PART I THE CHARGE TO TAX
The six Schedules
M1C2C115 Schedule A.
1
The Schedule referred to as Schedule A is as follows:—
F6SCHEDULE A
1
1
Tax is charged under this Schedule on the annual profits arising from a business carried on for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land in the United Kingdom.
2
To the extent that any transaction is entered into for the exploitation, as a source of rents or other receipts, of any estate, interest or rights in or over land in the United Kingdom, it is taken to be entered into in the course of such a business.
3
All businesses and transactions carried on or entered into by a particular person or partnership, so far as they are businesses or transactions the profits of which are chargeable to tax under this Schedule, are treated for the purposes of this Schedule as, or as entered into in the course of carrying on, a single business.
There are qualifications to this rule in the case of—
a
companies not resident in the United Kingdom (see subsection (1A) below); and
b
insurance companies (see sections 432AA and 441B(2A)).
4
The receipts referred to in the expression “as a source of rents or other receipts” include—
a
payments in respect of a licence to occupy or otherwise to use land or the exercise of any other right over land, and
b
rentcharges F11. . . and other annual payments reserved in respect of, or charged on or issuing out of, the land.
2
1
This Schedule does not apply to profits arising from the occupation of land.
2
This Schedule does not apply to—
a
profits charged to tax under Case I of Schedule D under—
section 53(1) (farming and market gardening), or
section 55 (mines, quarries and other concerns);
b
receipts or expenses taken into account as trading receipts or expenses under section 98 (tied premises);
c
rent charged to tax under Schedule D under—
section 119 (rent, etc. payable in connection with mines, quarries and other concerns), or
section 120(1) (certain rent, etc. payable in respect of electric line wayleaves).
C3C43
The profits of a Schedule A business carried on by a company shall be computed without regard to items giving rise to—
credits or debits within Chapter II of Part IV of the Finance Act 1996 (loan relationships), or
F9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F10credits or debits within Schedule 26 to the Finance Act 2002 (derivative contracts).
This Schedule does not affect the operation of those provisions.
3
1
For the purposes of this Schedule a right to use a caravan or houseboat, where the use to which the caravan or houseboat may be put in pursuance of the right is confined to use at a single location in the United Kingdom, is treated as a right deriving from an estate or interest in land in the United Kingdom.
2
In sub-paragraph (1)—
“caravan” has the meaning given by section 29(1) of the Caravan Sites and Control of Development Act 1960; and
“houseboat” means a boat or similar structure designed or adapted for use as a place of human habitation.
4
1
In the case of a furnished letting, any sum payable for the use of furniture shall be taken into account in computing the profits chargeable to tax under this Schedule in the same way as rent.
Expenses in connection with the provision of furniture shall similarly be taken into account in the same way as expenses in connection with the premises.
2
A furnished letting means where—
a
a sum is payable in respect of the use of premises, and
b
the tenant or other person entitled to the use of the premises is also entitled, in connection with that use, to the use of furniture.
3
This paragraph does not apply if the receipts and expenses are taken into account in computing the profits of a trade consisting in, or involving, making furniture available for use in premises.
4
In this paragraph—
a
any reference to a sum includes the value of consideration other than money, and references to a sum being payable shall be construed accordingly; and
b
“premises” includes a caravan or houseboat within the meaning of paragraph 3.
F71A
In the case of a company which is not resident in the United Kingdom—
a
businesses carried on and transactions entered into by it the profits of which are within the charge to corporation tax under Schedule A, and
b
businesses carried on and transactions entered into by it the profits of which are F12the profits of a UK property business within the charge to income tax under Chapter 3 of Part 3 of ITTOIA 2005,
are treated F13for the purposes of those charges as separate businesses.
2
F8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
F5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F143A
Subsection (1) applies for corporation tax purposes (and does not apply for income tax purposes except so far as necessary to ensure its application for corporation tax purposes by virtue of section 9).
4
Part II contains further provisions relating to the charge to tax under Schedule A F15and under Chapter 3 of Part 3 of ITTOIA 2005 (profits of a property business).
F116 Schedule B.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F217 Schedule C.
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18 Schedule D.
1
M2The Schedule referred to as Schedule D is as follows:—
SCHEDULE D C5
C14Tax under this Schedule shall be charged in respect of—
- a
the annual profits or gains arising or accruing—
- i
to any person residing in the United Kingdom from any kind of property whatever, whether situated in the United Kingdom or elsewhere, and
- ii
to any person residing in the United Kingdom from any trade, profession or vocation, whether carried on in the United Kingdom or elsewhere, and
- iii
C6to any person, whether a Commonwealth citizen or not, although not resident in the United Kingdom from any property whatever in the United Kingdom or from any trade, profession or vocation exercised within the United Kingdom, and
- i
- b
all interest of money, annuities and other annual profits or gains F17not charged under Schedule A F24or under ITEPA 2003 as employment income, pension income or social security income, and not specially exempted from tax.
- a
2
M3Tax under Schedule D shall be charged under the Cases set out in subsection (3) below, and subject to and in accordance with the provisions of the Tax Acts applicable to those Cases respectively.
C7C8C9C103
The Cases are—
C11Case I: | tax in respect of any trade carried on in the United Kingdom or elsewhere F16but not contained in Schedule A; |
C12Case II: | tax in respect of any profession or vocation not contained in any other Schedule; |
tax in respect of— | |
(a) any interest of money, whether yearly or otherwise, or any annuity or other annual payment, whether such payment is payable within or out of the United Kingdom, either as a charge on any property of the person paying the same by virtue of any deed or will or otherwise, or as a reservation out of it, or as a personal debt or obligation by virtue of any contract, or whether the same is received and payable half-yearly or at any shorter or more distant periods, but not including any payment chargeable under Schedule A, and | |
(b) all discounts, and | |
(c) income F18from securities which is payable out of the public revenue of the United Kingdom or Northern Ireland; | |
C12Case IV: | tax in respect of income arising from securities out of the United Kingdom F19. . . ; |
tax in respect of income arising from possessions out of the United Kingdom not being F25employment income, pension income or social security income on which tax is charged under ITEPA 2003; | |
tax in respect of any annual profits or gains not falling under any other Case of Schedule D and not charged by virtue of F20Schedule A F26or by virtue of ITEPA 2003 as employment income, pension income or social security income. |
F213A
For the purposes of corporation tax subsection (3) above shall have effect as if the following Case were substituted for Cases III and IV, that is to say—
Case III: | tax in respect of— (a) profits and gains which, as profits and gains arising from loan relationships, are to be treated as chargeable under this Case by virtue of Chapter II of Part IV of the Finance Act 1996; (b) any annuity or other annual payment which— (i) is payable (whether inside or outside the United Kingdom and whether annually or at shorter or longer intervals) in respect of anything other than a loan relationship; and (ii) is not a payment chargeable under Schedule A; F31(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
and as if Case V did not include tax in respect of any income falling within paragraph (a) of the substituted Case III.
F223B
The references in Case IV of Schedule D to income arising from securities out of the United Kingdom, and in Case V of Schedule D to income arising from possessions out of the United Kingdom, shall be taken, in the case of relevant foreign holdings, to include references to the following—
a
any proceeds of such a sale or other realisation of coupons for foreign dividends as is effected by a bank in the United Kingdom which pays the proceeds over or carries them into an account;
b
any proceeds of a sale of such coupons to a dealer in coupons in the United Kingdom by a person who is not a bank or another dealer in coupons.
3C
In this section “relevant foreign holdings” means—
a
any securities issued by or on behalf of a government or a public or local authority in a country outside the United Kingdom; or
b
any shares or securities issued by or on behalf of a body of persons not resident in the United Kingdom;
and “securities” here includes loan stock and similar securities.
3D
In this section “foreign dividends” means—
a
in relation to relevant foreign holdings falling within subsection (3C)(a) above, interest or annual payments payable out of the revenue of the government or authority in question; and
b
in relation to relevant foreign holdings falling within subsection (3C)(b) above, any dividends, interest or annual payments payable in respect of the holdings in question.
3E
In this section—
a
“bank” has the meaning given by section 840A; and
b
references to coupons include, in relation to any foreign dividends, warrants for and bills of exchange purporting to be drawn or made in payment of those dividends.
4
M4The provisions of Schedule D and of subsection (2) above are without prejudice to any other provision of the Tax Acts directing tax to be charged under Schedule D or under one or other of the Cases set out in subsection (3) above, and tax directed to be so charged shall be charged accordingly.
F284A
Subsections (1) to (4) apply for corporation tax purposes (and do not apply for income tax purposes except so far as necessary to ensure their application for corporation tax purposes by virtue of section 9).
5
F276
F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19 Schedule E.
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20 Schedule F.
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .