Finance Act 2003

Method of charging gain to tax U.K.

7 (1) Section 547 of the Taxes Act 1988 is amended as follows. U.K.

(2) In subsection (1) (attribution of gain) in paragraph (a) (which refers to trusts created by an individual) before “trusts” insert “ non-charitable ”.

(3) In paragraph (b) of that subsection (which refers to trusts created by a company) before “trusts” insert “ non-charitable ”.

(4) After paragraph (c) of that subsection (personal representatives) insert—

“(cc) if, immediately before the happening of that event, those rights—

(i) were held on charitable trusts, or

(ii) were held as security for a debt owed by trustees of a charitable trust,

subsection (9) or (10) below (as the case may be) shall apply in relation to the amount of the gain;”.

(5) In paragraph (d) of that subsection (trusts) in sub-paragraph (i) (rights held on trusts etc) before “trusts”, where first occurring, insert “ non-charitable ”.

(6) For the word “or” at the end of sub-paragraph (i) of that paragraph substitute the following sub-paragraph—

“(ia) those rights were held on non-charitable trusts and the circumstances were not such as are mentioned in paragraph (a), (b) or (c) above or sub-paragraph (i) above, or”.

(7) In sub-paragraph (ii) of that paragraph (rights held as security for debt owed by trustees) after “trustees” insert “ of a non-charitable trust ”.

(8) After subsection (4) insert—

“(4A) In subsection (1) above—

(a) paragraph (cc) is subject to paragraph 12(1) of Schedule 34 to the Finance Act 2003 (which applies paragraph 7(1) of Schedule 14 to the Finance Act 1998);

(b) paragraph (d)(ia) is subject to paragraph 12(2) of that Schedule (exception for certain cases where insurance etc made or effected before 9th April 2003).”.

(9) In subsection (5AA) (which, in a case falling within subsection (1)(d), applies, with modifications, to trustees the tax treatment for individuals under subsection (5)) for “subsection (1)(d)” substitute “ subsection (1)(cc) or (d) ”.

(10) In subsection (9) (treatment of gains in case falling within subsection (1)(d) where trustees resident in United Kingdom)—

(a) for “(1)(d)” substitute “ (1)(cc) or (d) ”; and

(b) in paragraph (b) (gain to be chargeable to income tax at the rate applicable to trusts) for “the rate applicable to trusts” substitute “ the appropriate rate ”.

(11) After subsection (9) insert—

“(9A) For the purposes of subsection (9) above, the “appropriate rate” for any year—

(a) in a case falling within subsection (1)(cc) above, is the basic rate for that year; and

(b) in a case falling within subsection (1)(d) above, is the rate applicable to trusts for that year.”.

(12) In subsection (10) (treatment of gains in case falling within subsection (1)(d) where trustees not resident in United Kingdom) for “(1)(d)” substitute “ (1)(cc) or (d) ”.