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The Tax Credits (Miscellaneous Amendments) Regulations 2006

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Citation and commencement

1.  These Regulations may be cited as the Tax Credits (Miscellaneous Amendments) Regulations 2006 and shall come into force on 6th April 2006.

Amendment of the Tax Credits (Claims and Notifications) Regulations 2002

2.—(1) The Tax Credits (Claims and Notifications) Regulations 2002(1) are amended as follows.

(2) In regulation 11(3)(a)(2) for “30th September” substitute “31st August”.

(3) In regulation 33(a)(3) for “30th September” substitute “31st August”.

Amendment of the Child Tax Credit Regulations 2002

3.  In regulation 5(2) of the Child Tax Credit Regulations 2002(4) for “date of leaving education” substitute “relevant leaving date”.

Amendment of the Tax Credits (Residence) Regulations 2003

4.—(1) The Tax Credits (Residence) Regulations 2003(5) are amended as follows.

(2) In regulation 3(4)—

(i)after “No 1612/68” insert “as amended by Council Directive No 2004/38/EC(6),”

(ii)for “Council Directive No 68/360/EEC” onwards substitute “Council Directive No 2004/38/EC.”

Amendment of the Tax Credits (Residence)(Amendment) Regulations 2004

5.  Regulation 1(2) of the Tax Credits (Residence)(Amendment) Regulations 2004(7) shall cease to have effect, and accordingly regulation 3(5) of the Tax Credits (Residence) Regulations 2003 shall not lapse on 1st May 2006.

Amendment of the Tax Credits (Definition and Calculation of Income) Regulations 2002

6.  The Tax Credits (Definition and Calculation of Income) Regulations 2002(8) are amended as follows.

7.—(1) Regulation 2(2) (interpretation) is amended as follows.

(a)for the definition of “the Board” substitute—

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

(b)for the definition of “employment zone” substitute—

“employment zone” means an area within Great Britain—

(i)

subject to a designation for the purposes of the Employment Zones Regulations 2003(9) by the Secretary of State, or

(ii)

listed in the Schedule to the Employment Zones (Allocation to Contractors) Pilot Regulations 2005(10),

pursuant to section 60 of the Welfare Reform and Pensions Act 1999(11);;;

(c)after the definition of “ITEPA” insert—

ITTOIA” means the Income Tax (Trading and Other Income) Act 2005(12);; and

(d)omit the definition of “Schedule D;”.

8.—(1) Regulation 3 (calculation of income of claimant) is amended as follows.

(2) In paragraph 1, Step Four, after the third sentence insert—

  • A loss shall not be available for tax credits purposes, unless the trade was being carried on upon a commercial basis and with a view to the realisation of profits in the trade or, where the carrying on of the trade formed part of a larger undertaking, in the undertaking as a whole..

(3) In paragraph (3)(b) for “section 584 of the Taxes Act,” substitute “Chapter 4 of Part 8 of ITTOIA,”.

(4) In paragraph (8)—

(a)in sub-paragraph (a) for “Schedule A business” substitute “UK property business”; and

(b)at the end, for —

In this paragraph “Schedule A business” and “overseas property business” have the same meanings as they have in the Taxes Act.

substitute—

In this paragraph “UK property business” and “overseas property business” have the same meanings as they have in Chapter 2 of Part 3 of ITTOIA..

9.—(1) Regulation 4 (employment income) is amended as follows.

(2) Omit paragraphs (2A) and (2B)(13).

(3) In Table 1, after item 16 insert—

16A.  A payment made by the Department for Employment and Learning in Northern Ireland under section 1 of the Employment and Training Act (Northern Ireland) 1950(14) by way of Return to Work Credit..

10.—(1) Regulation 5(1) (pension income) is amended as follows.

(2) At the end add—

(n)any social security pension lump sum to which section 7 of the Finance (No. 2) Act 2005(15) applies; and

(o)any lump sum payment to which section 636B or 636C(16) of ITEPA applies..

11.—(1) Regulation 6 (trading income) is amended as follows.

(2) For the second sentence substitute—

Here “taxable profits” has the same meaning as it has in Part 2 of ITTOIA but disregarding Chapter 16 of that Part (averaging profits of farmers and creative artists)..

12.—(1) Regulation 8 (student income) is amended as follows.

(2) For paragraph (a) substitute—

(a)in England, any adult dependants' grant payable—

(i)under regulation 17 of the Education (Student Support) Regulations 2005(17) in relation to an academic year which begins on or after 1st September 2005 but before 1st September 2006; or

(ii)under regulation 41 of the Education (Student Support) Regulations 2006(18) in relation to an academic year which begins on or after 1st September 2006;.

(3) In paragraph (b), at the end omit “and”.

(4) In paragraph (c), at the end add “and”.

(5) After paragraph (c) add—

(d)in Wales, any adult dependants' grant payable—

(i)under regulation 17 of the Education (Student Support) Regulations 2005 in relation to an academic year which begins on or after 1st September 2005 but before 1st September 2006; or

(ii)under regulation 22 of the Assembly Learning Grants and Loans (Higher Education) (Wales) Regulations 2006(19) in relation to an academic year which begins on or after 1st September 2006..

13.  For regulation 9 (payments of income in connection with students to be disregarded for the purposes of regulation 3) substitute—

Payments of income in connection with students to be disregarded for the purposes of regulation 3

9  Income which is exempt from income tax by virtue of section 753 or 776 of ITTOIA (which deal respectively with interest on the repayment of student loans and scholarship income) is disregarded in calculating a claimant’s income under regulation 3..

14.—(1) Regulation 10 (investment income) is amended as follows.

(2) In paragraph (1)(e) for “section 547(1)(a) of the Taxes Act.” substitute—

Chapter 9 of Part 4 of ITTOIA disregarding section 535 (top slicing relief)..

(3) In paragraph (2)—

(a)in sub-paragraph (c) for “section 46 of the Taxes Acts” substitute “section 692, 693 or 750 of ITTOIA”;

(b)in sub-paragraph (d) for—

section 325 of the Taxes Act (interest on deposits with National Savings and Investments).

substitute “section 691 of ITTOIA (National Savings Bank ordinary account interest).”; and

(c)in sub-paragraph (e) for the words following “by virtue of” substitute—

section 727 of ITTOIA (certain annual payments by individuals)..

(4) In Table 4—

(a)in item 1, for “section 333 of the Taxes Act” substitute “Chapter 3 of Part 6 of ITTOIA”;

(b)omit item 2;

(c)for item 3 substitute—

3.  Any interest payable under a certified SAYE savings arrangement for the purposes of Chapter 4 of Part 6 of ITTOIA.;

(d)in item 8—

(i)omit “in respect of interest”;

(ii)for paragraph (a) substitute—

(a)section 751 of ITTOIA (interest on damages for personal injury), or and

(iii)in paragraph (b) for “section 329AA of the Taxes Act” substitute “section 731 of ITTOIA (periodical payments of personal injury damages)”.

(e)in item 9—

(i)for “section 329AB(2) of the Taxes Act” substitute “section 732(3) of ITTOIA”; and

(ii)in the entry in column 2 for “section 329AA of the Taxes Act” substitute “section 731 of ITTOIA”;

(f)in item 12—

(i)for “section 656 of the Taxes Act” substitute “Chapter 7 of Part 4 of ITTOIA”; and

(ii)for the entry in column 2 substitute—

  • The amount exempted under section 717 of ITTOIA as calculated under section 719 of that Act.; and

(g)after item 12 add—

13.  Any payments which are exempt from income tax by virtue of—

The whole amount.

(a)section 725 of ITTOIA (annual payments under immediate needs annuities), or

(b)section 735 of ITTOIA (health and employment insurance payments).

15.—(1) Regulation 11 (property income) is amended as follows.

(2) In paragraph (1)—

(a)for “section 15 of the Taxes Act” substitute “Part 3 of ITTOIA”; and

(b)for “that section” wherever it occurs substitute “that Part”.

(3) For paragraph (2) substitute—

(2) In calculating property income there shall be disregarded any profits—

(a)treated as nil by section 791 to 794 of ITTOIA (full rent-a-room relief); or

(b)excluded from profits by section 795 to 798 of ITTOIA (alternative calculation of profits if amount exceeds limit)..

(4) In paragraph (3) for “Where a Schedule A business (as defined within Schedule A set out in section 15 of the Taxes Act)” substitute “Where a property business (as defined in Part 3 of ITTOIA)”.

16.—(1) Regulation 12 (foreign income) is amended as follows.

(2) In paragraph (1) for “possessions or from securities out of the United Kingdom” substitute “a source outside the United Kingdom or from foreign holdings”.

(3) For paragraph (2) substitute—

(2) The reference in paragraph (1) to “foreign holdings” shall be construed in accordance with section 571 of ITTOIA..

(4) In paragraph (3)—

(a)for sub-paragraph (b) substitute—

(b)the amount authorised to be deducted by the relevant provision if the claimant’s foreign income comprises or includes a pension to which the following provisions of ITEPA apply—

(i)section 567(5) and 617 (deduction allowed from taxable pension income);

(ii)section 575(2)(20) (taxable pension income: foreign pensions);

(iii)section 613(3)(21) (taxable pension income: foreign annuities); and

(iv)section 635(3)(22) (taxable pension income: foreign voluntary annual payments); and; and

(b)in sub-paragraph (c)—

(i)in paragraph (iii) for “Extra Statutory Concession A30” substitute “section 751(1)(c) of ITTOIA” and omit “or”; and

(ii)at the end add—

or

(v)section 730 of ITTOIA (foreign maintenance payments)..

(5) In paragraph (4) for “(within the meaning of the Taxes Act”) substitute “(within the meaning of Part 3 of ITTOIA)”.

17.—(1) Regulation 14 (claimants treated for any purpose as having income by virtue of the Income Tax Acts) is amended as follows.

(2) In paragraph (2)(a) omit sub-paragraphs (i) to (viii).

(3) For paragraph (b) substitute—

(b)the following provisions of ITTOIA—

(i)sections 277 to 283 (amounts treated as receipts: leases);

(ii)Chapter 5 of Part 4 (stock dividends from UK resident companies);

(iii)Chapter 6 of Part 4 (release of loan to participator in close company);

(iv)section 427 (charge to tax on profits from deeply discounted securities);

(v)Chapter 11 of Part 4 (transactions in deposits);

(vi)sections 624 to 628 (income treated as income of settlor: retained interests);

(vii)sections 629 to 632 (income treated as income of settlor: unmarried children);

(viii)section 633 (capital sums paid to settlor by trustees of settlement);

(ix)section 641 (capital sums paid to settlor by body connected with settlement);

(x)section 652 (estate income: absolute interests in residue); and

(xi)sections 654 to 655 (estate income: interests in residue); and

(c)section 84 and Schedule 15 to the Finance Act 2004 (charge to income tax by reference to enjoyment of property previously owned)..

18.  In regulation 18 (miscellaneous income) for “Case VI of Schedule D.” substitute “Part 5 of ITTOIA.”.

19.—(1) Regulation 19 (general disregards in the calculation of income) is amended as follows.

(2) In Table 6—

(a)in item 9 for “Schedule 36 to the Finance Act 2003.” Substitute “Chapter 2 of Part 7 of ITTOIA.”; and

(b)in item 11(a) for “section 327A of the Taxes Act;” substitute “sections 744 to 746 of ITTOIA;”.

(3) In Table 8, in items 3 and 4, in the entries in column 2—

(a)in paragraph (a)—

(i)omit “or gains”; and

(ii)for “paragraph 9 of Schedule 10 to the Finance (No. 2) Act 1992” substitute “section 791 to 794 of ITTOIA (full rent-a-room relief)”; and

(b)in paragraph (b) for “or gains by paragraph 11 of that Schedule” substitute “by section 795 to 798 of ITTOIA (alternative calculation of profits if amount exceeds limit)”.

Amendment of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002

20.—(1) The Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002(23) are amended as follows.

(2) In regulation 2(1) (interpretation) for the definition of “employment zone” substitute—

“employment zone” means an area within Great Britain—

(a)

subject to a designation for the purposes of the Employment Zones Regulations 2003(24) by the Secretary of State, or

(b)

listed in the Schedule to the Employment Zones (Allocation to Contractors) Pilot Regulations 2005(25),

pursuant to section 60 of the Welfare Reform and Pensions Act 1999(26);.

(3) In regulation 4(2)(f) for “the Employment Zones Regulations 2000” substitute “the Employment Zones Regulations 2003 and the Employment Zones (Allocation to Contractors) Pilot Regulations 2005”.

(4) In regulation 14(1A)(27) (charges not included in the definition of child care charges) after (b) add—

(c)a provider mentioned in regulation 14(2)(c)(v), in circumstances where the care is excluded from being qualifying child care by Article 4(2)(c) of the Tax Credits (Approval of Home Child Care Providers) Scheme (Northern Ireland) 2006(28)..

(5) In regulation 14(2)(b) (definition of child care in Scotland) after (i) add—

(ia)by a child care agency where the service consists of or includes supplying, or introducing to persons who use the service, child carers within the meaning of sections 2(7) and (8) of the Regulation of Care (Scotland) Act 2001(29); or.

(6) In regulation 14(2)(c) (definition of child care in Northern Ireland) after (iv) add—

(v)by a child care provider approved in accordance with the Tax Credits (Approval of Home Child Care Providers) Scheme (Northern Ireland) 2006..

Gillian Merron

Dave Watts

Two of the Lords Commissioners for Her Majesty’s Treasury

14th March 2006

David Varney

Mike Hanson

Two of the Commissioners for Her Majesty’s Revenue and Customs

13th March 2006

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