6Expenditure on software or consumable items

1

For the purposes of this Schedule expenditure on software or consumable items means expenditure on—

a

computer software, or

b

consumable or transformable materials,

and references to software or consumable items shall be construed accordingly.

2

For the purposes of this Schedule consumable or transformable materials include water, fuel and power.

3

Expenditure on software or consumable items is attributable to relevant research and development if the software or consumable items are employed directly in such research and development.

4

In the case of software or consumable items partly employed directly in relevant research and development, an appropriate portion of the expenditure on the software or consumable items is treated as attributable to relevant research and development.

5

For the purposes of sub-paragraphs (3) and (4), software or consumable items employed in the provision of services, such as secretarial or administrative services, in support of other activities are not, by virtue of their employment in the provision of those services, to be treated as themselves directly employed in those other activities.

31ADeductions for expenditure by landlords on energy-saving items

1

This section applies to a Schedule A business if the land mentioned in paragraph 1(1) of Schedule A consists of or includes a dwelling-house.

2

In computing for the purposes of income tax the profits of a Schedule A business to which this section applies, a deduction shall be allowed in respect of any expenditure to which subsection (3) applies.

That is subject to any provision of regulations under subsection (13).

3

This subsection applies to expenditure as respects which the numbered conditions set out in the following provisions of this section (“the qualifying conditions”) are satisfied.

4

Condition 1 is that the expenditure is incurred in the provision of a qualifying energy-saving item in the dwelling-house.

5

Condition 2 is that the expenditure is incurred on or after 6th April 2004 but before 6th April 2009.

6

Condition 3 is that the expenditure is incurred wholly and exclusively for the purposes of the Schedule A business.

7

Condition 4 is that the expenditure is capital expenditure.

8

Condition 5 is that, apart from this section, the expenditure is not deductible in computing the profits of the Schedule A business.

9

Condition 6 is that no allowance under the Capital Allowances Act may be claimed in respect of the expenditure.

10

Condition 7 is that the expenditure is not incurred in respect of the provision of an item in a dwelling-house which, at the time when the item is installed,—

a

is in the course of construction, or

b

is comprised in land in which the person claiming the deduction under this section does not have an interest or is in the course of acquiring an interest or further interest.

11

Condition 8 is that for the purposes of section 503 (letting of furnished holiday accommodation to be treated as a trade for certain purposes) either—

a

the Schedule A business does not consist to any extent in the commercial letting of furnished holiday accommodation, or

b

if it does so consist to any extent, the dwelling-house does not constitute any or all of the furnished holiday accommodation in question.

12

Condition 9 is that the income of the person claiming the deduction is not computed in accordance with paragraph 9 or 11 of Schedule 10 to the Finance (No. 2) Act 1992 (furnished accommodation) in respect of any qualifying residence which consists of or includes the dwelling-house.

13

The Treasury may by regulations make provision for any of the following purposes—

a

restricting or reducing the amount of expenditure in respect of which deductions may be claimed under this section;

b

excluding entitlement to a deduction under this section in such cases as may be specified in, or determined in accordance with, the regulations;

c

determining which of two or more persons is (and which is not) entitled to a deduction under this section in cases where different persons have different interests in land consisting of or including the whole or part of a building containing one or more dwelling-houses;

d

making apportionments (including apportioning amounts to companies which are not entitled to a deduction under this section) in cases where—

i

a Schedule A business is carried on by two or more persons in partnership, or

ii

an interest in land is beneficially owned by two or more persons jointly or in common.

14

Section 31B supplements this section.

31BProvisions supplementary to section 31A

1

This section has effect for the purpose of supplementing section 31A and shall be construed as one with that section.

2

Section 31A does not have effect for the purposes of corporation tax.

3

No deduction may be made under section 31A unless a claim is made.

4

Where, on a just and reasonable apportionment of any expenditure, the qualifying conditions—

a

would be satisfied as respects some part or parts of the expenditure, but

b

would not be satisfied as respects the remainder of the expenditure,

a deduction under section 31A shall be allowed in respect of the part or parts mentioned in paragraph (a) but not in respect of the remainder.

Any such deduction is subject to, and must be in accordance with, the other provisions of this section and regulations under section 31A(13).

5

Expenditure incurred by a person—

a

for the purposes of a Schedule A business, but

b

before the time when he begins to carry on that business,

is not deductible under section 31A by virtue of section 401 (relief for pre-trading expenditure) unless the expenditure is incurred not more than 6 months before that time (and on or after 6th April 2004).

The reference to section 401 is a reference to that section as it applies for the purposes of Schedule A in relation to a Schedule A business by virtue of section 21B.

6

“Qualifying energy-saving items”are items of any of the following descriptions—

a

cavity wall insulation;

b

loft insulation.

7

The Treasury may by regulations amend subsection (6)—

a

by adding further descriptions of items; or

b

by removing or varying descriptions of items.

8

The Treasury may by regulations provide that an item is to be regarded as an item of any particular description in subsection (6) only if it satisfies such conditions as may be specified in, or determined in accordance with, the regulations.

9

The conditions that may be imposed by regulations under subsection (8) include conditions imposed by reference to information or documents issued by any body, person or organisation.

10

The provision that may be made by regulations under this section or section 31A which are made on or before 31st December 2004 includes provision—

a

having effect before the date on which the regulations are made, or

b

having effect in relation to expenditure incurred before that date.

11

Any reference to the provision of a qualifying energy-saving item is a reference to the acquisition of such an item and its installation in the dwelling-house.

580CRelief from tax on annual payments under immediate needs annuities

1

No liability to income tax arises in respect of a relevant annual payment made under an immediate needs annuity to the extent that—

a

it is made for the benefit of the person protected under the immediate needs annuity, and

b

it is made to a care provider or a local authority in respect of the provision of care for the person protected.

2

In this section “relevant annual payment” means an annual payment which—

a

would (apart from this section) be brought into charge under Case III of Schedule D, or

b

is equivalent to a description of payment brought into charge under Case III of that Schedule but would (apart from this section) be brought into charge under Case V of that Schedule.

3

In this section “immediate needs annuity” means a contract for a life annuity—

a

the purpose, or one of the purposes, of which is to protect a person against the consequences of his being unable, at the time the contract is made, to live independently without assistance because of—

i

mental or physical impairment, or

ii

injury, sickness or other infirmity,

which is expected to be permanent, and

b

under which benefits are payable in respect of the provision of care for the person protected.

4

In this section “care provider” means a person who carries on a trade, profession or vocation which consists of or includes the provision of care and who—

a

in relation to care provided in England and Wales or Northern Ireland, is registered under the relevant enactment in respect of the provision of care;

b

in relation to care provided in Scotland, provides care which is registered under the relevant enactment;

c

in relation to care provided in a territory outside the United Kingdom, satisfies comparable requirements under the law of that territory relating to the provision of care.

5

In this section “the relevant enactment” means—

a

in relation to England and Wales, Part 2 of the Care Standards Act 2000,

b

in relation to Scotland, Part 1 of the Regulation of Care (Scotland) Act 2001,

c

in relation to Northern Ireland, Part 2 or 3 of the Registered Homes (Northern Ireland) Order 1992 or Part 3 of the Health and Personal Social Services (Quality, Improvement and Regulation) (Northern Ireland) Order 2003.

6

In this section “care” means accommodation, goods or services which it is necessary or desirable to provide to a person because of—

a

mental or physical impairment, or

b

injury, sickness or other infirmity,

which is expected to be permanent.

7

In this section “life annuity” means an annuity to which section 656 (read with section 657) applies.

8

The Treasury may by order amend—

a

the definition of “immediate needs annuity” in subsection (3) above;

b

the definitions of “care provider” in subsection (4) above and of “the relevant enactment” in subsection (5) above.