loss.

(6)For the purposes of this section each of the following expressions has the meaning given by Part 4 of Schedule 45 to the Finance Act 2013 (statutory residence test: anti-avoidance)—

  • “the period of return”

  • “temporarily non-resident”

  • “the temporary period of non-residence”.

(7)In this section the reference to “the remittance basis” applying to an individual for a tax year is to section 809B, 809D or 809E of ITA 2007 applying to the individual for the year.

1NSection 1M(1): assets acquired in temporary period of non-residence

(1)An asset is excluded from section 1M(1) if—

(a)it was acquired by the individual in the temporary period of non-residence,

(b)the acquisition was otherwise than by means of a disqualifying no gain/no loss disposal,

(c)there is no reduction in the consideration for the acquisition under section 23(4)(b) or (5)(b), 152(1)(b), 153(1)(b), 162(3)(b) or 247(2)(b) or (3)(b) by reference to a UK resident disposal, and

(d)the asset is not an interest created by or arising under a settlement.

(2)This exclusion does not apply in the case of an asset (“the new asset”) if—

(a)on a disposal of the new asset a gain or loss is treated as a result of 116(10) or (11), 134 or 154(2) or (4) as accruing (ignoring section 1M),

(b)the gain or loss is calculated by reference to another asset (“the old asset”), and

(c)the new asset is one that meets the conditions for exclusion but the old asset does not.

(3)For the purposes of this section “a UK resident disposal” means a disposal by a person (“P”) of an asset which was acquired by P at a time when—

(a)P was resident in the United Kingdom, and

(b)P was not Treaty non-resident.

(4)For the purposes of this section “a disqualifying no gain/no loss disposal” means a UK resident disposal to which section 58, 73 or 258(4) applies.

Interpretation
1ODefinitions used in Chapter

In this Chapter any reference to a person who is, or is not, “UK resident” is to be read in accordance with section 1A(4).

CHAPTER 2Corporation tax on chargeable gains
Corporation tax on chargeable gains: the general scheme
2Corporation tax on chargeable gains

(1)As a result of section 2(1) and (2) of CTA 2009, corporation tax is charged on chargeable gains accruing to a company on the disposal of assets.

(2)The charge to corporation tax on chargeable gains has effect in accordance with this Act and all other relevant provisions of the Corporation Tax Acts.

2ACompany’s total profits to include chargeable gains

(1)The amount of chargeable gains to be included in a company’s total profits for an accounting period is the total amount of chargeable gains accruing to the company in the period after deducting—

(a)any allowable losses accruing to the company in the period, and

(b)so far as not previously deducted under this subsection, any allowable losses previously accruing to the company while it was within the charge to corporation tax.

(2)For the purposes of corporation tax on gains “allowable loss” does not include a loss accruing to a company if, had a gain accrued, the company would not have been chargeable to corporation tax on the gain.

Territorial scope
2BTerritorial scope of charge to corporation tax on chargeable gains

(1)A company which is resident in the United Kingdom in an accounting period is chargeable to corporation tax on chargeable gains accruing to the company in the period on the disposal of assets wherever situated.

(2)This is subject to Chapter 3A of Part 2 of CTA 2009 (exemption from charge in respect of profits of foreign permanent establishments).

(3)A company which is not resident in the United Kingdom is chargeable to corporation tax on chargeable gains that—

(a)accrue to the company on the disposal of assets situated in the United Kingdom that have a relevant connection to the company’s UK permanent establishment (see section 2C),

(b)accrue at a time when it has that permanent establishment, and

(c)are, in accordance with sections 20 to 32 of CTA 2009, attributable to that permanent establishment.

(4)In addition, a company which is not resident in the United Kingdom is chargeable to corporation tax on chargeable gains accruing to the company on the disposal of assets not within subsection (3) that are—

(a)interests in UK land, or

(b)assets (wherever situated) not within paragraph (a) that derive at least 75% of their value from UK land where the company has a substantial indirect interest in that land.

(5)Section 1C applies for the purposes of subsection (4)(a) as it applies for the purposes of section 1A(3)(b) (disposing of interests in UK land).

(6)The reference in subsection (4)(b) to assets deriving at least 75% of their value from UK land where the company has a substantial indirect interest in that land is to be read in accordance with Schedule 1A.

2CNon-UK resident company with UK permanent establishment

(1)For the purposes of section 2B(3) a company has a UK permanent establishment at any time if, at that time, the company carries on a trade in the United Kingdom through a permanent establishment there.

(2)For the purposes of section 2B(3) an asset has a relevant connection to a company’s UK permanent establishment if—

(a)it is, or was, used in or for the purposes of the trade at or before the time of the disposal,

(b)it is, or was, used or held for the purposes of the permanent establishment at or before that time, or

(c)it is acquired for use by or for the purposes of the permanent establishment.

(3)Section 2B(3) does not apply to a company which, as a result of Part 2 of TIOPA 2010 (double taxation arrangements), is exempt from corporation tax for the accounting period in respect of the profits of the permanent establishment.

(4)In the case of the long-term business of an overseas life insurance company, subsection (2) has effect as if for paragraph (b) there were substituted—

(b)it is, or was, used or held for the purposes of the permanent establishment at or before that time (irrespective of where it is situated at that time),.

(5)In this section references to a trade include an office and references to carrying on a trade include holding an office.

Application of CGT principles etc
2DApplication of CGT principles in calculating gains and losses

(1)The total amount of chargeable gains to be included in a company’s total profits for an accounting period is calculated for corporation tax purposes in accordance with capital gains tax principles.

(2)All of the following questions are determined in accordance with the enactments relating to capital gains tax as if accounting periods were tax years—

(a)any question as to the amounts to be, or not to be, taken into account as chargeable gains or allowable losses,

(b)any question as to the amounts to be, or not to be, taken into account in calculating gains or losses,

(c)any question as to the amounts charged to tax as a company’s gains, and

(d)any question as to the time when any amount is treated as accruing.

(3)This section is subject to any provision made elsewhere by the Corporation Tax Acts.

2EReferences to income tax or Income Tax Acts in case of companies

(1)If the CGT enactments contain any reference to—

(a)income tax, or

(b)the Income Tax Acts,

the reference is, in relation to a company, to be read as a reference to corporation tax or the Corporation Tax Acts.

(2)But—

(a)this does not affect references to income tax in section 39(2), and

(b)so far as the CGT enactments operate by reference to matters of any specified description, account is to be taken for corporation tax purposes of matters of that description confined to companies but not of any confined to individuals.

(3)In this section “the CGT enactments” means the enactments relating to capital gains tax.

2FInteraction of capital gains tax and corporation tax

(1)This Act as it has effect in accordance with this Chapter is not to be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes.

(2)But this Act is, so far as it is consistent with the Corporation Tax Acts, to apply in relation to capital gains tax and corporation tax on gains as if they were one tax.

(3)Accordingly, a matter which in a case involving two individuals is relevant to both of them in relation to capital gains tax is in a similar case involving an individual and a company—

(a)relevant to the individual in relation to capital gains tax, and

(b)relevant to the company in relation to corporation tax.

Supplementary
2GAssets of a company vested in a liquidator

(1)If assets of a company are vested in a liquidator—

(a)this Chapter, and

(b)the enactments applied by this Chapter,

apply as if the assets were vested in the company and as if the acts of the liquidator in relation to the assets were the company’s acts.

(2)Accordingly, acquisitions from or disposals to the liquidator by the company are ignored.

(3)The assets may be vested in the liquidator under section 145 of the Insolvency Act 1986 or Article 123 of the Insolvency (Northern Ireland) Order 1989 or otherwise.

CHAPTER 3Attribution of gains of non-UK resident close companies
Gains of non-UK resident companies not otherwise chargeable
3Gains attributed to UK resident individuals etc

(1)This section applies if—

(a)a chargeable gain accrues at any time to a non-UK resident close company,

(b)the gain is connected to avoidance (see section 3A),

(c)the gain is not connected to a foreign trade or other economically significant foreign activities (see section 3A), and

(d)apart from this section, some or all of the gain would not be chargeable to corporation tax on the company.

(2)So much of the gain as would not otherwise be so chargeable is apportioned among participators, or indirect participators, in the company—

(a)who are resident in the United Kingdom at that time, or

(b)who are trustees of a settlement and are not resident in the United Kingdom at that time.

(3)The proportion of the amount of the gain to be apportioned to each person corresponds to the extent of the person’s interest in the company as a participator or indirect participator.

(4)The amount apportioned to each person is treated as a chargeable gain accruing to the person.

(5)No apportionment of any part of a gain is made to an individual if—

(a)the gain accrues in a tax year which, as respects the individual, is a split year, and

(b)the gain accrues in the overseas part of the year.

(6)No apportionment of any part of a gain is made to a person if the total amount that would, apart from this subsection, be apportioned to—

(a)the person, and

(b)persons connected to the person,

is 25% or less of the amount of the gain falling to be apportioned.

(7)A person (“P”) is an “indirect participator” in a company (“A”) if—

(a)another company (“B”) which is a non-UK resident close company is a participator in A, and

(b)P is a participator in B or P is a participator in a third non-UK resident close company which is participator in B,

and so on through any number of non-UK resident close companies that are participators in other non-UK resident close companies.

(8)P’s interest as an indirect participator in A in the case of any gain is determined by—

(a)apportioning the gain among the participators in A according to the extent of their respective interests as participators, and

(b)then further apportioning the gain apportioned to B among the participators in B according to the extent of their respective interests as participators, and so on through other companies.

(9)So far as it would go to reduce or extinguish chargeable gains accruing, as a result of this section, to a person in a chargeable period, this section applies to a loss accruing to the company on the disposal of an asset in that period as it would apply if there had been a gain.

(10)But—

(a)this only applies in relation to that person, and

(b)this section does not otherwise apply in relation to losses accruing to the company.

(11)In this section “a non-UK resident close company” means a company—

(a)which is not resident in the United Kingdom, and

(b)which would be a close company if it were resident in the United Kingdom.

3AGains connected to avoidance or foreign activities etc

(1)A gain accruing to a company on the disposal of an asset is taken to be “connected to avoidance” unless it is shown that neither—

(a)the disposal of the asset by the company, nor

(b)the acquisition or holding of the asset by the company,

formed part of a scheme or arrangements of which the main purpose, or one of the main purposes, was avoidance of liability to capital gains tax or corporation tax.

(2)A gain is “connected to a foreign trade” if it accrues on the disposal of an asset used only—

(a)for the purposes of a trade carried on by the company wholly outside the United Kingdom, or

(b)for the purposes of the foreign part of a trade carried on by the company partly within, and partly outside, the United Kingdom,

and the reference here to the foreign part of a trade is to the part of the trade carried on outside the United Kingdom.

(3)For this purpose an asset is to be regarded as used only for the purposes of a trade carried on by the company wholly outside the United Kingdom if—

(a)the asset is accommodation, or an interest or right in accommodation, situated outside the United Kingdom, and

(b)the accommodation has for each relevant period been furnished holiday accommodation of which a person has made a commercial letting.

(4)Each of the following is a “relevant period”—

(a)the period of 12 months ending with the date of the disposal and each of the two preceding periods of 12 months, or

(b)if the company has beneficially owned the accommodation (or interest or right) for more than 36 months, the period of 12 months ending with the date of the disposal and each of the preceding periods of 12 months throughout which the company had that beneficial ownership.

(5)The reference in this section to the commercial letting of furnished holiday accommodation is to be read in accordance with Chapter 6 of Part 4 of CTA 2009, but as if—

(a)sections 266, 268 and 268A were omitted, and

(b)the reference to an accounting period in section 267(1) were to a relevant period.

(6)A gain accruing on the disposal of an asset is “connected to other economically significant foreign activities” if—

(a)the asset is used only for the purposes of activities carried on by the company wholly or mainly outside the United Kingdom,

(b)the activities consist of the provision of goods or services on a commercial basis, and

(c)the activities also satisfy the staff, premises and economic value test.

(7)Activities satisfy the staff, premises and economic value test if they involve—

(a)the use of employees, agents or contractors of the company in numbers, and with competence and authority, commensurate with the size and nature of the activities,

(b)the use of premises and equipment commensurate with the size and nature of the activities, and

(c)the addition of economic value by the company to the persons to whom the goods or services are provided commensurate with the size and nature of the activities.

(8)This section applies for the purposes of section 3(1)(b) and (c).

3BParticipators and their interests

(1)“Participator” has the meaning given by section 454 of CTA 2010.

(2)Any reference to a person’s interest as a participator in a company is to the interest in it represented by all the factors by reference to which the person is a participator.

(3)Any reference to the extent of a person’s interest as a participator in a company is to such proportion of the interests as participators of all of the company’s participators as, on a just and reasonable basis, is represented by that interest.

(4)If—

(a)the interest of a person in a company is wholly or partly represented by an interest under a settlement (“the beneficial interest”), and

(b)the beneficial interest is the factor (or one of them) by reference to which the person would, apart from this subsection, have an interest as a participator in the company,

that interest as a participator is, so far as represented by the beneficial interest, to be treated instead as the interest of the trustees of the settlement.

(5)If—

(a)exempt assets of a pension scheme are taken into account in ascertaining a person’s interest as a participator in a company, and

(b)if those assets were ignored, an amount in respect of a gain accruing to the company would not be apportioned to the person as a result of section 3,

no amount in the respect of the gain is to be apportioned to the person as a result of that section.

(6)For this purpose—

(a)“assets of a pension scheme” means assets held for the purposes of a fund or scheme to which section 271(1)(c) or (1A) applies, and

(b)those assets are “exempt” if, at the time when the gain accrues, a disposal of those assets would be exempt from tax as a result of either of those provisions.

(7)This section applies for the purposes of section 3.

Prevention of multiple charges
3CPrevention of double UK taxation

(1)If—

(a)an amount of tax is paid by a person as a result of section 3 in respect of a gain, and

(b)there is a distribution of an amount in respect of the gain before the end of the relevant period,

the amount of tax is applied so as to reduce or extinguish any liability of the person to tax in respect of the distribution.

(2)For the purposes of subsection (1)

(a)the distribution is one made by way of dividend or distribution of capital or on the dissolution of the company,

(b)the tax in respect of the distribution is income tax, corporation tax or capital gains tax, and

(c)in determining the liability to tax of any individual in respect of any distribution for a tax year it is to be assumed that the distribution is the highest part of the individual’s income for the year.

(3)For the purposes of subsection (1) “the relevant period” means the period of 3 years from the end of whichever of the following periods is earlier—

(a)the period of account of the company in which the gain accrued, and

(b)the period of 12 months beginning with the date on which the gain accrued.

(4)The amount of tax paid by a person as a result of section 3 is allowable as a deduction in calculating a chargeable gain accruing on the disposal by the person of any asset representing the person’s interest as a participator in the company.

(5)An amount of tax—

(a)is not to be used more than once under this section (whether to reduce or extinguish a liability or as a deduction or a combination of those things), and

(b)is not to be applied if it is reimbursed by the company.

Non-UK domiciled individuals and temporary non-residents
3DNon-UK domiciled individuals

(1)This section applies if, as a result of section 3, an amount in respect of a gain accruing to a company in a tax year is apportioned to an individual who is not domiciled in the United Kingdom in that year.

(2)The apportioned amount is regarded for the purposes of paragraph 1 of Schedule 1 as accruing on a disposal of a foreign asset if the asset disposed of by the company is a foreign asset (but not otherwise).

(3)For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis)—

(a)treat any consideration obtained by the company on the disposal of the asset as deriving from the apportioned amount, and

(b)if that consideration is less than the market value of the asset, treat the asset as deriving from the apportioned amount.

(4)The apportioned amount may not be reduced or extinguished by a loss under section 3 if—

(a)the apportioned amount is regarded for the purposes of paragraph 1 of Schedule 1 as accruing on a disposal of a foreign asset,

(b)the remittance basis applies to the individual for the tax year in question, and

(c)any of the apportioned amount is remitted to the United Kingdom in a subsequent tax year.

(5)Paragraph 5 of Schedule 1 applies for the purposes of this section as it applies for the purposes of that Schedule.

3ETemporary non-residents

(1)This section applies if—

(a)an individual is temporarily non-resident, and

(b)a gain or loss accrues to a company in a tax year falling wholly or partly in the temporary period of non-residence.

(2)So much of the gain as would, as a result of section 3, have been treated as accruing to the individual in the tax year if the residence assumption were made is to be treated as accruing to the individual in the period of return.

(3)But if—

(a)the remittance basis applies to the individual for the tax year that comprises or includes the period of return, and

(b)any part of the gain has not been remitted to the United Kingdom before the period of the return,

subsection (2) has effect subject to the further application of Schedule 1 (as read with section 3D) in relation to that part of the gain.

(4)Paragraph 5 of Schedule 1 applies for the purposes of subsection (3) as it applies for the purposes of that Schedule.

(5)So much of the loss accruing in the tax year as would, in accordance with section 3(9), have reduced or extinguished a gain treated as accruing to the individual in that year as a result of section 3 if the residence assumption were made is to be treated as accruing to the individual in the period of return.

(6)For the purposes of this section the “residence assumption” is—

(a)that the individual was resident in the United Kingdom for the tax year in which the gain or loss accrued to the company, and

(b)that the tax year was not a split year as respects the individual.

(7)Nothing in any double taxation arrangements prevents a charge to capital gains tax arising as a result of this section.

(8)For the purposes of this section each of the following expressions has the meaning given by Part 4 of Schedule 45 to the Finance Act 2013 (statutory residence test: anti-avoidance)—

  • “the period of return”

  • “temporarily non-resident”

  • “the temporary period of non-residence”.

Application to groups
3FNon-resident groups of companies

(1)This section applies, for the purposes of section 3, certain provisions of this Act (modified as mentioned below) in relation to non-resident companies which are members of a non-resident group of companies.

(2)The applied provisions are—

(a)section 41(8),

(b)section 171 but as if subsections (1)(b) and (1A) were omitted,

(c)section 173 but as if “to which this section applies” in subsections (1)(a) and (2)(a) were omitted, as if “such” in subsections (1)(c) and (2)(c) were omitted and as if subsection (3) were omitted,

(d)section 174(4) but as if “at a time when both were members of the group” were substituted for “in a transfer to which section 171(1) applied”,

(e)section 175(1) but as if “to which this section applies” were omitted, and

(f)section 179 but as if subsections (1)(b) and (1A) were omitted, as if for any reference to a group of companies there were substituted a reference to a non-resident group of companies and as if for any reference to a company there were substituted a reference to a non-resident company.

(3)In this section—

  • “non-resident company” means a company which is not resident in the United Kingdom,

  • “non-resident group of companies”—

    (a)

    in the case of a group none of whose members are resident in the United Kingdom, means that group, and

    (b)

    in the case of a group some of whose members are not resident in the United Kingdom, means the members which are not resident in the United Kingdom, and

  • “group” is to be read in accordance with section 170.

Supplementary
3GSupplementary provisions

(1)If tax payable by a person (“P”) as a result of section 3 is paid by—

(a)the company (“C”) to which the gain accrues, or

(b)a company by reference to which P is regarded as an indirect participator in C,

the amount paid is not a payment to P for tax purposes.

(2)The reference here to tax purposes is to the purposes of income tax, capital gains tax or corporation tax.

(3)For the purposes of section 3 the amount of a gain or loss accruing to a company is calculated as if the company were a company resident in the United Kingdom chargeable to corporation tax on the gain.

3Omit sections 16ZB to 16ZD (losses of non-UK domiciled individuals).

4After section 36 insert—

Re-basing for non-residents for UK land etc held on 5 April 2019

36ARe-basing in relation to direct or indirect disposals of UK land

Schedule 4AA makes provision for the re-basing of assets where—

(a)the assets are held on 5 April 2019,

(b)there is a disposal after that date, and

(c)the disposal is a direct or indirect disposal of UK land (within the meaning of that Schedule).

5Omit Chapter 5 of Part 2 (computation of gains and losses: relevant high value disposals).

6Omit Chapter 6 of Part 2 (computation of gains and losses: non-resident CGT disposals).

7Omit Chapter 7 of Part 2 (computation of gains and losses: disposals of residential property interests).

8After section 103DA insert—

103DBUK property rich collective investment vehicles etc

Schedule 5AAA makes provision in relation to collective investment vehicles where the property which is the subject of or held by the vehicles consists of or includes direct or indirect interests in land in the United Kingdom.

9After section 271 insert—

Visiting forces and official agents etc

271ZAVisiting forces and staff of designated allied headquarters

(1)This section applies for the purposes of capital gains tax if section 833 of ITA 2007 (visiting forces and staff of designated allied headquarters) applies to an individual throughout a period.

(2)The period is not a period of residence in the United Kingdom.

(3)The period does not create a change of the individual’s residence or domicile.

271ZBOfficial agents of Commonwealth countries or Republic of Ireland etc

(1)An individual who is entitled to immunity from income tax as a result of section 841 of ITA 2007 (official agents of Commonwealth countries or Republic of Ireland etc) is entitled to the same immunity from capital gains tax as that to which a member of the staff of a mission is entitled under the Diplomatic Privileges Act 1964.

(2)The reference here to a member of the staff of a mission is to be read in accordance with the Diplomatic Privileges Act 1964.

10Omit Schedule B1 (disposals of UK residential property interests).

11Omit Schedule BA1 (disposals of non-UK residential property interests).

12Omit Schedule C1 (section 14F: meaning of “closely-held company” and “widely-marketed scheme”).

13For Schedule 1 substitute—

SCHEDULE 1UK resident individuals not domiciled in UK

Foreign gains treated as accruing when remitted to UK

1(1)This paragraph applies in the case of an individual to whom the remittance basis applies for a tax year if—

(a)in that year the individual disposes of foreign assets,

(b)chargeable gains accrue to the individual on the disposal of those assets, and

(c)the gains are not taken outside the charge to capital gains tax as a result of section 1G (cases where tax year is a split year).

(2)The gains are treated as accruing to the individual only so far as, and at the time when, they are remitted to the United Kingdom.

(3)The amount treated as accruing is equal to the full amount remitted to the United Kingdom at that time.

Use of allowable losses against foreign gains remitted in later year

2(1)This paragraph applies if—

(a)gains are treated as accruing to an individual in a tax year as a result of paragraph 1,

(b)the tax year is later than the one (“the actual year of accrual”) in which those gains actually accrued to the individual, and

(c)an election under section 16ZA (election for foreign losses to be allowable losses) has effect for both the tax year and the actual year of accrual.

(2)No allowable losses may be deducted under section 1 from the gains.

(3)This prohibition—

(a)applies regardless of whether or not the allowable losses accrue on disposals of foreign assets, but

(b)does not prevent the prior application of paragraph 3(3) in relation to the gains (which contains a rule for reducing the amount of the gains by reference to losses).

Matching rules for relieving allowable losses

3(1)This paragraph applies in the case of an individual for a tax year if—

(a)the remittance basis applies to the individual for the tax year, and

(b)an election under section 16ZA has effect for the tax year.

(2)Allowable losses accruing to the individual must be matched to chargeable gains accruing to the individual in accordance with paragraph 4.

(3)If allowable losses are matched to chargeable gains accruing on disposals of foreign assets—

(a)which actually accrue in the tax year, but

(b)which are, as a result of paragraph 1, treated as not accruing in the tax year,

the amount of those gains is reduced by the matched amount (and the allowable losses are reduced accordingly).

(4)So far as allowable losses are matched to other chargeable gains, they are deducted from chargeable gains accruing to the individual in the tax year.

(5)This is subject to—

(a)paragraph 2 (no use of allowable losses against foreign gains remitted in later year), and

(b)section 1E(4) (prohibition of deduction of losses from gains treated as accruing under section 87, 87K, 87L or 89(2)).

Rules for matching losses to chargeable gains

4(1)This paragraph explains how, for the purposes of paragraph 3, allowable losses are matched to chargeable gains in the case of an individual to whom that paragraph applies for a tax year.

(2)The losses are matched to the gains in the following order—

  • first, gains actually accruing to the individual in the tax year on the disposal of foreign assets so far as they are remitted to the United Kingdom in the tax year;

  • second, gains actually accruing to the individual in the tax year on the disposal of foreign assets so far as they are not remitted to the United Kingdom in the tax year;

  • third, any other gains accruing to the individual in the tax year.

(3)If the tax year is a split year, the matching under the first and second steps is to be done by reference to the extent to which the gains are, or are not, remitted in the UK part of the year.

(4)If there are losses to be matched to gains under the second step but the losses are insufficient to eliminate the gains—

(a)the losses are to be matched against gains accruing on the most recent day first (and then the next most recent day and so on until none of the losses remain), and

(b)if losses cannot be matched fully against gains accruing on a particular day, the appropriate portion of the losses is matched against each of the gains.

(5)“The appropriate portion” means the amount of each gain accruing on the day divided by the total amount of all of the gains accruing on the day.

Definitions

5(1)For the purposes of this Schedule “foreign asset” means an asset situated outside the United Kingdom.

(2)For the purposes of this Schedule any reference to “the remittance basis” applying to an individual for a tax year is to section 809B, 809D or 809E of ITA 2007 applying to the individual for the year.

(3)For the purposes of this Schedule any question as to whether, and when, amounts are “remitted to the United Kingdom” is determined in accordance with the rules in Chapter A1 of Part 14 of ITA 2007.

14After Schedule 1 insert—

SCHEDULE 1AAssets deriving 75% of value from UK land etc

PART 1Introduction

1This Schedule makes provision, for the purposes of section 1A(3)(c) or 2B(4)(b), for determining in the case of any disposal of any asset—

(a)whether the asset derives at least 75% of its value from UK land (see Part 2 of this Schedule), and

(b)whether the person making the disposal has a substantial indirect interest in the UK land (see Part 3 of this Schedule).

2The provision made by this Schedule needs to be read together with—

(a)paragraph 5 of Schedule 5AAA (which treats units in a CoACS as shares for the purposes of this Schedule), and

(b)paragraph 6 of that Schedule (which treats certain disposals of interests in collective investment vehicles as meeting the conditions in Part 3 of this Schedule).

PART 2Whether asset derives at least 75% of its value from UK land
The basic rule

3(1)An asset derives at least 75% of its value from UK land if—

(a)the asset consists of a right or an interest in a company, and

(b)at the time of the disposal, at least 75% of the total market value of the company’s qualifying assets derives (directly or indirectly) from interests in UK land.

(2)Market value may be traced through any number of companies, partnerships, trusts and other entities or arrangements but may not be traced through a normal commercial loan.

(3)It is irrelevant whether the law under which a company, partnership, trust or other entity or an arrangement is established or has effect is—

(a)the law of any part of the United Kingdom, or

(b)the law of any territory outside the United Kingdom.

(4)The assets held by a company, partnership or trust or other entity or arrangement must be attributed to the shareholders, partners, beneficiaries or other participants at each stage in whatever way is appropriate in the circumstances.

(5)For the purposes of this paragraph—

  • “normal commercial loan” means a loan which is a normal commercial loan for the purposes of section 158(1)(b) or 159(4)(b) of CTA 2010, and

  • “qualifying assets” has the meaning given by paragraph 4.

(6)The provision made by this paragraph is subject to exceptions provided by—

(a)paragraph 5 (interests in UK land used for trading purposes), and

(b)paragraph 6 (certain disposals of rights or interests in connected companies).

Meaning of “qualifying assets”

4(1)Subject as follows, all of the assets of the company are qualifying assets.

(2)An asset of the company is not a qualifying asset so far as it is matched to a related party liability.

(3)But an interest in UK land is a qualifying asset of the company even if it is matched to any extent to a related party liability.

(4)An asset of the company is matched to a related party liability if—

(a)the asset consists of a right under a transaction (for example, a right under a loan relationship or derivative contract),

(b)the right entitles the company to require another person to meet a liability arising under the transaction, and

(c)the other person is relevant to the paragraph 3 tracing exercise or is a related party of the company on the day of the disposal.

(5)For the purposes of this paragraph a person is relevant to the paragraph 3 tracing exercise if—

(a)the person has assets that fall to be taken into account in the tracing exercise mentioned in paragraph 3, or

(b)the person has obligations (whether as a trustee or otherwise) in relation to the holding of assets comprised in any trust or other arrangement that fall to be taken into account in that exercise.

(6)Whether, for the purposes of this paragraph, a person is a related party of the company on any day is determined in accordance with the rules in Part 8ZB of CTA 2010 but as if, in section 356OT(4) of that Act, the words “, within the period of 6 months beginning with that day” were omitted.

(7)In this paragraph a liability includes a contingent liability (such as one arising as a result of the giving of a guarantee, indemnity or other form of financial assistance).

Exception in relation to interests in UK land used for trading purposes

5(1)A disposal of a right or interest in a company is not to be regarded as a disposal of an asset deriving at least 75% of its value from UK land if it is reasonable to conclude that, so far as the market value of the company’s qualifying assets derives (directly or indirectly) from interests in UK land—

(a)all of the interests in UK land are used for trading purposes, or

(b)all of the interests in UK land would be used for those purposes if low-value non-trade interests in UK land were left out of account.

(2)An interest in UK land is “used for trading purposes” for the purposes of this paragraph if (and only if), at the time of the disposal—

(a)it is being used in, or for the purposes of, a qualifying trade, or

(b)it has been acquired for use in, or for the purposes of, a qualifying trade.

(3)A trade is a “qualifying” trade for the purposes of this paragraph if—

(a)it has been carried on by the company, or by a person connected with the company, throughout the period of one year ending with the time of the disposal on a commercial basis with a view to the realisation of profits, and

(b)it is reasonable to conclude that the trade will continue to be carried on (for more than an insignificant period of time) on a commercial basis with a view to the realisation of profits.

(4)For the purposes of this paragraph, “low-value non-trade interests in UK land” means interests in UK land—

(a)which are not used for trading purposes, and

(b)the total market value of which is, at the time of the disposal, no more than 10% of the total market value at that time of the interests in UK land that are used for trading purposes.

Exception for certain disposals of rights or interests under same arrangements etc

6(1)This paragraph applies if—

(a)there are two or more disposals of rights or interests in companies,

(b)the disposals are linked with each other,

(c)some but not all of the disposals would, apart from this paragraph, be disposals of assets deriving at least 75% of their value from UK land, and

(d)if one of the companies included all of the assets of the others, a disposal of a right or interest in it would not be a disposal of an asset deriving at least 75% of its value from UK land.

(2)None of the disposals are to be regarded as disposals of assets deriving at least 75% of their value from UK land.

(3)In determining whether the condition in sub-paragraph (1)(d) is met in the case of a disposal of a right or interest in a company, it is to be assumed that, for the purposes of paragraph 4, each of the other companies in which rights or interest are disposed of is (so far as this would not otherwise be the case) a related party of the company on the day of the disposal.

(4)For the purposes of this paragraph a disposal of a right or interest in a company is linked with a disposal of a right or interest in another company if—

(a)the disposals are made under the same arrangements,

(b)the disposals are made by the same person or by persons connected with each other,

(c)the disposals are made to the same person or to persons connected with each other, and

(d)in the case of each disposal, the person making the disposal is connected with the company in which the right or interest is disposed of.

(5)For the purposes of this paragraph, the question whether or not a person is connected with another is to be determined immediately before the arrangements are entered into.

(6)Section 286 (connected persons: interpretation) has effect for the purposes of this paragraph as if, in subsection (4), the words “Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements,” were omitted.

Meaning of “interest in UK land”

7For the purposes of this Part of this Schedule “interest in UK land” has the meaning given by section 1C.

PART 3Whether person has substantial indirect interest in UK land
Basic rule

8(1)If—

(a)a person disposes of an asset consisting of a right or an interest in a company, and

(b)the asset derives at least 75% of its value from UK land,

the person has a substantial indirect interest in UK land if, at any time in the period of 2 years ending with the time of the disposal, the person has a 25% investment in the company.

(2)But a person is not to be regarded as having a 25% investment in the company at times falling in the person’s qualifying ownership period if, having regard to the length of that period, the times (taken as whole) constitute an insignificant proportion of that period.

(3)The “person’s qualifying ownership period” means the period throughout which the person has held an asset consisting of a right or an interest in the company, but excluding times that fall before the beginning of the 2 year period mentioned in sub-paragraph (1).

Meaning of “25% investment”

9(1)A person (“P”) has a 25% investment in a company (“C”) if—

(a)P possesses or is entitled to acquire 25% or more of the voting power in C,

(b)in the event of a disposal of the whole of the equity in C, P would receive 25% or more of the proceeds,

(c)in the event that the income in respect of the equity in C were distributed among the equity holders in C, P would receive 25% or more of the amount so distributed, or

(d)in the event of a winding-up of C or in any other circumstances, P would receive 25% or more of C’s assets which would then be available for distribution among the equity holders in C in respect of the equity in C.

(2)In this paragraph references to the equity in C are to—

(a)the shares in C other than restricted preference shares, or

(b)loans to C other than normal commercial loans.

(3)For this purpose “shares in C” includes—

(a)stock, and

(b)any other interests of members in C.

(4)For the purposes of this paragraph a person is an equity holder in C if the person possesses any of the equity in C.

(5)For the purposes of this paragraph—

  • “normal commercial loan” means a loan which is a normal commercial loan for the purposes of section 158(1)(b) or 159(4)(b) of CTA 2010, and

  • “restricted preference shares” means shares which are restricted preference shares for the purposes of section 160 of CTA 2010.

(6)In a case where C is a company which does not have share capital, in applying for the purposes of this paragraph the definitions of “normal commercial loan” and “restricted preference shares”—

(a)sections 160(2) to (7) and 161 to 164 of CTA 2010, and

(b)any other relevant provisions of that Act,

have effect with the necessary modifications.

(7)In this paragraph references to a person receiving any proceeds, amount or assets include—

(a)the direct or indirect receipt of the proceeds, amount or assets, and

(b)the direct or indirect application of the proceeds, amount or assets for the person’s benefit,

and it does not matter whether the receipt or application is at the time of the disposal, distribution, winding-up or other circumstances or at a later time.

(8)If—

(a)there is a direct receipt or direct application of any proceeds, amount or assets by or for the benefit of a person (“A”), and

(b)another person (“B”) directly or indirectly owns a percentage of the equity in A,

there is, for the purposes of sub-paragraph (7), an indirect receipt or indirect application of that percentage of the proceeds, amount or assets by or for the benefit of B.

(9)For this purpose the percentage of the equity in A directly or indirectly owned by B is to be determined by applying the rules in sections 1155 to 1157 of CTA 2010 with such modifications (if any) as may be necessary.

(10)Sub-paragraph (7) is not to result in a person being regarded as having a 25% investment in another person merely as a result of their being parties to a normal commercial loan.

(11)Any reference in this paragraph, in the case of a person who is a member of a partnership, to the proceeds, amount or assets of the person includes the person’s share of the proceeds, amount or assets of the partnership (apportioning those things between the partners on a just and reasonable basis).

Attribution of rights and interests

10(1)In determining for the purposes of paragraph 9 the investment that a person (“P”) has in a company, P is to be taken to have all of the rights and interests of any person connected with P.

(2)A person is not to be regarded as connected with another person for the purposes of this paragraph merely as a result of their being parties to a loan that is a normal commercial loan for the purposes of paragraph 9.

(3)Section 286 (connected persons: interpretation) has effect for the purposes of this paragraph—

(a)as if, in subsection (2), for the words from “, or is a relative” to the end there were substituted “or is a lineal ancestor or lineal descendant of the individual or of the individual’s spouse or civil partner”, and

(b)as if subsections (4) and (8) were omitted.

PART 4Anti-avoidance

11(1)This paragraph applies if a person has entered into any arrangements the main purpose, or one of the main purposes, of which is to obtain a tax advantage for the person as a result (wholly or partly) of—

(a)a provision of this Schedule applying or not applying, or

(b)double taxation arrangements having effect despite a provision of this Schedule in a case where the advantage is contrary to the object and purpose of the double taxation arrangements.

(2)The tax advantage is to be counteracted by the making of such adjustments as are just and reasonable.

(3)The adjustments may be made (whether by an officer of Revenue and Customs or the person) by way of an assessment, the modification of an assessment, amendment or disallowance of a claim, or otherwise.

(4)The counteraction has effect in a treaty shopping case regardless of section 6(1) of TIOPA 2010.

(5)This paragraph applies by reference to—

(a)arrangements entered into on or after 22 November 2017 in a treaty shopping case, and

(b)arrangements entered into on or after 6 July 2018 in any other case.

(6)In this paragraph—

  • “arrangements” (except in the expression “double taxation arrangements”) includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),

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

  • “tax” means capital gains tax or corporation tax,

  • “tax advantage” includes—

    (a)

    relief or increased relief from tax,

    (b)

    repayment or increased repayment of tax,

    (c)

    avoidance or reduction of a charge to tax or an assessment to tax,

    (d)

    avoidance of a possible assessment to tax,

    (e)

    deferral of a payment of tax or advancement of a repayment of tax, and

    (f)

    avoidance of an obligation to deduct or account for tax, and

  • “treaty shopping case” means a case where this paragraph applies as a result of sub-paragraph (1)(b).

15After Schedule 1A insert—

SCHEDULE 1BResidential property gains

Meaning of “residential property gain”

1(1)For the purposes of Chapter 1 of Part 1 “residential property gain” means so much of a chargeable gain accruing to a person on a disposal of residential property as, in accordance with paragraph 2, is attributable to that property.

(2)The question whether or not a person disposes of residential property is determined in accordance with paragraphs 3 to 7.

Attribution of gain to residential property

2(1)The proportion of a chargeable gain attributable to residential property is equal to—

(a)the relevant fraction of the gain, and

(b)if there has been mixed use of the land to which the disposal relates on one or more days in the applicable period, the relevant fraction of the gain as adjusted, on a just and reasonable basis, to take account of the mixed use on the day or days.

(2)The relevant fraction is A/B where—

  • A is the number of days in the applicable period on which the land to which the disposal relates consists of or includes a dwelling, and

  • B is the total number of days in the applicable period.

(3)There is mixed use of land on any day on which the land consists of—

(a)one or more dwellings, and

(b)other land.

(4)If the disposal is of an interest in land subsisting under a contract for the acquisition of land consisting of or including a building that is to be constructed or adapted for use as a dwelling, that land is taken to consist of or include a dwelling throughout the applicable period.

(5)In this paragraph “the applicable period” means the period—

(a)beginning with the day on which the person making the disposal acquired the interest in land being disposed of or, if later, the day from which the interest in land became chargeable, and

(b)ending with the day before the day on which the disposal occurs.

(6)For the purposes of this paragraph an interest in land became “chargeable”—

(a)in any case where the disposal is of an interest in land in the United Kingdom—

(i)by a person in a tax year in which the person is not UK resident, or

(ii)by a person in the overseas part of a tax year which is, as respects the person, a split year,

from 6 April 2015, and

(b)in any other case, from 31 March 1982.

(7)If the interest in land disposed of by the person results from interests in land acquired by the person at different times, the person is regarded for the purposes of this paragraph as having acquired the interest disposed of at the time of the first acquisition.

Disposing of residential property

3(1)For the purposes of this Schedule a person “disposes of residential property” if the person disposes of an interest in land in a case where—

(a)the land consisted of or included a dwelling at any time falling on or after the date on which the applicable period begins,

(b)the interest in land subsisted for the benefit of land that consisted of or included a dwelling at any time falling on or after that date, or

(c)the interest in land subsists under a contract for the acquisition of land consisting of or including a building that is to be constructed or adapted for use as a dwelling.

(2)No account is to be taken for the purposes of this paragraph of any time falling on (or after) the day on which the disposal is made.

Interest in land

4(1)For the purposes of this Schedule an “interest in land” means—

(a)an estate, interest, right or power in or over land, or

(b)the benefit of an obligation, restriction or condition affecting the value of an estate, interest, right or power in or over land,

other than an excluded interest.

(2)The following interests are “excluded interests”—

(a)any interest or right held for securing the payment of money or the performance of any other obligation,

(b)a licence to use or occupy land,

(c)in relation to land in England and Wales or Northern Ireland, a tenancy at will or an advowson, franchise or manor, and

(d)such other descriptions of interest or right in relation to land as may be specified in regulations made by the Treasury.

(3)An interest or right is not within sub-paragraph (2)(a) if it is—

(a)a rentcharge, or

(b)in relation to land in Scotland, a feu duty or a payment mentioned in section 56(1) of the Abolition of Feudal Tenure etc (Scotland) Act 2000.

(4)The grant of an option by a person binding the person to dispose of an interest in land is (so far as it would not otherwise be the case) regarded as a disposal of an interest in land by the person for the purposes of this Schedule.

(5)This does not affect the operation of section 144 in relation to the grant of the option (or otherwise).

(6)In applying the domestic concepts of law mentioned in this paragraph to land outside the United Kingdom, this paragraph is to be read so as to produce the result most closely corresponding with that produced in relation to land in the United Kingdom.

(7)In this paragraph—

  • “franchise” means a grant from the Crown such as the right to hold a market or fair, or the right to take tolls, and

  • “land” includes—

    (a)

    buildings and structures, and

    (b)

    land under the sea or otherwise covered by water.

Dwelling: basic meaning

5(1)For the purposes of this Schedule a building is a dwelling at any time when—

(a)it is used, or suitable for use, as a dwelling, or

(b)it is in the process of being constructed or adapted for use as a dwelling,

and, in each case, it is not an institutional building.

(2)Land that at any time is, or is intended to be, occupied or enjoyed with a dwelling as a garden or grounds (including any building or structure) is taken to be part of the dwelling at that time.

(3)A building is an institutional building if—

(a)it is used as residential accommodation for school pupils,

(b)it is used as residential accommodation for members of the armed forces,

(c)it is used as a home or other institution providing residential accommodation for children,

(d)it is used as a home or other institution providing residential accommodation with personal care for persons in need of personal care because of old age, disability, past or present dependence on alcohol or drugs or past or present mental disorder,

(e)it is used as a hospital or hospice,

(f)it is used as a prison or similar establishment,

(g)it is used as a hotel or inn or similar establishment,

(h)it is otherwise used, or suitable for use, as an institution that is the sole or main residence of its residents,

(i)it falls within—

(i)paragraph 4 of Schedule 14 to the Housing Act 2004 (buildings in England or Wales occupied by students and managed or controlled by educational establishment etc), or

(ii)any provision having effect in Scotland or Northern Ireland that is designated by regulations made by the Treasury as provision corresponding to paragraph 4 of that Schedule, or

(j)it qualifies in accordance with the next sub-paragraph as student accommodation.

(4)A building qualifies as student accommodation in accordance with this sub-paragraph at any time if the time falls in a tax year in which—

(a)the accommodation provided by the building includes at least 15 bedrooms,

(b)the accommodation is purpose-built, or is converted, for occupation by students, and

(c)the accommodation is occupied by students on at least 165 days.

(5)Accommodation is to be regarded as occupied by persons as students if they occupy it wholly or mainly for undertaking a course of education (otherwise than as school pupils).

Building temporarily unsuitable for use as a dwelling

6(1)A building is treated for the purposes of paragraph 5 as continuing to be suitable for use as a dwelling at any time when it has become temporarily unsuitable for use as a dwelling.

(2)There is an exception to this rule if—

(a)the temporary unsuitability resulted from accidental damage to the building, and

(b)the damage resulted in the building becoming unsuitable for use as a dwelling for a period of at least 90 consecutive days (“the 90 day period”).

(3)This exception does not apply if the damage occurred in the course of work that—

(a)was being done for the purpose of altering the building, and

(b)itself involved, or could be expected to involve, making the building unsuitable for use as a dwelling for at least 30 consecutive days.

(4)If the exception applies, work done in the 90 day period to restore the building to suitability for use as a dwelling is not to count for the purposes of paragraph 5 as constructing or adapting the building for use as a dwelling.

(5)For the purposes of this paragraph—

(a)references to accidental damage include damage otherwise caused by events beyond the control of the person disposing of the interest in land,

(b)references to alteration of a building include its partial demolition, and

(c)the 90 day period does not include the day of the disposal (or later days).

(6)For the purposes of this paragraph a building’s unsuitability for use as a dwelling is not regarded as temporary if paragraph 7 applies (disposal of a building that has undergone works).

Disposal of a building that has undergone works

7(1)If—

(a)a person disposes of an interest in land on which a building has been suitable for use as a dwelling, and

(b)as a result of qualifying works, the building has, at or before the time of completion of the disposal, ceased to exist or become unsuitable for use as a dwelling,

the building is to be regarded for the purposes of paragraph 5 as unsuitable for use as a dwelling throughout the works period.

(2)For the purposes of this paragraph works are “qualifying” works if—

(a)any planning permission or development consent required for the works, or for any change of use with which they are associated, has been granted (whether before or after completion), and

(b)the works have been carried out in accordance with the permission or consent.

(3)In this paragraph “the works period” means—

(a)the period when the works were in progress, and

(b)such period (if any) ending immediately before the start of the works throughout which the building was, for reasons connected with the works, not used as dwelling.

(4)If at any time when qualifying works are in progress—

(a)the building was undergoing any other work, or put to any other use, in relation to which planning permission or development consent was required but has not (at any time) been granted, or

(b)anything else was being done in contravention of a condition or requirement attached to a planning permission or development consent relating to the building,

the works period does not include that time.

(5)If sub-paragraph (1) would have applied but for the fact that, at the completion of the disposal, the works are not qualifying works, the works are regarded as not affecting the building’s suitability for use as a dwelling at any time before the disposal.

Other definitions

8(1)For the purposes of this Schedule a building is regarded as ceasing to exist from the time when either—

(a)it has been demolished completely to ground level, or

(b)it has been demolished to ground level except for a single facade (or a double facade if it is on a corner site) the retention of which is a condition or requirement of planning permission or development consent.

(2)For the purposes of this Schedule the completion of the disposal of an interest in land is regarded as occurring—

(a)at the time of the disposal, or

(b)if the disposal is under a contract which is completed by a conveyance, transfer or other instrument, at the time when the instrument takes effect.

(3)In this Schedule—

  • “building” includes a part of a building,

  • “development consent” means—

    (a)

    in the case of land in the United Kingdom, development consent under the Planning Act 2008, and

    (b)

    in the case of land outside the United Kingdom, consent corresponding to development consent under that Act, and

  • “planning permission”—

    (a)

    in the case of land in England or Wales, has the meaning given by section 336(1) of the Town and Country Planning Act 1990,

    (b)

    in the case of land in Scotland, has the meaning given by section 227(1) of the Town and Country Planning (Scotland) Act 1997,

    (c)

    in the case of land in Northern Ireland, has the meaning given by Article 2(2) of the Planning (Northern Ireland) Order 1991, and

    (d)

    in the case of land outside the United Kingdom, means permission corresponding to any planning permission in relation to land anywhere in the United Kingdom.

Power to modify meaning of “use as a dwelling”

9(1)The Treasury may by regulations amend this Schedule for the purpose of clarifying or changing the cases where a building is, or is not, to be regarded as being used, or suitable for use, as a dwelling.

(2)The provision that may be made by the regulations includes (for example) provision omitting or adding cases where a building is, or is not, to be regarded as being used, or suitable for use, as a dwelling.

Regulations

10Regulations under any provision of this Schedule may make incidental, consequential, supplementary or transitional provision or savings.

16After Schedule 1B insert—

SCHEDULE 1CAnnual exempt amount in cases involving settled property

Introductory

1(1)This Schedule provides for the application of section 1K (in some cases with modifications) in relation to the trustees of a settlement for a tax year.

(2)The application of this Schedule depends on (among other things) whether or not—

(a)a settlement is for the benefit of a disabled person, and

(b)a settlement is a qualifying UK settlement.

(3)For the definitions of those expressions, see paragraphs 3 and 7 respectively.

(4)In this Schedule any reference to the application of section 1K in relation to an individual for a tax year is to its application in relation to an individual who is resident and domiciled in the United Kingdom for the year.

Settlements for the benefit of disabled persons

2(1)In the case of a settlement for the benefit of a disabled person for a tax year, section 1K applies in relation to the trustees of the settlement for the year as it applies in relation to an individual for the year.

(2)This paragraph needs to be read with—

(a)paragraph 6 (cases where settlement is a qualifying UK settlement comprised in a group), and

(b)paragraph 8 (sub-fund settlements).

3(1)A settlement is a “settlement for the benefit of a disabled person” for a tax year if, for the whole or part of that year, settled property is held on trusts which secure that, during the lifetime of a disabled person, the property and income tests are met.

(2)The property test is met if any of the property which is applied for the benefit of a beneficiary is applied for the disabled person’s benefit.

(3)The income test is met if either—

(a)the disabled person is entitled to all of the income (if any) arising from any of the property, or

(b)if any income arising from any of the property is applied for the benefit of a beneficiary, it is applied for the disabled person’s benefit.

(4)A settlement is not prevented from being a settlement for the benefit of a disabled person for a tax year just because—

(a)the trustees have power to apply amounts (of any nature) not exceeding the de minimis threshold for that year,

(b)the trustees have the powers of advancement conferred by section 32 of the Trustee Act 1925 or section 33 of the Trustee Act (Northern Ireland) 1958,

(c)the trustees have those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by—

(i)proviso (a) of section 32(1) of the Trustee Act 1925, or

(ii)section 33(1)(a) of the Trustee Act (Northern Ireland) 1958, or

(d)the trustees have powers to the same effect as the powers mentioned in paragraph (b) or (c).

(5)For the purposes of sub-paragraph (4)(a) “the de minimis threshold” means—

(a)£3,000, or

(b)3% of the maximum value of the settled property during the tax year,

whichever is the lower.

(6)In this paragraph “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.

(7)If the income from settled property is held for the benefit of a disabled person (“D”) on trusts of the kind described in section 33 of the Trustee Act 1925 (protective trusts), the reference in this paragraph to D’s lifetime is to be read as a reference to the period during which the income is held on trust for D.

(8)This paragraph applies for the purposes of this Schedule.

4(1)The Treasury may by order—

(a)specify circumstances in which paragraph 3(4)(a) is, or is not, to apply, and

(b)amend the definition of “the de minimis threshold” in paragraph 3(5).

(2)The order may—

(a)make different provision for different purposes, and

(b)contain transitional and saving provision.

(3)A statutory instrument containing an order under this paragraph which reduces the annual exempt amount in any case may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

Other settlements

5(1)This paragraph applies if settlement is not a settlement for the benefit of a disabled person for a tax year.

(2)Section 1K applies in relation to the trustees of the settlement for the year as it applies in relation to an individual for the year but as if the annual exempt amount for the year were one-half of the amount available for the individual for the year.

(3)This paragraph needs to be read be with—

(a)paragraph 6 (cases where settlement is qualifying UK settlement comprised in a group), and

(b)paragraph 8 (sub-fund settlements).

Special rules for qualifying UK settlements comprised in groups

6(1)This paragraph reduces the annual exempt amount for trustees of a settlement for a tax year if the settlement is one of two or more qualifying UK settlements comprised in a group.

(2)In the case of a settlement for the benefit of a disabled person for the year, the annual exempt amount for the year is to be reduced so that it is equal to—

(a)one-tenth of an individual’s amount for that year, or

(b)the amount resulting from dividing the individual’s amount for that year by the number of settlements in the group,

whichever is the greater.

(3)In the case of any other settlement, the annual exempt amount for the year is to be reduced so that it is equal to—

(a)one-tenth of an individual’s amount for that year, or

(b)the amount resulting from dividing half of an individual’s amount for that year by the number of settlements in the group,

whichever is the greater.

(4)In this paragraph “an individual’s amount”, in relation to a tax year, means the annual exempt amount applying to an individual for the year under section 1K.

(5)For the purposes of this paragraph all qualifying UK settlements in relation to which the same person is the settlor constitute a group.

(6)If—

(a)two or more persons are settlors in relation to a settlement, and

(b)a settlement is consequently comprised in two or more groups comprising different numbers of settlement,

sub-paragraphs (2)(b) and (3)(b) have effect by reference to the largest group.

7(1)In this Schedule “qualifying UK settlement”, in relation to a tax year, means any settlement in relation to which both of the following conditions are met—

(a)the trustees of the settlement are resident in the United Kingdom during any part of the tax year, and

(b)the property comprised in the settlement is not held for a charitable or pensions purpose.

(2)Property comprised in a settlement is held for a charitable purpose if (and only if)—

(a)it is held for charitable purposes only, and

(b)it cannot become applicable for other purposes.

(3)Property comprised in a settlement is held for a pensions purpose if (and only if) it is held for the purposes of—

(a)a registered pension scheme,

(b)a superannuation fund to which section 615(3) of the Taxes Act applies, or

(c)an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) that is not a registered pension scheme.

(4)For this purposes of any provision of this Schedule other than paragraph 8 a settlement is not a qualifying UK settlement if—

(a)in the case of one for the benefit of a disabled person, it was made before 10 March 1981, or

(b)in any other case, it was made before 6 June 1978.

Special rules for principal settlements and sub-funds

8(1)This paragraph—

(a)applies if the trustees of a settlement (“the principal settlement”) have made an election under paragraph 1 of Schedule 4ZA the effect of which is that one or more other settlements (“sub-fund settlements”) are treated as created, and

(b)provides for the annual exempt for the trustees of each of the affected settlements to be determined by reference to the assumed annual amount.

(2)For this purposes of this paragraph—

(a)the principal settlement and each of the sub-fund settlements is an “affected settlement”, and

(b)the “assumed annual amount” means the amount which would be the annual exempt for the trustees of the principal settlement on the assumption that no election had been made under paragraph 1 of Schedule 4ZA.

(3)The annual exempt amount for the trustees of each of the affected settlements is the assumed annual amount unless there are two or more qualifying UK settlements in the affected settlements.

(4)In that case, the annual exempt amount for the trustees of each of the affected settlements is the assumed annual amount divided by the number of qualifying UK settlements in the affected settlements.

17After Schedule 4 insert—

SCHEDULE 4AARe-basing for non-residents in respect of UK land etc held on 5 April 2019

PART 1Introduction

1(1)Part 2, 3 or 4 of this Schedule applies on the first occasion on which a person disposes of an asset that the person held on 5 April 2019 where—

(a)the disposal is either a direct or indirect disposal of UK land, and

(b)the disposal is made by a non-resident or a UK resident in the overseas part of a tax year.

(2)See also paragraph 16 (non-UK resident company holding UK land becoming resident in UK after 5 April 2019).

(3)For the purposes of this Schedule—

(a)a disposal is a “direct disposal of UK land” if it is a disposal of an interest in UK land, and

(b)a disposal by a person is an “indirect disposal of UK land” if it is a disposal of an asset (other than an interest in UK land) deriving at least 75% of its value from UK land where the person has a substantial indirect interest in that land.

(4)For the purposes of this paragraph, the disposal is made by a non-resident or a UK resident in the overseas part of a tax year if it is—

(a)a disposal on which a gain accrues that falls to be dealt with by section 1A(3) because the asset disposed of is within paragraph (b) or (c) of that subsection,

(b)a disposal on which a gain accrues that falls to be dealt with by section 1A(1) in accordance with section 1G(2) because the asset disposed of is within section 1A(3)(b) or (c),

(c)a disposal on which a gain accrues that falls to be dealt with by section 2B(4), or

(d)a disposal of an asset on which a gain does not accrue but which, had a gain accrued, would fall to be dealt with as mentioned in any of the preceding paragraphs of this sub-paragraph.

PART 2Indirect disposals and direct disposals not chargeable before 6 April 2019
Introduction

2(1)This Part of this Schedule applies to—

(a)all indirect disposals of UK land,

(b)direct disposals of UK land that were not fully residential before 6 April 2019, and

(c)direct disposals of UK land by persons who were not chargeable before 6 April 2019.

(2)For the purposes of this paragraph a direct disposal of UK land made by a person was “not fully residential before 6 April 2019” if in the period—

(a)beginning with the day on which the person acquired the interest in land being disposed of or, if later, 6 April 2015, and

(b)ending with 5 April 2019,

there was no day on which the land to which the disposal relates consisted of or included a dwelling.

(3)If the disposal is of an interest in land subsisting under a contract for the acquisition of land that, at any time before 6 April 2019, consisted of or included a building to be constructed or adapted for use as a dwelling, the disposal is taken to be fully residential before that date.

(4)For the purposes of this paragraph, a disposal is made by a person who was not chargeable before 6 April 2019 if, immediately before that date, the person was—

(a)a company which was not a closely-held company (see sub-paragraph (5)),

(b)a widely-marketed scheme (see sub-paragraph (6)), or

(c)a company carrying on life assurance business (as defined in section 56 of the Finance Act 2012) where the interest in UK land was, immediately before that date, held for the purpose of providing benefits to policyholders in the course of that business.

(5)The question as to whether a company is “a closely-held company” is determined in accordance with Part 1 of Schedule C1; but if—

(a)the company is a divided company within the meaning of section 14G, and

(b)the company would not otherwise be regarded as a closely-held company,

the company is to be so regarded if the conditions in subsection (3) of that section are met.

(6)A person is a “widely-marketed scheme” if—

(a)the person is a scheme within the meaning of section 14F, and

(b)condition A or B in that section is met,

reading the reference in subsection (8)(a) of that section to the non-resident CGT disposal as a reference to the disposal mentioned in paragraph 1(1).

(7)In determining for the purposes of this paragraph whether or not—

(a)a person is a closely-held company, or

(b)a person is a widely-marketed scheme,

arrangements are to be ignored if the main purpose of, or one of the main purposes of, them is to secure a tax advantage as a result of the person not being a closely-held company or the person being a widely-marketed scheme.

(8)In this paragraph—

(a)“arrangements” and “tax advantage” have the same meaning as in section 16A, and

(b)any reference to section 14F, 14G or Schedule C1 are to those provisions as they had effect on 5 April 2019 (before their repeal by Schedule 1 to the Finance Act 2019).

Re-basing to 5 April 2019

3(1)In calculating the gain or loss accruing on the disposal it is be assumed that the asset was on 5 April 2019 sold by the person, and immediately reacquired by the person, at its market value on that date.

(2)This paragraph has effect subject to any election made by the person under paragraph 4 (retrospective basis of calculation).

Election for retrospective basis of calculation

4(1)The person may make an election under this paragraph for the assumption that the asset is sold and reacquired as mentioned in paragraph 3 not to apply.

(2)If, in the case of an indirect disposal of UK land—

(a)a person makes an election under this paragraph, and

(b)a loss accrues on the disposal,

the loss is not an allowable loss.

Calculation of residential property gain if election made under paragraph 4

5(1)This paragraph applies if—

(a)a person makes an election under paragraph 4 in respect of a disposal on which a gain accrues, and

(b)it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain.

(2)Paragraph 2 of Schedule 1B has effect as if—

(a)sub-paragraphs (5) and (6) of that paragraph were omitted, and

(b)in that paragraph, “the applicable period” had the definition given by the next sub-paragraph.

(3)“The applicable period” means the period—

(a)beginning with the day on which the person acquired the interest in land being disposed of or, if later, 31 March 1982, and

(b)ending with the day before the day on which the disposal is made.

PART 3Direct disposals of Pre-April 2015 assets fully chargeable before 6 April 2019
Introduction

6(1)This Part of this Schedule applies to any direct disposal of UK land if—

(a)the person held the interest in UK land being disposed of throughout the period beginning with 6 April 2015 and ending with the disposal, and

(b)the disposal was fully residential before 6 April 2019.

(2)For this purpose a direct disposal of UK land made by a person is “fully residential before 6 April 2019” if in the period—

(a)beginning with 6 April 2015, and

(b)ending with 5 April 2019,

every day on which the land to which the disposal relates consisted of a dwelling.

(3)If the disposal is of an interest in land subsisting under a contract for the acquisition of land that, at any time in that period, did not consist of a building to be constructed or adapted for use as a dwelling, the disposal is taken to be not fully residential before 6 April 2019.

(4)This Part of this Schedule does not apply to a direct disposal of UK land made by a person who was not chargeable before 6 April 2019, as determined for the purposes of paragraph 2.

Re-basing to 5 April 2015

7(1)In calculating the gain or loss accruing on the disposal it is be assumed that the asset was on 5 April 2015 sold by the person, and immediately reacquired by the person, at its market value on that date.

(2)This paragraph has effect subject to any election made by the person under either—

(a)paragraph 8 (retrospective basis of calculation), or

(b)paragraph 9 (straight-line time apportionment),

(and an election may be made under only one of those paragraphs).

Election for retrospective basis of calculation

8The person may make an election under this paragraph for the assumption that the asset is sold and reacquired as mentioned in paragraph 7 not to apply.

Election for straight-line time apportionment

9(1)The person may make an election under this paragraph—

(a)for the assumption that the asset is sold and reacquired as mentioned in paragraph 7 not to apply, and

(b)for the gain or loss accruing on the disposal to be apportioned so that only the post-5 April 2015 proportion of it is treated as accruing on the disposal.

(2)The “post-5 April 2015 proportion” is the proportion that the days in the post-5 April 2015 period bear to the days in the ownership period.

(3)For this purpose—

  • “the post-5 April 2015 period” means the day beginning with 6 April 2015 and ending with the day on which the disposal is made, and

  • “the ownership period” means the period beginning with the day on which the person acquired the interest disposed of or, if later, 31 March 1982 and ending with the day on which the disposal is made.

Calculation of residential property gain if election made under paragraph 8 or 9

10(1)This paragraph applies if—

(a)a person makes an election under paragraph 8 in respect of a disposal on which a gain accrues, and

(b)it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain.

(2)Paragraph 2 of Schedule 1B has effect as if—

(a)sub-paragraphs (5) and (6) of that paragraph were omitted, and

(b)in that paragraph, “the applicable period” had the definition given by the next sub-paragraph.

(3)“The applicable period” means the period—

(a)beginning with the day on which the person acquired the interest in land being disposed of or, if later, 31 March 1982, and

(b)ending with the day before the day on which the disposal is made.

11(1)This paragraph applies if—

(a)a person makes an election under paragraph 9 in respect of a disposal on which a gain accrues, and

(b)it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain.

(2)Paragraph 2 of Schedule 1B has effect as if—

(a)sub-paragraphs (5) and (6) of that paragraph were omitted, and

(b)in that paragraph, “the applicable period” had the definition given by the next sub-paragraph.

(3)“The applicable period” means the period—

(a)beginning with 6 April 2015, and

(b)ending with the day before the day on which the disposal is made.

PART 4Direct disposals of assets partly chargeable before 6 April 2019
Introduction

12(1)This Part of this Schedule applies to any direct disposal of UK land if—

(a)neither Part 2 nor Part 3 of this Schedule applies to the disposal, and

(b)the interest in UK land being disposed of was not a post-April 2015 asset that was fully residential before 6 April 2019.

(2)For this purpose—

(a)the interest in UK land being disposed of is a “post-April 2015 asset” if it was acquired by the person after 5 April 2015, and

(b)the asset “was fully residential before 6 April 2019” if, in the period beginning with the day on which it was acquired and ending with 5 April 2019, every day on which the land to which the disposal relates consisted of a dwelling.

(3)If the disposal is of an interest in land subsisting under a contract for the acquisition of land that, at any time in that period, did not consist of a building to be constructed or adapted for use as a dwelling, the disposal is taken to be not fully residential before 6 April 2019.

Re-basing to 5 April 2015 and 5 April 2019

13(1)In calculating the gain or loss accruing on the disposal (“the actual disposal”) it is be assumed that—

(a)the asset was on 5 April 2015 sold by the person, and immediately reacquired by the person, at its market value on that date (but see sub-paragraph (3)), and

(b)in addition, the asset was on 5 April 2019 sold by the person, and immediately reacquired by the person, at its market value on that date.

(2)In the case of the assumed sale on 5 April 2019, the gain or loss accruing on that sale is treated as accruing on the actual disposal (in addition to the gain or loss that actually accrues on the actual disposal).

(3)If the asset was acquired by the person after 5 April 2015, the assumption that it is sold, and immediately reacquired, on 5 April 2015 is not to apply.

(4)This paragraph has effect subject to any election made by the person under paragraph 14 (retrospective basis of calculation).

Election for retrospective basis of calculation

14The person may make an election under this paragraph for the assumptions that the asset is sold and reacquired as mentioned in paragraph 13 not to apply.

Calculation of residential property gain if election made under paragraph 14

15(1)This paragraph applies if—

(a)a person makes an election under paragraph 14 in respect of a disposal on which a gain accrues, and

(b)it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain.

(2)Paragraph 2 of Schedule 1B has effect as if—

(a)sub-paragraphs (5) and (6) of that paragraph were omitted, and

(b)in that paragraph, “the applicable period” had the definition given by the next sub-paragraph.

(3)“The applicable period” means the period—

(a)beginning with the day on which the person acquired the interest in land being disposed of or, if later, 31 March 1982, and

(b)ending with the day before the day on which the disposal is made.

PART 5Miscellaneous
Companies with UK land becoming UK resident after 5 April 2019

16(1)This paragraph applies in any case where—

(a)a company becomes resident in the United Kingdom after 5 April 2019,

(b)the company makes a direct or indirect disposal of UK land after that date, and

(c)(ignoring this paragraph) Part 2, 3 or 4 of this Schedule would have applied to the disposal but for the fact that it is made at a time when the company is resident in the United Kingdom.

(2)In that case, Part 2, 3 or 4 of this Schedule applies in relation to the disposal (regardless of paragraph 1(1)(b)).

Persons with UK land ceasing to be UK resident after 5 April 2019

17(1)This paragraph applies in any case where—

(a)the trustees of a settlement cease to be resident in the United Kingdom after 5 April 2019,

(b)after that date the trustees dispose of an asset held by them on that date, and

(c)the disposal is a direct or indirect disposal of UK land.

(2)Nothing in Part 2, 3 or 4 of this Schedule applies to the disposal.

(3)The asset that is disposed of is excepted from the application of section 80(2) (deemed disposal of assets on trustees ceasing to be resident in UK).

18(1)This paragraph applies in any case where—

(a)a company ceases to be resident in the United Kingdom after 5 April 2019,

(b)after that date the company disposes of an asset held by it on that date, and

(c)the disposal is a direct or indirect disposal of UK land.

(2)Nothing in Part 2, 3 or 4 of this Schedule applies to the disposal.

(3)The asset that is disposed of is excepted from the application of section 185(2) and (3) (deemed disposal of assets on company ceasing to be resident in UK).

Wasting assets

19(1)This paragraph applies if, in calculating a gain or loss accruing to a person in a case where paragraph 3, 7 or 13 is applicable, it is necessary to make a wasting asset determination in relation to the asset disposed of.

(2)The assumption that the asset was acquired on a date mentioned in paragraph 3, 7 or 13 (as the case may be) is to be ignored in making that determination.

(3)In this paragraph “a wasting asset determination” means a determination whether or not an asset is a wasting asset, as defined for the purposes of Chapter 2 of Part 2 of this Act.

Capital allowances

20(1)This paragraph applies if, in calculating a gain or loss accruing to a person in a case where paragraph 3, 7 or 13 is applicable, it is to be assumed that the asset disposed of was acquired on a particular date for a consideration equal to its market value on that date.

(2)For the purposes of that calculation—

(a)section 41 (restriction of losses by reference to capital allowances and renewals allowances), and

(b)section 47 (wasting assets qualifying for capital allowances),

are to apply in relation to any allowance made in respect of the expenditure actually incurred in acquiring or providing the asset as if it were made in respect of the expenditure assumed to have been incurred.

(3)In this paragraph “allowance” means any capital allowance or renewals allowance.

Making of elections

21(1)An election under any provision of this Schedule must (regardless of section 42(2) of the Management Act) be made by being included in a relevant return relating to the disposal.

(2)For the purposes of this paragraph a “relevant return” means—

(a)an ordinary tax return, or

(b)a return under Schedule 2 to the Finance Act 2019.

(3)An election under any provision of this Schedule which is made by being included in a return under Schedule 2 to the Finance Act 2019 may be subsequently revoked by provision included in an ordinary tax return which is delivered on or before the filing date for the ordinary tax return.

(4)Subject to that, an election under any provision of this Schedule is irrevocable.

(5)All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under any provision of this Schedule.

(6)For the purposes of this paragraph, in the case of a person other than a company—

  • “ordinary tax return” means a return under section 8 or 8A of the Management Act, and

  • “the filing date”, in relation to that return, has the meaning given by section 9A(6) of that Act.

(7)For the purposes of this paragraph, in the case of a company—

  • “ordinary tax return” means a company tax return under Schedule 18 to the Finance Act 1998, and

  • “the filing date”, in relation to that return, has the meaning given by paragraph 14 of that Schedule.

(8)For the purposes of this paragraph—

(a)the reference to an election being included in a relevant return includes its being included as a result of an amendment of the return, and

(b)the reference to the revocation of an election being included in an ordinary tax return includes its being included as a result of an amendment of the return.

Interpretation

22(1)In this Schedule—

(a)any reference to an interest in UK land is to be read in accordance with section 1C (and any reference to land is to be read in accordance with that section), and

(b)any reference to an asset (other than an interest in UK land) deriving at least 75% of its value from UK land where a person has a substantial indirect interest in that land is to be read in accordance with Schedule 1A.

(2)If an interest in UK land disposed of by a person results from interests in UK land acquired by the person at different times, the person is regarded for the purposes of this Schedule as having acquired the interest disposed of at the time of the first acquisition.

(3)For the purposes of this Schedule, whether a building is a dwelling is determined in accordance with Schedule 1B.

18Omit Schedule 4ZZA (relevant high value disposals: gains and losses).

19Omit Schedule 4ZZB (non-resident CGT disposals: gains and losses).

20Omit Schedule 4ZZC (disposals of residential property interests: gains and losses).

21After Schedule 5A insert—

SCHEDULE 5AAAUK property rich collective investment vehicles etc

PART 1Introduction: key expressions
Meaning of “collective investment vehicle”, “participant” and “unit”

1(1)In this Schedule “collective investment vehicle” means—

(a)a collective investment scheme,

(b)an AIF,

(c)a company which is a UK REIT, or

(d)a company which is resident outside the United Kingdom and meets the property income condition.

(2)A company meets the property income condition if—

(a)it is not a close company or is a close company but only because it has a qualifying investor as a direct or indirect participator,

(b)at least half of its income is property income from long-term investments,

(c)it distributes all, or substantially all, of its property income from long-term investments and does so on an annual basis, and

(d)it is not liable to tax on that income under the law of any territory in which it is resident.

(3)Paragraph 46 (meaning of “close company”, “qualifying investor” and “direct or indirect participator”) applies for the purposes of sub-paragraph (2)(a).

(4)For the purposes of sub-paragraph (2) “property income from long-term investments” means income deriving from direct or indirect investments in—

(a)land, or

(b)estates, interests or rights in or over land,

which are made on a long-term basis.

(5)In this Schedule “participant” means—

(a)in relation to a collective investment scheme or an AIF, a person who takes part in the arrangements or undertaking constituting the scheme or AIF, whether by becoming the owner of, or of any part of, the property that is the subject of or held by the arrangements or undertaking or otherwise, or

(b)in relation to a company within (1)(c) or (d), a shareholder in the company.

(6)In this Schedule “unit” means—

(a)in the case of a collective investment scheme or an AIF, the rights or interests (however described) of the participant in the scheme or AIF, or

(b)in the case of a company within (1)(c) or (d), a share in the company.

(7)In this paragraph—

  • “AIF” has the meaning given by regulation 3 of the Alternative Investment Fund Managers Regulations 2013, and

  • “UK REIT” has the same meaning as in Part 12 of CTA 2010.

Meaning of “offshore collective investment vehicle”

2(1)In this Schedule “offshore collective investment vehicle” means—

(a)a collective investment vehicle constituted as a body corporate resident outside the United Kingdom,

(b)a collective investment vehicle under which property is held on trust for the participants where the trustees of the property are not resident in the United Kingdom, or

(c)a collective investment vehicle constituted by other arrangements that create rights in the nature of co-ownership where the arrangements take effect as a result of the law of a territory outside the United Kingdom.

(2)In this paragraph—

  • “body corporate” does not include a limited liability partnership, and

  • “co-ownership” is not restricted to the meaning of that term in the law of any part of the United Kingdom.

Meaning of a collective investment vehicle being “UK property rich” etc

3(1)For the purposes of this Schedule the question whether a collective investment vehicle is “UK property rich” at any time is determined by applying the rules in Part 2 of Schedule 1A on the following assumptions.

(2)The assumptions are—

(a)that (so far as this would not otherwise be the case) the vehicle were a company, and

(b)that a disposal were made at that time of a right or interest in that company.

(3)If that disposal would be regarded for the purposes of Schedule 1A as a disposal of an asset deriving at least 75% of its value from UK land, the vehicle is regarded for the purposes of this Schedule as being UK property rich at that time.

(4)For the purposes of this Schedule the question whether a company is “UK property rich” at any time is determined by applying the rules in Part 2 of Schedule 1A on the assumption that a disposal were made at that time of a right or interest in the company.

(5)If that disposal would be regarded for the purposes of Schedule 1A as a disposal of an asset deriving at least 75% of its value from UK land, the company is regarded for the purposes of this Schedule as being UK property rich at that time.

PART 2Basic rules
Application of Act to offshore CIV

4(1)This paragraph applies to an offshore collective investment vehicle—

(a)which is not a company, and

(b)which is not constituted by two or more persons carrying on a trade or business in partnership.

(2)It is to be assumed that, for relevant purposes—

(a)the vehicle is a company, and

(b)the rights of the participants are shares in that company.

(3)The reference here to “relevant purposes” means—

(a)the purposes of this Schedule, and

(b)the purpose of applying section 1A(3)(b) or (c) or 2B(4) (and the other provisions of this or any other Act so far as relevant to their application) in relation to the vehicle.

(4)This paragraph does not apply to a collective investment vehicle in relation to which an election has effect under Part 3 of this Schedule (election for transparency).

(5)This paragraph applies in relation to a collective investment vehicle to which section 103D applies (tax transparent funds) but does not affect the operation of the rules set out in—

(a)section 103D(4) to (9) (calculation of gains on disposal of units etc), or

(b)section 103DA (share pooling etc).

(6)If this paragraph applies in relation to a collective investment vehicle, section 99 (application of Act to unit trust schemes) does not apply in relation to the scheme.

Units in a CoACS treated as shares in a company

5(1)This paragraph applies to a unit in an authorised contractual scheme which is a co-ownership scheme where, as a result of the application of section 103D (application of Act to tax transparent funds), the unit is treated as an asset for the purposes of this Act.

(2)The asset is treated for the purposes of Schedule 1A as if it were a share in a company.

Disposals by non-UK residents

6(1)This paragraph applies if—

(a)a person disposes of an asset that derives at least 75% of its value from UK land (as determined in accordance with Part 2 of Schedule 1A), and

(b)the disposal has an appropriate connection to a collective investment vehicle (see sub-paragraphs (3) to (6) for the cases in which this test is met).

(2)For the purposes of section 1A(3)(c) or 2B(4)(b) (disposals by non-UK residents of assets deriving 75% of value from UK land etc), the person is treated as having a substantial indirect interest in the UK land at the time of the disposal.

(3)A disposal has an appropriate connection to a collective investment vehicle if the asset disposed of consists of a right or interest in—

(a)a collective investment vehicle, or

(b)a company at least half of whose market value derives from its being a direct or indirect participant in one or more collective investment vehicles.

(4)A disposal has an appropriate connection to a collective investment vehicle if—

(a)the vehicle is constituted by two or more persons carrying on a trade or business in partnership, and

(b)the disposal is made by a person as a participant in the vehicle.

(5)A disposal has an appropriate connection to a collective investment vehicle if the vehicle is a company and the disposal is made by it.

(6)A disposal has an appropriate connection to a collective investment vehicle if—

(a)a company (which is not the vehicle) makes the disposal, and

(b)the vehicle, and one or more other collective investment vehicles that are UK property rich, have a 50% investment in the company.

(7)Collective investment vehicles have a 50% investment in a company if, applying the rule in paragraph 9 (but without regard to paragraph 10) of Schedule 1A as if references to 25% were references to 50%, the vehicles would be regarded as having a 50% investment in the company at the time of the disposal.

(8)For this purpose the collective investment schemes are to be regarded as if they were a single person.

(9)This paragraph is subject to paragraph 7 (collective investment vehicles expected to have no more than 40% investments in UK land).

7(1)This paragraph applies to a disposal which would otherwise have an appropriate connection to a collective investment vehicle as a result of paragraph 6(3), (5) or (6).

(2)A disposal does not have an appropriate connection to a collective investment vehicle if, at the time of the disposal, the vehicle mentioned in paragraph 6(3)(a) or (5) or (6), or each of the vehicles mentioned in paragraph 6(3)(b), meets—

(a)the non-UK real estate condition, and

(b)the genuine diversity of ownership condition or, if the vehicle is a company, the non-close condition.

(3)If—

(a)a disposal is made as mentioned in paragraph 6(6), and

(b)the vehicle mentioned there is constituted by two or more persons carrying on a trade or business in partnership,

the condition in sub-paragraph (2)(b) is taken to be met if the company mentioned in paragraph 6(6) meets the non-close condition.

(4)A vehicle meets the non-UK real estate condition at any time if, by reference to the prospectus for the vehicle as the prospectus has effect at that time, no more than 40% of the expected market value of the vehicle’s investments is intended to derive from investments consisting of—

(a)interests in UK land, or

(b)rights or interests in companies which are UK property rich.

(5)A vehicle meets the genuine diversity of ownership condition at any time if, at that time—

(a)it meets conditions A to C of regulation 75 of the Offshore Funds (Tax) Regulations 2009, or

(b)it meets the condition in regulation 75(5) of those Regulations,

and those Regulations apply for the purposes of this sub-paragraph as if any collective investment vehicle which is not an offshore fund were regarded as an offshore fund.

(6)A company meets the non-close condition at any time if, at that time, it—

(a)is not a close company, or

(b)is a close company but only because it has a qualifying investor as a direct or indirect participator.

(7)Paragraph 46 (meaning of “close company”, “qualifying investor” and “direct or indirect participator”) applies for the purposes of sub-paragraph (6).

PART 3Election for transparency
Election for collective investment vehicle to be treated as partnership

8(1)This paragraph applies to an offshore collective investment vehicle—

(a)which is UK property rich, and

(b)which is transparent for income tax purposes otherwise than as a result of being constituted by two or more persons carrying on a trade or business in partnership.

(2)The manager of the vehicle may make an election for the vehicle to be treated for the purposes of—

(a)this Act, and

(b)the Management Act, and any other provision of the Corporation Tax Acts, so far as relating to the taxation of chargeable gains,

as if, in relation to all times on and after its constitution, it were to be regarded as a partnership.

(3)Accordingly, as a result of sub-paragraph (2)(b), it follows that, in applying rules such as section 1154 of CTA 2010 (meaning of “75% subsidiary” etc) for the purposes of Part 12 of that Act (Real Estate Investment Trusts) so far as relating to the taxation of chargeable gains, the vehicle is to be regarded as a partnership.

(4)In the case of section 12AA of the Management Act as it applies as a result of sub-paragraph (2), a notice under subsection (2) or (3) of that section may be given to the manager of the vehicle.

(5)The election has effect whether or not the vehicle would, but for the making of the election, be regarded as a person chargeable to capital gains tax or corporation tax on chargeable gains.

(6)For the purposes of this paragraph whether or not an offshore collective investment vehicle is regarded as being UK property rich may be determined by reference to the prospectus for the vehicle on the assumption that investments are made by the vehicle in accordance with the prospectus.

(7)For the purposes of this paragraph a collective investment vehicle is “transparent for income tax purposes” if, on the assumption that there are participants who are individuals resident in the United Kingdom, any sums which form part of the income of the vehicle—

(a)would be chargeable to income tax on those assumed participants under a provision specified in section 830(2) of ITTOIA 2005 in respect of such of those sums as would be referable to their interests, or

(b)if any of that income is derived from assets within the United Kingdom, would be so chargeable had the assets been outside the United Kingdom.

(8)If an election is made under this paragraph in relation to a collective investment vehicle—

(a)section 99 (application of Act to unit trust schemes) does not apply in relation to the vehicle, and

(b)section 103D (tax transparent funds) does not apply in relation to the vehicle.

Further provision about election

9(1)An election under paragraph 8 in relation to an offshore collective investment vehicle—

(a)has effect only if the participants in the vehicle at the time at which it is made have consented to the making of the election,

(b)must be made by notice given to an officer of Revenue and Customs, and

(c)must be made before the end of the period of 12 months beginning with the relevant acquisition date.

(2)For this purpose “the relevant acquisition date” means the earliest date on which—

(a)an interest in UK land, or

(b)a right or interest in a company that is UK property rich,

forms part of the property that is the subject of or held by the vehicle.

(3)An election under paragraph 8 is irrevocable.

Units in CIVs held by life insurance companies

10(1)This paragraph applies if an election under paragraph 8 has effect in relation to an offshore collective investment vehicle.

(2)The election is treated as having no effect for the purposes of this Act in relation to any units in the vehicle which are held by an insurance company for the purposes of its long-term business.

Relationship to re-basing rules under Schedule 4AA for non-UK residents

11(1)This paragraph applies if—

(a)an election under paragraph 8 has effect in relation to an offshore collective investment vehicle, and

(b)as a result of the election, Part 3 or 4 of Schedule 4AA would (but for this paragraph) apply in relation to a disposal made by a participant in the vehicle.

(2)The disposal is to be regarded for the purposes of Schedule 4AA as if it were one to which Part 2 of that Schedule applies.

PART 4Exemption
Exemption for qualifying offshore CIV that is UK property rich etc

12(1)An election may be made for a collective investment vehicle, or a company which is not a collective investment vehicle, to be exempt from corporation tax on chargeable gains accruing to it on—

(a)all direct disposals of UK land, and

(b)all indirect disposals of UK land.

(2)An election may be made in respect of a collective investment vehicle if each of the following entitlement conditions is met—

(a)the vehicle is offshore,

(b)the vehicle is a company (whether as a result of paragraph 4 or otherwise),

(c)the vehicle is UK property rich,

(d)the vehicle meets all of the qualifying conditions set out in paragraph 13, and

(e)if the vehicle is an AIF, it would also meet the definition of a collective investment vehicle for another reason.

(3)An election may be made in respect of a company which is not a collective investment vehicle if each of the following entitlement conditions is met—

(a)the company is wholly (or almost wholly) owned by a collective investment scheme which is constituted by two or more persons carrying on a trade or business in partnership or is constituted by a CoACS,

(b)the appropriate entity is UK property rich, and

(c)the company meets all of the qualifying conditions set out in paragraph 13,

and it does not matter where the company is resident.

(4)In sub-paragraph (3)(b) the “appropriate entity” means—

(a)in a case where the collective investment scheme is constituted by two or more persons carrying on a trade or business in partnership, the company, and

(b)in a case where the collective investment scheme is constituted by a CoACS, the CoACS.

(5)If an election is made under this paragraph in respect of a collective investment vehicle—

(a)the vehicle is referred to in this Part of this Schedule as “a qualifying fund”, and

(b)any reference in this Part of this Schedule to a qualifying fund, in relation to any time after the election is made (including any time after the election ceases to have effect), is to be read as a reference to the arrangements, undertaking or company which met the definition of collective investment vehicle when the election was made.

(6)If an election is made under this paragraph in respect of a company which is not a collective investment vehicle—

(a)the company is referred to in this Part of this Schedule as “a qualifying company”, and

(b)any reference in this Part of this Schedule to a qualifying company, in relation to any time after the election is made (including any time after the election ceases to have effect), is to be read as a reference to the company.

(7)Section 103D (application of Act to tax transparent funds) does not apply for the purpose of determining whether sub-paragraph (3)(a) applies.

(8)In this paragraph—

  • “AIF” has the meaning given by regulation 3 of the Alternative Investment Fund Managers Regulations 2013, and

  • “CoACS” means an authorised contractual scheme which is a co-ownership scheme.

Qualifying conditions and information provided to HMRC

13(1)For the purposes of paragraph 12(2), a collective investment vehicle meets the qualifying conditions in this paragraph at any time if, at that time—

(a)it is a collective investment scheme and it meets the genuine diversity of ownership condition,

(b)it is a company (otherwise than as a result of paragraph 4) and it meets the recognised stock exchange condition and the non-close condition, or

(c)it is a collective investment vehicle (of any kind) and it meets the UK tax condition and the non-close condition.

(2)For the purposes of paragraph 12(3), a company which is not a collective investment vehicle meets the qualifying conditions in this paragraph at any time if, at that time, either—

(a)the company meets the UK tax condition and the non-close condition, or

(b)the collective investment scheme which wholly (or almost wholly) owns the company meets the genuine diversity of ownership condition.

(3)For the purposes of this paragraph a collective investment scheme meets the genuine diversity of ownership condition at any time if, at that time—

(a)it meets conditions A to C of regulation 75 of the Offshore Funds (Tax) Regulations 2009, or

(b)it meets the condition in regulation 75(5) of those Regulations,

and those Regulations apply for the purposes of this sub-paragraph as if any collective investment scheme which is not an offshore fund were regarded as an offshore fund.

(4)For the purposes of this paragraph a company meets the recognised stock exchange condition at any time if, at that time—

(a)it has ordinary share capital, and

(b)the shares forming part of its ordinary share capital are regularly traded on a recognised stock exchange.

(5)For the purposes of this paragraph a company meets the non-close condition at any time if, at that time, it—

(a)is not a close company, or

(b)is a close company but only because it has a qualifying investor as a direct or indirect participator.

(6)Paragraph 46 (meaning of “close company”, “qualifying investor” and “direct or indirect participator”) applies for the purposes of sub-paragraph (5).

(7)For the purposes of this paragraph a company meets the UK tax condition at any time if, on the assumption that all of the shares in it were disposed of for their market value at that time, the person making the election reasonably considers at that time that, as a result solely of double taxation arrangements, no more than 25% of the total proceeds would fall to be left out of account for the purposes of this Act.

14(1)An election under paragraph 12 has effect only if it is accompanied by information of such description as may be specified by an officer of Revenue and Customs about disposals made by participants in the relevant fund at any time in—

(a)the period of two years ending with the day before the day on which the election is made, or

(b)if shorter, the period beginning with the constitution of the relevant fund and ending with the day before the day on which the election is made.

(2)Information is not required by sub-paragraph (1) to accompany the election so far as—

(a)it has already been provided to an officer of Revenue and Customs in a form and manner, and at times, specified by an officer of Revenue and Customs, and

(b)the election sets out those occasions on which the information has been so provided.

15(1)An election under paragraph 12 has effect subject to such conditions as to the provision of information or documents to an officer of Revenue and Customs as may be specified by an officer of Revenue and Customs.

(2)The information or documents must be provided to an officer of Revenue and Customs in respect of every period of account of the relevant fund which ends at a time when the election has effect.

(3)The information or documents must be provided to an officer of Revenue and Customs within the period of 12 months from the end of the period of account.

(4)The conditions as to the provision of information or documents may include—

(a)conditions relating to the participants in the relevant fund, and

(b)conditions requiring information or documents in respect of the operation of any provision of this Schedule (or any provision of this Act relevant to this Schedule).

(5)In the case of an election under paragraph 12

(a)a designated HMRC officer may revoke the election if, in the officer’s opinion, there has been, without reasonable excuse, a breach of any provision made by or under this paragraph, but

(b)an officer of Revenue and Customs (whether or not designated) may waive a breach of any provision made by or under this paragraph if, in the officer’s opinion, there is no reasonable excuse for the breach but, having regard to all the circumstances, the breach is nonetheless insignificant.

(6)The circumstances to which the officer may have regard in determining whether a breach is insignificant include the number and seriousness of previous breaches.

(7)In this paragraph “period of account”, in relation to the relevant fund, means any period for which accounts of the relevant fund are drawn up.

(8)If the period of account would otherwise be longer than 12 months, the period of account is to be treated for the purposes of this paragraph as split into more than one period of account, and—

(a)the first deemed period of account is to be 12 months long, and

(b)any subsequent deemed period of account is to start when the previous deemed period of account ends and is to end 12 months later or, if earlier, when the actual period of account ends.

Exemption for direct or indirect disposals of UK land by persons in which fund invests

16(1)This paragraph applies if—

(a)an election under paragraph 12 has been made in respect of a qualifying fund or qualifying company (“Q”),

(b)Q is UK property rich by reference (wholly or partly) to particular interests in UK land (“the relevant UK property”), and

(c)a person other than Q makes a disposal at a time when the election has effect.

(2)If—

(a)the disposal is a direct disposal of any of the relevant UK property by a person, and

(b)immediately before the disposal, Q has a 40% investment in the person,

the appropriate proportion of any gain accruing to the person on the disposal is not a chargeable gain.

(3)If the disposal is an indirect disposal of UK land in a case where—