Finance Act 2020

Sections 15 and 16

SCHEDULE 2 The loan charge: consequential amendments

PART 1 Amendments to F(No.2)A 2017 in consequence of section 15

1 Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

2 In paragraph 1 (application of Part 7A of ITEPA 2003: relevant step) in sub-paragraph (2) for the words from “before” to the end substitute “before the end of 5 April 2019.”

3 For the italic heading before paragraph 2 substitute “Meaning of “loan” and “quasi loan””.

4 In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment date”) omit sub-paragraph (6).

5 (1) Paragraph 4 (when an amount of a loan is outstanding: certain repayments to be disregarded) is amended as follows.

(2) In sub-paragraph (1)(b)(ii) for “the relevant date” substitute “5 April 2019”.

(3) In sub-paragraph (2) for “the relevant date” substitute “5 April 2019”.

(4) Omit sub-paragraph (4).

6 In paragraph 5 (meaning of “outstanding”: loans where A or B acquires a right to payment of the loan) in sub-paragraph (1)(b) for “6 April 1999” substitute “9 December 2010”.

7 In paragraph 13 (meaning of “outstanding”: quasi-loans where A or B acquires a right to the payment or transfer of assets) in sub-paragraph (1)(b) for “6 April 1999” substitute “9 December 2010”.

8 Omit paragraph 19 (meaning of “approved fixed term loan”) and the italic heading before that paragraph.

9 For the heading of Part 2 substitute “Accelerated payments”.

10 Omit paragraphs 20 to 22 and the italic headings before each of those paragraphs.

11 Omit the italic heading before paragraph 23.

12 (1) Paragraph 23 (accelerated payments) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (d) for “the relevant date” substitute “5 April 2019”, and

(b) in paragraph (e) for “the relevant date” substitute “5 April 2019”.

(3) Omit sub-paragraph (4).

13 (1) Paragraph 35A (when the duty to provide loan charge information arises) is amended as follows.

(2) Omit sub-paragraph (3).

(3) In sub-paragraph (4) in the words before paragraph (a) for “third” substitute “second”.

(4) In sub-paragraph (5)—

(a) in the words before paragraph (a) for “fourth” substitute “third”,

(b) in paragraph (a) for the words from the beginning to “conditions” substitute “neither the first nor the second condition”, and

(c) in paragraph (b)—

(i) for “and (2)(b)” substitute “and (2)”, and

(ii) omit the words from “(and if paragraph” to “omitted)”.

(5) In sub-paragraph (6) in the words before paragraph (a) for “fourth” substitute “third”.

(6) In sub-paragraph (7) omit paragraph (b).

14 In paragraph 35B (duty of appropriate third party to provide information to A) in sub-paragraph (1) omit “Q,”.

15 (1) Paragraph 35D (meaning of “loan charge information”) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (e) omit “, or the loan mentioned in paragraph 35A(3)(a),”,

(b) in paragraph (j) omit “, Q”, and

(c) in paragraph (k) omit “, or in a case within paragraph 35A(3)(a),”.

(3) In sub-paragraph (2) omit paragraph (a).

16 (1) Paragraph 36 (duty to provide loan charge information to B) is amended as follows.

(2) In sub-paragraph (1)(b) for “6 April 1999” substitute “9 December 2010”.

(3) In sub-paragraph (2) for the words from “the period” to the end substitute “15 April 2019”.

(4) Omit sub-paragraph (4).

17 Schedule 12 to F(No.2)A 2017 (trading income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

18 For the italic heading before paragraph 2 substitute “Meaning of “loan” and “quasi loan””.

19 In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment date”) omit sub-paragraph (6).

20 Omit paragraphs 15 to 18 and the italic heading before each of those paragraphs.

21 (1) Paragraph 19 (accelerated payments: application of paragraph 20) is amended as follows.

(2) In sub-paragraph (1)—

(a) in paragraph (e) for “the relevant date” substitute “5 April 2019”, and

(b) in paragraph (f) for “the relevant date” substitute “5 April 2019”.

(3) Omit sub-paragraph (3).

22 In paragraph 23 (meaning of “loan charge information”) in sub-paragraph (2) omit paragraph (a).

PART 2 Amendments in consequence of section 16

ITEPA 2003

23 ITEPA 2003 is amended as follows.

24 (1) Section 554A (application of Chapter 2 of Part 7A: the main case) is amended as follows.

(2) In subsection (2) after “paragraph 1” insert “or 1A”.

(3) For subsection (4) substitute—

“(4) Chapter 2 does not apply by reason of—

(a) a relevant step taken on or after A’s death if—

(i) the relevant step is within section 554B, or

(ii) the relevant step is within section 554C by virtue of subsection (1)(ab) of that section,

(b) a relevant step within paragraph 1 of Schedule 11 to F(No.2)A 2017 which is treated as being taken on or after A’s death, or

(c) a relevant step within paragraph 1A of Schedule 11 to F(No.2)A 2017 in a case where the initial step (within the meaning given by sub-paragraph (1)(a) of that paragraph) is treated as being taken on or after A’s death.”

25 In section 554Z (interpretation: general) in subsection (10)(d) after “paragraph 1” insert “or 1A”.

F(No.2)A 2017

26 Schedule 11 to F(No.2)A 2017 (employment income provided through third parties: loans etc outstanding on 5 April 2019) is amended as follows.

27 In paragraph 2 (meaning of “loan”, “quasi-loan” and “approved repayment date”)—

(a) in sub-paragraph (2), in the words before paragraph (a), for “paragraph 1” substitute “paragraphs 1 and 1A”,

(b) in sub-paragraph (4) for “paragraph 1” substitute “paragraphs 1 and 1A”, and

(c) in sub-paragraph (5) for “paragraph 1” substitute “paragraphs 1 and 1A”.

28 In paragraph 3(1) (meaning of “outstanding”: loans) for “paragraph 1” substitute “paragraphs 1 and 1A”.

29 In paragraph 4 (when an amount of a loan is outstanding: certain repayments to be disregarded) in sub-paragraph (6) for “the relevant step treated as taken by paragraph 1” substitute “a relevant step treated as taken by paragraph 1 or 1A”.

30 In paragraph 5 (meaning of “outstanding”: loans where A or B acquires a right to payment of the loan) in sub-paragraph (2)(b) for “paragraph 1(4)” substitute “paragraphs 1(4) and 1A(5)”.

31 In paragraph 7 (meaning of “outstanding”: loans in currencies other than stirling) in sub-paragraph (3) after “relevant step” insert “within paragraph 1”.

32 In paragraph 10 (meaning of “outstanding”: loans made in a depreciating currency) in sub-paragraph (1)(b) after “relevant step” insert “within paragraph 1”.

33 In paragraph 11(1) (meaning of “outstanding”: quasi-loans) for “paragraph 1” substitute “paragraphs 1 and 1A”.

34 In paragraph 12 (certain payments or transfers to be disregarded for the purposes of paragraph 11) in sub-paragraph (5) for “the relevant step treated as taken by paragraph 1” substitute “a relevant step treated as taken by paragraph 1 or 1A”.

35 In paragraph 13 (meaning of “outstanding”: quasi-loans where A or B acquires a right to the payment or transfer of assets) in sub-paragraph (2)(b) for “paragraph 1(4)” substitute “paragraphs 1(4) and 1A(5)”.

36 In paragraph 15 (meaning of “outstanding”: quasi-loans in currencies other than sterling) in sub-paragraph (3) after “relevant step” insert “within paragraph 1”.

37 In paragraph 18 (meaning of “outstanding”: quasi-loans made in a depreciating currency) in sub-paragraph (1)(b) after “relevant step” insert “within paragraph 1”.

38 After paragraph 35 insert—

“Exclusion for relevant step within paragraph 1A where initial step excluded

35ZA Chapter 2 of Part 7A of ITEPA 2003 does not apply by reason of a relevant step within paragraph 1A if that Chapter does not apply by reason of the initial step (within the meaning given by sub-paragraph (1)(a) of paragraph 1A).”

Social Security (Contributions) Regulations 2001

39 (1) The Social Security (Contributions) Regulations 2001 (S.I. 2001/1004) are amended as follows.

(2) In regulation 22B (amounts to be treated as earnings: Part 7A of ITEPA 2003) in paragraph (3A)(a) after “paragraph 1” insert “or 1A”.

(3) In regulation 22C (amounts to be treated as earnings paid to or for the benefit of the earner: Schedule 11 to F(No.2)A 2017) in paragraph (1)—

(a) after “paragraph 1” insert “or 1A”, and

(b) after “paragraph 1(2)” insert “or 1A(3) or (4)”.