Finance Act 2009

Part 2 U.K. Other amendments

ICTA U.K.

2 U.K. ICTA is amended as follows.

3 U.K. In section 13(7) (small companies' relief), omit “resident in the United Kingdom”.

4 (1) Section 505(1)(c) (charitable companies: general) is amended as follows. U.K.

(2) After sub-paragraph (ii) insert—

“(iizza) from tax under Part 9A of CTA 2009 (company distributions),”.

(3) Omit sub-paragraph (iib).

5 (1) Section 95ZA (taxation of UK distributions received by insurance companies) is amended as follows. U.K.

(2) In subsection (1), for “section 1285” substitute “ section 130(2) ”.

(3) In subsection (2)(a), omit “resident in the United Kingdom”.

6 (1) Section 231 (tax credits for certain recipients of qualifying distributions) is amended as follows. U.K.

(2) In subsection (1)—

(a) omit “and section 219(4B) of the Finance Act 1994”,

(b) for “resident in the United Kingdom makes a” substitute “ (whether resident in the United Kingdom or outside the United Kingdom) makes an exempt ”, and

(c) for “another such company” substitute “ a company resident in the United Kingdom ”.

(3) After subsection (1A) insert—

“(1B) For the purposes of subsection (1) a qualifying distribution is “exempt” if it is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

7 U.K. In section 795 (double taxation relief: computation of income subject to foreign tax), omit subsection (3A).

8 (1) Section 799 (double taxation relief: computation of underlying tax in respect of a dividend) is amended as follows. U.K.

(2) In subsection (3) (as it has effect as amended by paragraph 8 of Schedule 30 to FA 2000)—

(a) before paragraph (a) insert—

“(za) if the dividend is received in an accounting period of the recipient in which the recipient is not a small company, and the dividend is a relevant dividend, the profits in respect of which the dividend is paid;”,

(b) in paragraph (a), insert at the beginning “ in a case not falling under paragraph (za), ”, and

(c) in paragraph (c), insert at the beginning “in a case not falling under paragraph (za),”.

(3) After subsection (3) insert—

“(3A) For the purposes of subsection (3)—

(a) “small company” has the same meaning as in Part 9A of CTA 2009 (company distributions),

(b) “relevant dividend” means a dividend that, for the purposes of section 931H of that Act (dividends derived from transactions not designed to reduce tax), is treated as paid in respect of profits other than relevant profits (see subsection (4) of that section), and

(c) the profits in respect of which a dividend is paid are the profits in respect of which the dividend is treated as paid for the purposes of that section.”

9 U.K. Omit sections 806A to 806K (double taxation relief in relation to foreign dividends: onshore pooling and utilisation of eligible unrelieved foreign tax).

10 U.K. In section 826 (interest on tax overpaid), omit subsection (7BC).

11 (1) Paragraph 2 of Schedule 23A (manufactured dividends on UK equities: general) is amended as follows. U.K.

(2) After sub-paragraph (1) insert—

“(1A) Sub-paragraphs (1C) to (1E) apply where—

(a) a manufactured dividend is paid by a dividend manufacturer, and

(b) the dividend of which the manufactured dividend is representative is taxable.

(1B) For this purpose a dividend is “taxable” if—

(a) it is received by the dividend manufacturer and the charge to corporation tax on income applies to it, or

(b) it is received by a person other than the dividend manufacturer and the charge to corporation tax on income would have applied to it if it had been received by the dividend manufacturer.

(1C) Where the dividend manufacturer carries on a trade to which the manufactured dividend relates, and neither sub-paragraph (1D) nor (1E) applies, the manufactured dividend is to be treated as an expense of the trade.

(1D) Where the dividend manufacturer has investment business to which the manufactured dividend relates, the manufactured dividend is to be treated as expenses of management of the business for the purposes of Part 16 of CTA 2009.

(1E) Where the dividend manufacturer carries on life assurance business to which the manufactured dividend relates, the manufactured dividend is to be treated as if, to the extent that it is referable to basic life assurance and general annuity business, it were an expense payable falling to be brought into account at step 3 of section 76(7).

(1F) For the purposes of sub-paragraph (1E), the manufactured dividend is to be treated as referable to basic life assurance and general annuity business to the extent that the dividend of which it is representative—

(a) is received by the dividend manufacturer and is so referable by virtue of section 432A, or

(b) is received by a person other than the dividend manufacturer, and would have been so referable by virtue of section 432A if it had it been received by the dividend manufacturer.”

(3) In sub-paragraph (2), omit paragraph (b) (and the “and” before it).

(4) After sub-paragraph (3) insert—

“(3A) In its application in relation to a manufactured dividend by virtue of sub-paragraph (2) or (3), Part 9A of CTA 2009 (company distributions) has effect subject to the following modification.

(3B) The modification is that—

(a) the definition of “the payer” in section 931T is to be treated as omitted, and

(b) references in that Part to the payer are to be treated as references to the company that pays the dividend of which the manufactured dividend is representative.”

12 (1) Paragraph 4 of Schedule 23A (manufactured overseas dividends) is amended as follows. U.K.

(2) For sub-paragraph (1A) substitute—

“(1A) Sub-paragraphs (1C) to (1E) apply where the overseas dividend of which the manufactured overseas dividend is representative is taxable.

(1B) For this purpose an overseas dividend is “taxable” if—

(a) it is received by the overseas dividend manufacturer and the charge to corporation tax on income applies to it, or

(b) it is received by a person other than the overseas dividend manufacturer and the charge to corporation tax on income would have applied to it if it had been received by the overseas dividend manufacturer.

(1C) Where the overseas dividend manufacturer carries on a trade to which the manufactured overseas dividend relates, and neither sub-paragraph (1D) nor (1E) applies, the manufactured overseas dividend is to be treated as an expense of the trade.

(1D) Where the overseas dividend manufacturer has investment business to which the manufactured overseas dividend relates, the manufactured overseas dividend is to be treated as expenses of management of the business for the purposes of Part 16 of CTA 2009.

(1E) Where the overseas dividend manufacturer carries on life assurance business to which the manufactured overseas dividend relates, the manufactured overseas dividend is to be treated as if, to the extent that it is referable to basic life assurance and general annuity business, it were an expense payable falling to be brought into account at step 3 of section 76(7).

(1F) For the purposes of sub-paragraph (1E), the manufactured overseas dividend is to be treated as referable to basic life assurance and general annuity business to the extent that the overseas dividend of which it is representative—

(a) is received by the overseas dividend manufacturer and is so referable by virtue of section 432A, or

(b) is received by a person other than the dividend manufacturer, and would have been so referable by virtue of section 432A if it had it been received by the dividend manufacturer.”

(3) After sub-paragraph (4) insert—

“(4A) In its application in relation to a manufactured overseas dividend by virtue of sub-paragraph (4), Part 9A of CTA 2009 (company distributions) has effect—

(a) as if the manufactured overseas dividend were an overseas dividend on the overseas securities in question, and

(b) subject to the following modification.

(4B) The modification is that—

(a) the definition of “the payer” in section 931T is to be treated as omitted, and

(b) references in that Part to the payer are to be treated as references to the company that pays the dividend of which the manufactured overseas dividend is representative.”

13 U.K. In paragraph 5(3)(c) of Schedule 27 (distributing funds: United Kingdom equivalent profits)—

(a) for “section 1285” substitute “ Chapter 2 or 3 of Part 9A ”, and

(b) omit “in like manner as if they were dividends or distributions of a company resident outside the United Kingdom”.

14 U.K. In paragraph 5 of Schedule 28AA (provision not at arm's length), after sub-paragraph (7) insert—

“(8) For the purposes of sub-paragraph (1) section 209(2)(d) (excessive interest etc treated as distribution) is to be disregarded.”

FA 1989 U.K.

15 U.K. FA 1989 is amended as follows.

16 (1) Section 85A (life assurance: excess adjusted Case I profits) is amended as follows. U.K.

(2) In paragraph (a) of subsection (6), for “distributions received by the company in the accounting period from companies resident in the United Kingdom” substitute “ non-taxable distributions received by the company in the accounting period ”.

(3) After that subsection insert—

“(6A) In this section “non-taxable distribution” means—

(a) a distribution that is exempt for the purposes of Part 9A of the Corporation Tax Act 2009 (company distributions), and

(b) does not include any amount withheld from the distribution on account of tax payable under the laws of a territory outside the United Kingdom.”

17 (1) Section 89 (life assurance: policy holders' share of profits) is amended as follows. U.K.

(2) In subsection (2)(b), for “distributions received from companies resident in the United Kingdom” substitute “ non-taxable distributions received ”.

(3) In subsection (7), after the definition of “Case I profits” insert—

““non-taxable distribution” has the same meaning as in section 85A.”

FA 1994 U.K.

18 U.K. In section 219 of FA 1994 (taxation of profits of Lloyd's underwriters etc)—

(a) in subsection (3), omit “Subject to subsection (4A) below,”, and

(b) omit subsections (4), (4A) and (4C).

FA 2006 U.K.

19 U.K. In Schedule 17 to FA 2006 (group REITs modifications), in paragraph 32 (non-UK resident members), omit sub-paragraph (7).

CTA 2009 U.K.

20 U.K. CTA 2009 is amended as follows.

21 U.K. In section 1(2) (overview of Act), before the “and” at the end of paragraph (f) insert—

“(fa) Part 9A (company distributions),”.

22 U.K. For section 130 (traders receiving distributions etc) substitute—

“Insurers U.K.

130 Insurers receiving distributions etc

(1) This section applies for the purpose of calculating the trading profits of—

(a) insurance business other than life assurance business, or

(b) any category of such business.

(2) A receipt that is exempt for the purposes of Part 9A (company distributions) is not brought into account in calculating the profits of the trade.”

23 U.K. In section 932(1) (overview of Part 10), omit paragraph (a).

24 U.K. Omit Chapter 2 of Part 10 (taxation of dividends from non-UK resident companies).

25 (1) Section 974 (charge to tax in relation to sale of foreign dividend coupons) is amended as follows. U.K.

(2) In subsection (3)(a), after “realisation of” insert “ taxable ”.

(3) In subsection (4), after “sale of” insert “ taxable ”.

(4) After subsection (4) insert—

“(4A) For the purposes of subsections (3) and (4) a dividend coupon is “taxable” if the associated dividend would not have been exempt for the purposes of Part 9A (company distributions) had it been paid to the holder of the shares.”

26 U.K. In section 982(1)(a) and (2)(a) (boundary provisions for Part 10), omit “2,”.

27 U.K. Omit section 1285 (exemption for distributions of UK resident companies).

28 U.K. In section 1310(4) (orders and regulations subject to affirmative resolution procedure in House of Commons), before paragraph (a) insert—

“(za) section 931C (meaning of “qualifying territory”),”.

29 U.K. In Schedule 4 (index of defined expressions), insert at the appropriate places—

“ordinary share (in Part 9A)

section 931U”;

“the payer (in Part 9A)

section 931T”;

“the recipient (in Part 9A)

section 931T”;

“redeemable (in Part 9A)

section 931U”;

“a relevant person (in Part 9A)

section 931T”;

“scheme (in Part 9A)

section 931V”;

“small company (in Part 9A)

section 931S”;

“tax advantage scheme (in Part 9A)

section 931V”.

Consequential repeals U.K.

30 U.K. In consequence of the amendments made by this Schedule, omit—

(a) in F(No.2)A 1997, section 22(2) and (3)(a),

(b) in FA 2000, in Schedule 30, paragraphs 8(4)(c), 21 and 22,

(c) in FA 2001, in Schedule 27, paragraphs 1(3), 4 and 5,

(d) in FA 2008, in Schedule 39, paragraph 25, and

(e) in CTA 2009, in Schedule 1, paragraphs 174(4)(c), 252 to 254 and 392(4) and (5).