Income Tax (Trading and Other Income) Act 2005

Part 9 Exempt income

Ulster savings certificates

138 In the case of certificates acquired before 27th July 1981, section 693(5) applies with the substitution for “the Department of Finance and Personnel” of “the Treasury”.

SAYE interest

139 Any scheme which was certified as mentioned in section 326(2)(c), (3)(b) or (4)(b) of ICTA before 1st December 1994 is treated as a certified SAYE savings arrangement for the purposes of Chapter 4 of Part 6 of this Act.

140 A European authorised institution arrangement is not an institutional arrangement for the purposes of Chapter 4 of Part 6 if the arrangement was established before 2nd May 1995.

141 (1) Neither—

(a) the Treasury specification rules, nor

(b) the Treasury authorisation rules,

apply to any scheme which was certified as mentioned in section 326(3)(b), (4)(b) or (5)(b) of ICTA before 31st July 1995.

(2) In sub-paragraph (1)—

• “the Treasury specification rules” means sections 705(1)(b) and (2) to (4) and 706 of this Act, and

• “the Treasury authorisation rules” means sections 707 and 708 of this Act.

Venture capital trust dividends: shares acquired before the tax year 2004-05

142 In the case of dividends paid in respect of shares acquired before the tax year 2004-05, Chapter 5 of Part 6 (venture capital trust dividends) applies as if the references in section 709(4) (annual acquisition limit) to £200,000 were references to £100,000.

Purchased life annuity payments: old determinations concerning capital elements

143 (1) Any determination in relation to an annuity as to the amount of the capital element that was made under Chapter 5 of Part 14 of ICTA before 6th April 2005 and any decision on appeal that was so made against such a determination have effect on and after that date, so far as is required for the purposes of this Act, as a determination or decision as to the extent to which annuity payments made under the annuity are within section 717(1) (exemption for part of purchased life annuity payments) in accordance with section 719 (extent of exemption under that section).

(2) And a notification of such a determination or appeal or of an alteration of such a determination has effect accordingly.

Purchased life annuity payments: carry forward of excess capital elements

144 (1) This paragraph applies if, in the case of an annuity to which section 656(2) of ICTA applied immediately before 6th April 2005, the total of the amounts determined in accordance with that section to be capital elements in respect of the annuity payments that arose before that date (and accordingly not to be annual payments for income tax purposes) exceeded the total of those annuity payments.

(2) The amount of the excess is to be added to the fixed sum mentioned in section 719(4) for the first payment that arises after 5th April 2005.

Purchased life annuity payments: penalty for false statements

145 (1) Section 723(7) (liability to penalty for false statements and representations to obtain exemption under Chapter 7 of Part 6) does not apply (and section 658(5) of ICTA continues to apply) to any statement or representation made before 6th April 2005, despite the fact that it relates to the tax year 2005-06 or any subsequent tax year.

(2) Section 723(7) (liability to penalty for false statements and representations to obtain exemption under Chapter 7 of Part 6) applies (and section 658(5) of ICTA does not apply) to any statement or representation made on or after 6th April 2005, despite the fact that it relates to a tax year before the tax year 2005-06.

Certain annual payments by individuals

146 (1) Sections 727 (exemption for certain annual payments by individuals) and 730 (exemption for foreign maintenance payments) do not apply to—

(a) any payment falling due before 16th March 1988, or

(b) any payment falling due on or after that date but before 6th April 2000 to which this paragraph applies.

(2) Paragraph (b) of sub-paragraph (1) applies to a payment made in pursuance of an existing obligation (within the meaning of section 36(3) of FA 1988) unless it meets any of conditions A to E.

(3) Condition A is that the payment is treated as income of the payer under Chapter 5 of Part 5 as a result of section 624 or 629.

(4) Condition B is that the payment fell due from a husband to a wife or a wife to a husband at a time after 5th April 1990 when they were living together.

(5) Condition C is that an election is duly made under section 39 of FA 1988 in respect of the payment.

(6) Condition D is that the payment fell due on or after 6th April 1994 and is made—

(a) in pursuance of an obligation within section 36(4)(a) to (c) of FA 1988 that is an obligation under—

(i) an order made by a court,

(ii) a written or oral agreement, or

(iii) a deed executed for giving effect to an agreement, and

(b) for the benefit, maintenance or education of a person (whether or not the person to whom the payment is made) who attained the age of 21 on or before the day on which the payment fell due but after 5th April 1994.

(7) Condition E is that—

(a) the payment is made in pursuance of an obligation within section 36(4)(a) of FA 1988 (existing obligations under certain court orders),

(b) the payment is made for the benefit, maintenance or education of a person (whether or not the person to whom the payment is made) who attained the age of 21 before 6th April 1994, and

(c) section 38 of FA 1988 (treatment of certain maintenance payments under existing obligations) does not apply to the payment.

Annual payments for non-taxable consideration

147 Section 729 (exemption for payments for non-taxable consideration) applies in the case of an annuity granted before 30th March 1977—

(a) with the substitution in subsection (1) of “condition B, C or D” for “condition B or C”, and

(b) with the substitution of the following subsections for subsection (5)—

“(5) Condition D is that the payment is a payment under an annuity charged on an interest in settled property and granted by an individual to a company—

(a) whose business then consisted wholly or mainly in the acquisition of interests in settled property, or

(b) which was then carrying on life assurance business in the United Kingdom.

(6) In the application of subsections (4) and (5) to Scotland, the references in those subsections to settled property are to be read as references to property held in trust.”

Periodical payments of personal injury damages etc.

148 (1) Subject to sub-paragraphs (4) and (5), sections 731, 733 and 734 apply with the modifications in sub-paragraphs (2) and (3).

(2) In section 731 (periodical payments of personal injury damages)—

(a) for subsection (2) substitute—

“(2) This subsection applies to periodical payments made in pursuance of—

(a) a court order making a final or interim award of damages in respect of personal injury,

(b) an agreement settling a claim or action for such damages, or

(c) an agreement for a payment on account of the damages that may be awarded in such an action.”,

(b) in subsection (3)(b) for the words from “agreement” to the end of the paragraph substitute “or agreement as is mentioned in subsection (2) or a subsequent agreement”, and

(c) omit subsection (6).

(3) In sections 733(a) and 734(1)(a)(i) for “agreement, undertaking” substitute “or agreement”.

(4) The modifications in sub-paragraphs (2) and (3) do not apply if an order has been made under section 110(1) of the Courts Act 2003 (c. 39) (commencement) making provision for section 100(2) and (3) of that Act to come into force on a day earlier than 6th April 2005.

(5) The power in section 110(1) of that Act includes power to make provision in accordance with which the modifications in sub-paragraphs (2) and (3) do not apply on or after a day appointed by the order that is later than 5th April 2005.