Finance Act 2013

Special charging rules for savings and investment income U.K.

82 U.K. Part 4 of ITTOIA 2005 (savings and investment income) is amended as follows.

83 U.K. In section 368 (territorial scope of charges in respect of savings and investment income), after subsection (2) insert—

“(2A) If income arising to an individual who is UK resident arises in the overseas part of a split year, it is to be treated for the purposes of this section as arising to a non-UK resident.”

84 U.K. In section 465 (person liable for tax on gains from life insurance etc: individuals), after subsection (1) insert—

“(1A) But if the tax year is a split year as respects the individual, the individual is not liable for tax under this Chapter in respect of gains arising in the overseas part of that year (subject to section 465B).”

85 U.K. In section 467 (person liable: UK resident trustees), in subsection (4), after paragraph (a) insert—

“(aa) is UK resident but the gain arises in the overseas part of a tax year that is, as respects the person who created the trusts, a split year,”.

86 (1) Section 528 (reduction in amount charged under Chapter 9 of Part 4: non-UK resident policy holders) is amended as follows. U.K.

(2) The amendments made by sub-paragraphs (3) to (6) apply to section 528 as substituted by paragraph 3 of Schedule 8 to this Act, and have effect in relation to policies and contracts in relation to which that section as so substituted has effect.

(3) In subsection (1)(b), for the words from “on which” to the end substitute “ that are foreign days ”.

(4) After subsection (1) insert—

“(1A) Foreign days” are—

(a) days falling within any tax year for which the individual is not UK resident, and

(b) days falling within the overseas part of any tax year that is a split year as respects the individual.”

(5) In subsection (3), in the definition of “A”, for “days falling within subsection (1)(b)” substitute “ foreign days ”.

(6) In subsection (8), for “subsection (1)(b)” substitute “ subsection (1A)(a) and (b) ”.

(7) The amendments made by sub-paragraphs (8) to (10) apply to section 528 as in force immediately before the substitution mentioned in sub-paragraph (2) so far as that section as so in force continues to have effect after the substitution.

(8) In subsection (1), for the words from “the policy holder” to the end substitute “ there are one or more days in the policy period that are foreign days. ”

(9) After that subsection insert—

“(1A) Foreign days” are—

(a) days on which the policy holder is not UK resident, and

(b) days falling within the overseas part of any tax year that is a split year as respects the policy holder (if the policy holder is an individual).”

(10) In subsection (3), in the definition of “A”, for the words from “on which” to the end substitute “ in the policy period that are foreign days, and ”.

87 (1) Section 528A (reduction in amount charged on basis of non-UK residence of deceased person), as inserted by paragraph 3 of Schedule 8 to this Act, is amended as follows. U.K.

(2) In subsection (1)(b), for the words from “on which” to the end substitute “ that were foreign days ”.

(3) In subsection (2)—

(a) in paragraph (b), for the words from “on which” to the end substitute “ that were foreign days, and ”, and

(b) for paragraph (c), substitute—

“(c) the deceased died—

(i) in a tax year for which the deceased was UK resident but not one that was a split year as respects the deceased, or

(ii) in the UK part of a tax year that was a split year as respects the deceased.”

(4) After that subsection insert—

“(2A) Foreign days” are—

(a) days falling within any tax year for which the deceased was not UK resident, and

(b) days falling within the overseas part of any tax year that was a split year as respects the deceased.”

(5) In subsection (4), in the definition of “A”, for the words from “are days falling” to the end substitute “ were foreign days, and ”.

(6) In subsection (8), for “subsection (1)(b) or (2)(b)” substitute “ subsection (2A)(a) and (b) ”.

88 (1) Section 536 (top slicing relieved liability: one chargeable event) is amended as follows. U.K.

(2) The amendment made by sub-paragraph (3) applies to section 536 as amended by paragraph 5 of Schedule 8 to this Act, and has effect in accordance with paragraph 7 of that Schedule.

(3) For subsection (7) substitute—

“(7) If in the case of the individual the gain is reduced under section 528—

(a) divide the number of foreign days in the material interest period (as determined in accordance with that section, including subsections (7) and (8)) by 365,

(b) if the result is not a whole number, round it down to the nearest whole number, and

(c) reduce N, for steps 1 and 3 in subsection (1), by the number found by applying paragraphs (a) and (b).”

(4) The amendment made by sub-paragraph (5) applies to section 536 as in force immediately before it is amended by paragraph 5 of Schedule 8 to this Act, so far as that section as so in force continues to have effect after it is so amended.

(5) For subsection (7) substitute—

“(7) If the gain is from such a policy—

(a) divide the number of foreign days in the policy period (as defined in section 528) by 365,

(b) if the result is not a whole number, round it down to the nearest whole number, and

(c) reduce N, for steps 1 and 3 in subsection (1), by the number found by applying paragraphs (a) and (b).”