Income Tax Act 2007

Taxation of Chargeable Gains Act 1992 (c. 12) U.K.

294 U.K. The Taxation of Chargeable Gains Act 1992 is amended as follows.

295 (1) Amend section 4 (rates of capital gains tax) as follows. U.K.

(2) In subsection (1) for “lower rate” substitute “ savings rate ”.

(3) In subsection (1AA) for “rate applicable to trusts under section 686 of the Taxes Act” substitute “ trust rate ”.

(4) In subsection (1AB) for the words from “(after” to “total income” substitute “ an individual has no Step 3 income for a year of assessment or the individual's Step 3 income ”.

(5) In subsection (1AC) for the words from “his total income” to the end substitute “ the individual's Step 3 income ”.

(6) In subsection (4) for the words from “his total income” to the end substitute “ the individual's Step 3 income ”.

(7) At the end insert—

“(5) For the purposes of this section the “Step 3 income” of an individual means the individual's net income less allowances deducted at Step 3 of the calculation in section 23 of ITA 2007 for the purpose of calculating the individual's income tax liability.

(6) Section 989 of ITA 2007 (the definitions) applies for the purposes of this section as it applies for income tax purposes.”

296 (1) Amend section 6 (rates of capital gains tax: special cases) as follows. U.K.

(2) In subsection (2)—

(a) in paragraph (a) for the words from “a deduction” to “liability” substitute “ a person is entitled to relief by reference to the amount of a deficiency ”,

(b) in paragraph (c) for “those purposes” substitute “ the purposes of extra liability ”,

(c) for “his income” substitute “ the person's Step 3 income ”, and

(d) for “that amount” substitute “ the amount of the deficiency or (as the case may be) the amount mentioned in paragraph (c) ”.

(3) In subsection (3) for “his total income” substitute “ the person's Step 3 income ”.

(4) Omit subsection (4).

297 U.K. For section 11 (visiting forces, agents-general etc) substitute—

“11 Visiting forces and official agents

(1) If section 833 of ITA 2007 (visiting forces and staff of designated allied headquarters) applies to an individual throughout a period, the period is not treated for capital gains tax purposes as—

(a) a period of residence in the United Kingdom, or

(b) creating a change of the individual's residence or domicile.

(2) If an individual is entitled to immunity from income tax by virtue of section 841 of ITA 2007 (which provides immunity from income tax for official agents of Commonwealth countries or the Republic of Ireland etc), the individual is entitled to the same immunity from capital gains tax as that to which a member of the staff of a mission is entitled under the Diplomatic Privileges Act 1964.

(3) “A member of the staff of a mission” is to be read in accordance with the Diplomatic Privileges Act 1964.”

298 U.K. In section 16(1) (computation of losses) for “section 72 of the Finance Act 1991” substitute “ sections 261B, 261D and 263ZA ”.

299 U.K. In section 37 (consideration chargeable to tax on income) at the end insert—

“(5) If—

(a) because section 759(4) or (6) of ITA 2007 applies, the person charged to tax under Chapter 3 of Part 13 of that Act (transactions in land) is a person other than the person (“A”) by whom the gain was realised, and

(b) the income tax has been paid,

for the purposes of this section the amount charged to that tax is regarded as having been charged as the income of A.

(6) If—

(a) because section 777(5) of that Act applies, the person charged to tax under Chapter 4 of Part 13 of that Act (sales of occupation income) is a person other than the person (“B”)—

(i) for whom the capital amount was obtained, or

(ii) in the case of income treated as arising under section 779 of that Act, by whom the property or right was sold or realised, and

(b) the income tax has been paid,

for the purposes of this section the amount charged to that tax is regarded as having been charged as the income of B.

(7) In subsection (6) “capital amount” has the same meaning as in Chapter 4 of Part 13 of that Act (sales of occupation income) (see section 777(7) of that Act).”

300 U.K. In section 39 (exclusion of expenditure by reference to tax on income) after subsection (3) insert—

“(4) If—

(a) because section 759(4) or (6) of ITA 2007 applies, the person charged to tax under Chapter 3 of Part 13 of that Act (transactions in land) is a person other than the person (“A”) by whom the gain was realised, and

(b) the income tax has been paid,

for the purposes of this section the amount charged to that tax is regarded as having been charged as the income of A.”

301 U.K. In section 79(8) (charge on settlor with interest in settlement etc: supplementary provisions) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “ 508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property) ”.

302 U.K. In section 97(3) (settlements etc: supplementary provisions) for “section 740(2)(b) of the Taxes Act” substitute “ section 733 of ITA 2007 ”.

303 U.K. In section 98(2) (power to obtain information for purposes of sections 87 to 90)—

(a) for the words from the beginning to “745(1)” substitute “ Sections 748(3) to (5), 749 and 750 of ITA 2007 shall have effect in relation to subsection (1) above as they have effect in relation to section 748(1) and (2) of that Act ”, and

(b) in paragraph (a) for “Chapter III of Part XVII of the Taxes Act” substitute “ Chapter 2 of Part 13 of that Act ”.

304 U.K. In section 101B(1)(a) (transfer of a company's assets to VCT), for “section 842AA of the Taxes Act” substitute “ Part 6 of ITA 2007 ”.

305 U.K. In section 101C(7) (transfer within group to VCT), for “section 842AA of the Taxes Act” substitute “ Part 6 of ITA 2007 ”.

306 (1) Amend section 105A (shares acquired on the same day: elections for alternative treatment) as follows. U.K.

(2) In subsection (4)—

(a) after “Chapter 3 of Part 7 of the Taxes Act” insert “ , relief under Part 5 of ITA 2007 ”,

(b) after “section 299 of the Taxes Act” insert “ or section 246 of ITA 2007 ”,

(c) for “of that Act” substitute “ of the Taxes Act or subsection (3) of section 246 of ITA 2007 ”, and

(d) for “that section” substitute “ section 299 of the Taxes Act or subsection (4) of section 246 of ITA 2007 ”.

(3) In subsection (7)—

(a) after “Chapter 3 of Part 7 of the Taxes Act” insert “ or relief under Part 5 of ITA 2007 ”,

(b) for “that Act” substitute “ the Taxes Act or section 245 of ITA 2007 ”, and

(c) after “that Chapter” insert “ or relief under that Part ”.

(4) After subsection (8) insert—

“(9) In this section references to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.”

307 U.K. In section 108(1)(a) (identification of relevant securities) for “section 710 of the Taxes Act” substitute “ Chapter 2 of Part 12 of ITA 2007 (accrued income profits) ”.

308 (1) Amend section 119 (transfer of securities subject to the accrued income scheme) as follows. U.K.

(2) For subsections (1) to (5) substitute—

“(1) Where there is a transfer of securities within the meaning of Chapter 2 of Part 12 of ITA 2007 (accrued income profits)—

(a) if a payment is treated as made to the transferor under section 632 of that Act or by the transferor under section 633 of that Act, section 37 shall be disregarded in computing the gain accruing on the disposal concerned;

(b) if a payment is treated as made by the transferee under section 632 of that Act or to the transferee under section 633 of that Act, section 39 shall be disregarded in computing the gain accruing to the transferee if he disposes of the securities;

but subsections (2) and (3) below shall apply.

(2) Where the securities are transferred with accrued interest (within the meaning of that Chapter)—

(a) if a payment is treated as made to the transferor under section 632 of ITA 2007, an amount equal to the amount of that payment shall be excluded from the consideration mentioned in subsection (8) below;

(b) if a payment is treated as made by the transferee under that section, an amount equal to the amount of that payment shall be excluded from the sums mentioned in subsection (9) below.

(3) Where the securities are transferred without accrued interest (within the meaning of that Chapter)—

(a) if a payment is treated as made by the transferor under section 633 of ITA 2007, an amount equal to the amount of that payment shall be added to the consideration mentioned in subsection (8) below;

(b) if a payment is treated as made to the transferee under that section, an amount equal to the amount of that payment shall be added to the sums mentioned in subsection (9) below.

(3A) Subsections (3B) and (3C) below apply where there is a transfer of variable rate securities (within the meaning of that Chapter) and—

(a) the transferor is treated as making accrued income profits under section 630(2) of ITA 2007, or

(b) a payment is treated as made to the transferor under section 635 of that Act.

(3B) Section 37 shall be disregarded in computing the gain accruing on the disposal concerned.

(3C) An amount equal to the amount of the profits or payment shall be excluded from the consideration mentioned in subsection (8) below.

(4) Where there is a transfer of securities with unrealised interest (within the meaning of Chapter 2 of Part 12 of ITA 2007)—

(a) if section 630 of that Act applies or a payment is treated as made to the transferor under section 634 of that Act, section 37 shall be disregarded in computing the gain accruing on the disposal concerned, but the relevant amount shall be excluded from the consideration mentioned in subsection (8) below;

(b) if section 681 of that Act applies, section 39 shall be disregarded in computing the gain accruing on the disposal concerned, but the relevant amount shall be excluded from the sums mentioned in subsection (9) below.

(5) In subsection (4) above “the relevant amount” means an amount equal to—

(a) if paragraph (b) below does not apply, the amount of the unrealised interest in question (within the meaning of Chapter 2 of Part 12 of ITA 2007);

(b) if section 660 of that Act applies—

(i) in a case falling within subsection (4)(a) above, the amount taken, by virtue of section 660 or 661 of that Act (as the case may be), to be the unrealised interest value for the purposes of section 660(2) or (3) of that Act;

(ii) in a case falling within subsection (4)(b) above, the amount of income that is exempt from liability to income tax under section 681 of that Act.”

(3) In subsection (6) for the words from “as if” to the end substitute “as if for “ is treated as made ”, in each place where it occurs, there were substituted “would, if the disposal were a transfer, be treated as made”.”

(4) For subsection (7) substitute—

“(7) Where there is a disposal of securities for the purposes of this Act which is not a transfer (within the meaning of Chapter 2 of Part 12 of ITA 2007) but, if it were such a transfer, a payment would be treated as made under section 632 or 633 of that Act, the securities shall be treated—

(a) for the purposes of subsection (6) above, as transferred on the day of the disposal, and

(b) for the purposes of subsections (2) and (3) above, as transferred with accrued interest if, had the disposal been a transfer within the meaning of that Chapter, it would have been a transfer with accrued interest and as transferred without accrued interest if, had the disposal been such a transfer, it would have been a transfer without accrued interest.

(7A) In relation to any securities which by virtue of subsection (7B) below are treated for the purposes of this subsection as having been transferred, subsection (3A) above shall have effect as if—

(a) for “is treated as making” there were substituted “ would, if the disposal were a transfer, be treated as making ”, and

(b) for “is treated as made” there were substituted “ would, if the disposal were a transfer, be treated as made ”.

(7B) Where there is a disposal of securities for the purposes of this Act which is not a transfer (within the meaning of Chapter 2 of Part 12 of ITA 2007) but, if it were such a transfer, the transferor would be treated as making accrued income profits under section 630(2) of that Act in respect of a transfer of variable rate securities or a payment would be treated as made under section 635 of that Act—

(a) the securities shall be treated, for the purposes of subsection (7A) above, as transferred on the day of the disposal, and

(b) the transfer shall be treated, for the purposes of subsection (3A) above, as a transfer of variable rate securities.”

(5) In subsection (10) for the words from “a person is treated”, in the first place where it occurs, to “(determined under that section)”, in the first place it occurs, substitute “ a payment is treated as made to a person under section 632 or 635 of ITA 2007, or a person is treated as making accrued income profits under section 630(2) of that Act in respect of a transfer of variable rate securities, an amount equal to the amount of the payment or profits ”.

(6) In the full-out words of subsection (10) for the words from “a person is treated” to “(determined under that section)” substitute “ a payment is treated as made by a person under section 633 of that Act an amount equal to the amount of the payment ”.

309 U.K. After section 125 insert—

“Share loss relief U.K.

125A Effect of share loss relief

(1) If loss relief under section 573 of the Taxes Act or Chapter 6 of Part 4 of ITA 2007 (“share loss relief”) is obtained in respect of a loss or any part of a loss, no deduction is to be made in respect of the loss or (as the case may be) the part under this Act.

(2) If a claim is made for share loss relief in respect of a loss accruing on the disposal of shares, section 30 has effect in relation to the disposal as if for the references in subsections (1)(b) and (5) to a tax-free benefit there were substituted references to any benefit whether tax-free or not.

(3) All such adjustments of corporation tax on chargeable gains or capital gains tax are to be made, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of—

(a) share loss relief being obtained in respect of an allowable loss, or

(b) such relief not being obtained in respect of the whole or part of such a loss in respect of which a claim is made.”

310 U.K. In section 148C(1) (deemed disposals at a loss under section 564(4) of ITTOIA 2005) for “section 392 of ICTA” substitute “ section 152 of ITA 2007 ”.

311 (1) Amend section 150A (enterprise investment schemes) as follows. U.K.

(2) In subsection (2) after “section 312 (1A)(a) of the Taxes Act” insert “ or section 159(2) of ITA 2007 ”.

(3) In subsection (3) for paragraphs (a), (aa) and (b) substitute—

“(a) an individual's liability to income tax has been reduced (or treated by virtue of section 304 of the Taxes Act or section 245 of ITA 2007 (spouses and civil partners) as reduced) for any year of assessment under section 289A of the Taxes Act or section 158 of ITA 2007 in respect of any issue of shares,

(b) the amount of the reduction (“A”) is less than the amount (“B”) which is equal to tax at the savings rate for that year on the amount subscribed for the issue, and

(c) A is not found under section 289A(2)(b) of the Taxes Act or (as the case may require) is not within paragraph (b) solely by virtue of section 29(2) and (3) of ITA 2007,”.

(4) In subsection (4) after “the Taxes Act” insert “ or as provided by section 246 of ITA 2007 ”.

(5) In subsection (8B) for the words from “subsection (2)” to the end substitute “ section 306(2) of the Taxes Act or section 203(1) of ITA 2007 and in accordance with section 306 of the Taxes Act or sections 204 and 205 of ITA 2007 ”.

(6) In subsection (8C) after “Taxes Act” insert “ or section 159(2) of ITA 2007 ”.

(7) In subsection (8D)—

(a) after “section 304A of the Taxes Act” insert “ or section 247 of ITA 2007 ”, and

(b) for paragraph (b) substitute—

“(b) the following—

(i) subsections (2)(b), (3) and (4) of section 304A of the Taxes Act and subsection (5) of that section so far as relating to section 306(2) of that Act, or

(ii) sections 247(3)(b), 248(2)(a) and 249 of ITA 2007,

shall apply for the purposes of this section as they apply for the purposes of Chapter 3 of Part 7 of the Taxes Act or Part 5 of ITA 2007.”

(8) In subsection (10A) for “the same meaning as in the Taxes Act” substitute “ the meaning given in section 989 of ITA 2007 ”.

(9) In subsection (11)—

(a) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”, and

(b) after “that Chapter” insert “ or means shares that meet the requirements of section 173(2) of ITA 2007 ”.

(10) After subsection (12) insert—

“(13) References in this section to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.”

312 (1) Amend section 150B (enterprise investment scheme: reduction of relief) as follows. U.K.

(2) In subsection (1)—

(a) after “section 300(1A)(a) of the Taxes Act” insert “ or section 213(2)(a) of ITA 2007 ”, and

(b) for “that Act” substitute “ the Taxes Act or section 224(2)(a) of ITA 2007 ”.

(3) In subsection (6) for “Subsections (11) and (12)” substitute “ Subsections (11) to (13) ”.

313 U.K. In section 150D (enterprise investment scheme: application of taper relief) after “or” insert “ relief under ” and after “Taxes Act” insert “ or Part 5 of ITA 2007, ”.

314 U.K. In section 151A(7) (venture capital trusts: reliefs) for “the meaning of the Taxes Act” substitute “ the meaning given in section 989 of ITA 2007 ”.

315 (1) Amend section 151B (VCTs: supplementary) as follows. U.K.

(2) In subsection (3)—

(a) in paragraph (a) for “been given” substitute “ obtained ” and for “Part 1 of Schedule 15B to the Taxes Act” substitute “ Chapter 2 of Part 6 of ITA 2007 ”, and

(b) in paragraphs (b) and (c) for “been given” substitute “ obtained ” and for “that Part of that Schedule” substitute “ that Chapter of that Part ”.

(3) In subsection (6)(b) for “section 842AA(8) of the Taxes Act” substitute “ section 281(3) of ITA 2007 ”.

(4) In subsection (8)(b) for “given” substitute “ obtained ” and for “Part 1 of Schedule 15B to the Taxes Act” substitute “ Chapter 2 of Part 6 of ITA 2007 ”.

316 U.K. After section 151B insert—

“151BA CITR: identification of securities or shares on a disposal

(1) This section applies for the purpose of identifying the securities or shares disposed of in any case where—

(a) an individual or company (“the investor”) disposes of part of a holding of securities or shares (“the holding”), and

(b) the holding includes securities or shares to which CITR is attributable in respect of one or more years of assessment or accounting periods that have been held by the investor continuously from the time they were issued until the disposal.

(2) Any disposal by the investor of securities or shares included in the holding which have been acquired by the investor on different days is treated as relating to those acquired on an earlier day rather than to those acquired on a later day.

(3) If there is a disposal by the investor of securities or shares included in the holding which have been acquired by the investor on the same day, any of those securities or shares—

(a) to which CITR is attributable, and

(b) which have been held by the investor continuously from the time they were issued until the time of disposal,

are treated as disposed of after any other securities or shares included in the holding which were acquired by the investor on that day.

(4) For the purposes of this section a holding of securities is any number of securities of a company which—

(a) carry the same rights,

(b) were issued under the same terms, and

(c) are held by the investor in the same capacity.

It does not matter for this purpose that the number of the securities grows or diminishes as securities carrying those rights and issued under those terms are acquired or disposed of.

(5) For the purposes of this section a holding of shares is any number of shares in a company which—

(a) are of the same class, and

(b) are held by the investor in the same capacity.

It does not matter for this purpose that the number of the shares grows or diminishes as shares of that class are acquired or disposed of.

(6) Chapter 1 of Part 4 (share pooling, etc) has effect subject to this section.

(7) Sections 104 to 107 (which make provision for the identification of securities and shares on a disposal) do not apply to securities or shares to which CITR is attributable.

(8) In a case to which section 127 (equation of original shares and new holding) applies, shares included in the new holding are treated for the purposes of subsections (2) and (3) as acquired when the original shares were acquired.

(9) In subsection (8)—

(a) the reference to section 127 includes a reference to that section as it is applied by virtue of any enactment relating to chargeable gains, and

(b) “original shares” and “new holding” have the same meaning as in section 127, or (as the case may be) that section as applied by virtue of the enactment in question.

(10) In this section and sections 151BB and 151BC—

(a) if the investor is an individual—

(i) “CITR” has the meaning given by section 333 of ITA 2007,

(ii) references to CITR being attributable to securities, shares or debentures are to be read in accordance with section 357 of that Act, and

(iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with section 380 of that Act,

(b) if the investor is a company—

(i) “CITR” means relief under Part 5 of Schedule 16 to the Finance Act 2002,

(ii) references to CITR being so attributable are to be read in accordance with paragraph 26 of that Schedule, and

(iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with paragraph 49 of that Schedule.”

317 U.K. After section 151BA insert—

“151BB CITR: rights issues etc

(1) If—

(a) an individual or company (“the investor”) holds shares in the CDFI which are of the same class and held in the same capacity (“the existing holding”),

(b) there is a reorganisation affecting the existing holding as a result of an allotment which—

(i) falls within section 126(2)(a) (an allotment of shares or debentures in respect of and in proportion to an original holding), and

(ii) is not an allotment of corresponding bonus shares,

(c) immediately after the reorganisation, CITR is attributable to the shares included in the existing holding or the shares or debentures allotted in respect of those shares, in respect of one or more years of assessment or accounting periods, and

(d) if CITR is attributable to the shares included in the existing holding at that time, those shares have been held by the investor continuously from the time they were issued until the reorganisation,

sections 127 to 130 (treatment of share capital following a reorganisation) do not apply in relation to the existing holding.

(2) Section 116(10) (reorganisations, conversions and reconstructions) does not apply in any case where the old asset consists of shares held (in the same capacity) by the investor—

(a) that have been held by the investor continuously from the time they were issued until the relevant transaction, and

(b) to which CITR is attributable immediately before that transaction.

In this subsection “old asset” and “the relevant transaction” have the meaning given by section 116.

(3) For the purposes of subsection (1)—

• “corresponding bonus shares” means bonus shares that—

  (a)

  are issued in respect of shares included in the existing holding, and

  (b)

  are in the same company, are of the same class, and carry the same rights as, those shares,

• “reorganisation” has the meaning given in section 126.

(4) The following provisions of this Act have effect subject to this section—

• section 116 (reorganisations, conversions and reconstructions);

• Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc).

(5) In this section “the CDFI” is to be read—

(a) if the investor is an individual, in accordance with section 334(2) of ITA 2007,

(b) if the investor is a company, in accordance with paragraph 1(2) of Schedule 16 to the Finance Act 2002.”

318 U.K. After section 151BB insert—

“151BC CITR: company reconstructions etc

(1) If—

(a) an individual or company (“the investor”) holds shares in or debentures of a company (“company A”),

(b) there is a reconstruction or amalgamation affecting that holding (“the existing holding”),

(c) immediately before the reconstruction or amalgamation, CITR is attributable to the shares or debentures included in the existing holding in respect of one or more years of assessment or accounting periods, and

(d) the shares or debentures included in the existing holding have been held by the investor continuously from the time they were issued until the reconstruction or amalgamation,

sections 135 and 136 (share exchanges and company reconstructions) do not apply in respect of the existing holding.

(2) Subsection (1)(a) applies only if the shares or debentures are held by the investor in the same capacity.

(3) For the purposes of subsection (1) a “reconstruction or amalgamation” means an issue by a company of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A.

(4) The following provisions of this Act have effect subject to this section—

• section 116 (reorganisations, conversions and reconstructions),

• Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc).

(5) The investor is treated as disposing of any securities or shares which but for subsection (1) the investor—

(a) would be treated as exchanging for other securities or shares by virtue of section 136, or

(b) would be so treated but for section 137(1) (which restricts section 136 to genuine reconstructions).”

319 U.K. In section 151C(5) (strips: manipulation of price: associated payment giving rise to loss) for “section 709(1)” substitute “ section 840ZA ”.

320 U.K. In section 151D(5) (corporate strips: manipulation of price: associated payment giving rise to loss) for “section 709(1)” substitute “ section 840ZA ”.

321 U.K. In section 161 (stock in trade: appropriations to and from stock) after subsection (4) insert—

“(5) If—

(a) any person is charged to income tax under section 755 of ITA 2007 (charge to tax from transactions in land) on the realisation of a gain because the condition in section 756(3)(d) is met, and

(b) the gain is calculated on the basis that any property was appropriated as trading stock,

the property shall be treated on that basis also for the purposes of this section.”

322 U.K. In section 169D(1) (gifts to settlor-interested settlements: exceptions) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “ 508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property) ”.

323 U.K. In section 226B(1) (private residence relief: special cases) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “ 508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property) ”.

324 U.K. In section 231(1) and (3) (shares: special provision) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

325 U.K. In section 241(3)(a) (furnished holiday lettings) for the words from “the Taxes Act)” to “that Act)” substitute “ the Income Tax Acts), or any Schedule A business (within the meaning of the Taxes Act) ”.

326 (1) Amend section 256 (charities) as follows. U.K.

(2) In subsection (1) for the words “subsection (2) below” substitute “ the following provisions of this section ”.

(3) After subsection (2) insert—

“(3) Subsection (4) below applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.

(4) Gains accruing to the charitable trust in the year of assessment are treated as being, and always having been, chargeable gains so far as they are attributed under section 256A to the non-exempt amount.

(5) For restrictions on exemptions under Part 10 of ITA 2007 (special rules about charitable trusts etc) see section 539 of that Act.”

327 U.K. After section 256 insert—

“256A Attributing gains to the non-exempt amount

(1) This section applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.

(2) Attributable gains of the charitable trust for the year of assessment may be attributed to the non-exempt amount but only so far as the non-exempt amount has not been used up.

(3) The non-exempt amount can be used up (in whole or in part) by—

(a) attributable gains being attributed to it under this section, or

(b) attributable income being attributed to it under section 541 of ITA 2007.

(4) The whole of the non-exempt amount must be used up by—

(a) attributable gains being attributed to the whole of it under this section,

(b) attributable income being attributed to the whole of it under section 541 of ITA 2007, or

(c) a combination of attributable gains being attributed to some of it under this section and attributable income being attributed to the rest of it under section 541 of ITA 2007.

(5) See section 256B for the way in which gains are to be attributed to the non-exempt amount under this section.

(6) In this section and section 256B a charitable trust's “attributable income”, and “attributable gains”, for a tax year have the same meaning as in Part 10 of ITA 2007 (see section 540 of that Act).

256B How gains are attributed to the non-exempt amount

(1) This section is about the ways in which attributable gains can be attributed to a non-exempt amount under section 256A.

(2) The trustees of the charitable trust may specify the attributable gains that are to be attributed to the non-exempt amount.

(3) A specification under subsection (2) is made by notice to an officer of Revenue and Customs.

(4) Subsection (6) applies if—

(a) an officer of Revenue and Customs requires the trustees of a charitable trust to make a specification under this section, and

(b) the trustees have not given notice under subsection (3) of the specification before the end of the required period.

(5) The required period is 30 days beginning with the day on which the officer made the requirement.

(6) An officer of Revenue and Customs may determine the attributable gains that are to be attributed to the non-exempt amount.”

328 U.K. In section 257 (gifts to charities etc) after subsection (2) insert—

“(2A) Subsection (2B) applies if relief is available under Chapter 3 of Part 8 of ITA 2007 or section 587B of the Taxes Act (gifts of shares, securities and real property to charities) in relation to the disposal of a qualifying investment to a charity (whether or not a claim for relief is actually made).

(2B) The consideration for which the charity's acquisition of the qualifying investment is treated by virtue of subsection (2) above as having been made—

(a) is reduced by the relievable amount if relief in relation to the disposal is available only under Chapter 3 of Part 8 of ITA 2007,

(b) is reduced by the relevant amount if relief in relation to the disposal is available only under section 587B of the Taxes Act,

(c) is reduced by the relievable amount if relief in relation to the disposal is available both under that Chapter and that section as a result of section 442 of ITA 2007 and section 587BA of the Taxes Act, or

(d) is reduced to nil if that consideration is less than the amount referred to in paragraph (a), (b) or (c) (as the case may be).

(2C) In subsections (2A) and (2B)—

• “qualifying investment” has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 432 of that Act),

• “relevant amount” has the same meaning as in section 587B of the Taxes Act, and

• “relievable amount” has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 434 of that Act).”

329 U.K. After section 261A insert—

“Deduction of trading losses or post-cessation expenditure etc U.K.

261B Treating trade loss etc as CGT loss

(1) A person may make a claim under this section if—

(a) relief is available to the person under section 64 or 128 of ITA 2007 (trade or employment loss relief against general income) for a tax year in relation to an amount of loss, and

(b) the person makes a claim under that section for the amount to be deducted in calculating the person's net income for the tax year.

(2) A person may also make a claim under this section if—

(a) relief is available to the person as mentioned in subsection (1)(a) for a tax year in relation to an amount of loss, but

(b) the person's total income for the tax year is nil or does not include any income from which the amount can be deducted.

(3) A claim under this section is for determining so much of the amount of the loss (“the relevant amount”) as—

(a) is not deducted in calculating the person's net income for the tax year, and

(b) has not already been taken into account for the purposes of any relief for any other tax year or any year of assessment (whether under ITA 2007, this section or otherwise).

(4) When the relevant amount can no longer be varied—

(a) by the Commissioners on appeal, or

(b) on the order of a court,

it is treated for the purposes of capital gains tax as an allowable loss accruing to the person in the year of assessment corresponding to the tax year.

(5) But so much of the relevant amount as exceeds the maximum amount (see section 261C) is not to be treated for the purposes of capital gains tax as an allowable loss.

(6) The excess may, however, be used in giving effect to any other loss relief under Part 4 of ITA 2007 (depending on the terms of the relief).

(7) The amount treated as an allowable loss under this section—

(a) is no longer to be regarded as an amount available for income tax relief, and

(b) is not to be deductible from chargeable gains accruing to a person in any year of assessment that begins after the person has permanently ceased to carry on the trade, profession, vocation, employment or office in which the loss was made.

(8) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year in which the loss was made in the trade, profession, vocation, employment or office.

(9) In this section “normal self-assessment filing date”, “tax year” and “total income” have the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).

261C Meaning of “the maximum amount” for purposes of section 261B

(1) For the purposes of section 261B “the maximum amount” is the amount on which the person would be chargeable to capital gains tax for the year of assessment if—

(a) the provisions mentioned below were ignored, and

(b) no account were taken of the event mentioned below.

(2) The provisions are—

(a) section 2A (taper relief),

(b) section 3(1) (annual exempt amount), and

(c) section 261B.

(3) The event is any event—

(a) which occurs after the date on which the relevant amount (see section 261B(3)) can no longer be varied by the Commissioners on appeal or on the order of a court, and

(b) in consequence of which the amount chargeable to capital gains tax is reduced as a result of an enactment relating to capital gains tax.

261D Treating excess post-cessation trade or property relief as CGT loss

(1) A person may make a claim under this section if—

(a) relief is available to the person under section 96 or 125 of ITA 2007 (post-cessation trade or property relief) for a tax year in relation to an amount, and

(b) the person makes a claim under that section to deduct the amount in calculating the person's net income for the tax year.

(2) A person may also make a claim under this section if—

(a) relief is available to the person as mentioned in subsection (1)(a) for a tax year in relation to an amount, but

(b) the person's total income for the tax year is nil.

(3) A claim under this section is for treating for the purposes of capital gains tax so much of the amount as is not deducted in calculating the person's net income for the tax year (“the relevant amount”) as an allowable loss accruing to the person in the year of assessment corresponding to the tax year.

(4) But so much of the relevant amount as exceeds the maximum amount (see section 261E) is not to be treated for the purposes of capital gains tax as an allowable loss.

(5) The relevant amount is no longer to be regarded as an amount available for income tax relief.

(6) A claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the tax year mentioned in subsection (1) or (2) (as the case may be).

(7) In this section “normal self-assessment filing date”, “tax year” and “total income” have the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).

261E Meaning of “the maximum amount” for purposes of section 261D

(1) For the purposes of section 261D “the maximum amount” is the amount on which the person would be chargeable to capital gains tax for the year of assessment if the following were ignored.

(2) The matters to be ignored are—

(a) any allowable losses falling to be carried forward to that year from a previous year for the purposes of section 2(2),

(b) section 3(1) (annual exempt amount), and

(c) any relief under section 261B or 261D.”

330 U.K. After section 261E insert—

“Repurchase price under repos U.K.

261F Deemed manufactured payments: effect on repurchase price

(1) This section applies if —

(a) the repurchase price of UK shares, UK securities or overseas securities is treated by section 604(2), (4) or (5) of ITA 2007 (deemed increase in repurchase price: repos and options) as increased for the purposes of section 607 of that Act (treatment of price differences under repos),

(b) condition A or B is met, and

(c) section 263A does not apply.

(2) Condition A is that, as a result of the increase, there is no difference for the purposes of section 607 of that Act between the sale price and the repurchase price.

(3) Condition B is that, as a result of an exception in section 608 of that Act, section 607 of that Act does not apply.

(4) The deemed increase of the repurchase price also has effect for capital gains tax purposes.

(5) Expressions used in this section and in section 605 of ITA 2007 (deemed increase in repurchase price: other income tax purposes) have the same meanings in this section as in that section.”

331 U.K. After section 261F insert—

“261G Price differences under repos: effect on repurchase price

(1) Subsections (2) and (3) apply if—

(a) section 607 of ITA 2007 (treatment of price differences under repos) applies,

(b) an amount is treated under that section as a payment of interest, and

(c) section 263A does not apply.

(2) If the repurchase price is more than the sale price, the repurchase price is treated for capital gains tax purposes as reduced by the amount of the payment of interest.

(3) If the sale price is more than the repurchase price, the repurchase price is treated for capital gains tax purposes as increased by the amount of the payment of interest.

(4) Expressions used in this section and in section 609 of ITA 2007 (additional income tax consequences of price differences under repos) have the same meanings in this section as in that section.”

332 U.K. After section 261G insert—

“261H Power to modify section 261G in non-arm's length case

(1) The Treasury may by regulations provide for section 261G to apply with modifications if the exception in section 608(2) of ITA 2007 (agreement not at arm's length) would otherwise prevent it from applying.

(2) Regulations under this section may make different provision for different cases.

(3) Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings.

(4) The incidental, supplemental, and consequential provision may include modifications of section 261F (deemed manufactured payments: effect on repurchase price).

(5) In this section “modifications” includes exceptions and omissions.

(6) Accordingly, the power in subsection (1) includes power to provide for any provision of section 261G not to apply in relation to the case mentioned in that subsection.”

333 (1) Amend section 263ZA (former employees: employment-related liabilities) as follows. U.K.

(2) In subsection (1)(a)—

(a) for “from total income” substitute “ in calculating net income ”, and

(b) for “when computing a former employee's total income” substitute “ in calculating a former employee's net income ”.

(3) In subsection (1)(b) for “the total income” substitute “ the remaining total income ”.

(4) In subsection (2)(b) for “the total income” substitute “ the remaining total income ”.

(5) After subsection (2) insert—

“(2A) In this section “the remaining total income”, in relation to a tax year, means the former employee's total income for the tax year less reliefs already deducted for the tax year at Step 2 of the calculation in section 23 of ITA 2007 for the purpose of calculating the former employee's income tax liability.”

(6) In subsection (5)—

(a) in paragraph (d) for “against capital gains tax under section 72 of the Finance Act 1991” substitute “ under section 261B ”, and

(b) in paragraph (e) for “against capital gains tax under section 90(4) of the Finance Act 1995” substitute “ under section 261D ”.

F1 334 U.K. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 Sch. 1 para. 334 repealed (19.7.2007) by Finance Act 2007 (c. 11), Sch. 27 Pt. 2(14)

335 (1) Amend section 263D (gains accruing to persons paying manufactured dividends) as follows. U.K.

(2) In subsection (2)(b) and (d) for “United Kingdom equities” substitute “ UK shares ”.

(3) In subsection (3)(b) and (d) for “United Kingdom equities” substitute “ UK shares ”.

(4) In subsection (4)(a), (b) and (d) for “United Kingdom equities” substitute “ UK shares ”.

(5) In subsection (7) for “paragraph 2A of Schedule 23A to the Taxes Act” substitute “ sections 574 and 575 of ITA 2007 (manufactured dividends: allowable deductions) ”.

(6) In subsection (9)—

(a) for “paragraph 2 of Schedule 23A to the Taxes Act” substitute “ Chapter 2 of Part 11 of ITA 2007 (manufactured payments) ”,

(b) in paragraph (a)—

(i) for “section 737A(5) of that Act” substitute “ section 602(1) of that Act (deemed manufactured payments: repos) ”, and

(ii) for “Schedule 23A” substitute “ that Chapter of that Part of that Act ”, and

(c) in paragraph (b)—

(i) for “section 736B(2) of that Act” substitute “ section 596(2) of that Act (deemed manufactured payments: stock lending arrangements) ”, and

(ii) for “that Schedule” substitute “ that Chapter of that Part of that Act ”.

(7) In subsection (10) for the words from “the following” to “and, in any such case,” substitute “ those in which there is a repo for the purposes of Part 11 of ITA 2007 (see section 569 of that Act); and, in any such case, ”.

(8) In subsection (12)—

(a) for “United Kingdom equities” substitute “ UK shares ”, and

(b) for “paragraph 1(1) of Schedule 23A to the Taxes Act” substitute “ section 566(2) of ITA 2007 ”.

336 U.K. After section 263E insert—

“263F Power to modify repo provisions: non-standard repo cases

(1) The Treasury may by regulations provide for—

(a) section 261F (deemed manufactured payments: effect on repurchase price),

(b) section 261G (price differences under repos: effect on repurchase price),

(c) section 263A (agreements for sale and repurchase of securities),

(d) section 263D (gains accruing to persons paying manufactured dividends), or

(e) any of those sections,

to apply with modifications in relation to non-standard repo cases.

(2) The power in subsection (1) to make provision for section 263A or 263D to apply with modifications is exercisable only so far as the section applies to cases falling within section 607 of ITA 2007 (treatment of price differences under repos).

(3) A case is a non-standard repo case if—

(a) there is a repo in respect of securities,

(b) under the repo there has been a sale (“the original sale”) of the securities by the original owner to the interim holder, and

(c) any of conditions A to E is met in relation to the repo.

(4) Condition A is that—

(a) the obligation to buy back the securities is not performed, or

(b) the option to buy them back is not exercised.

(5) Condition B is that provision is made by or under an agreement for different or additional UK shares, UK securities or overseas securities to be treated as (or as included with) representative securities.

(6) Condition C is that provision is made by or under an agreement for any UK shares, UK securities or overseas securities to be treated as not included with representative securities.

(7) Condition D is that provision is made by or under an agreement for the sale price or repurchase price to be decided or varied wholly or partly by reference to post-agreement fluctuations.

(8) Condition E is that provision is made by or under an agreement for a person to be required, in a case where there are post-agreement fluctuations, to make a payment in the period—

(a) beginning immediately after the making of the agreement for the original sale, and

(b) ending when the repurchase price becomes due.

(9) Expressions used in this section and in section 612 of ITA 2007 (powers to modify repo provisions: non-standard repo cases) have the same meanings in this section as in that section.”

337 U.K. After section 263F insert—

“263G Power to modify repo provisions: redemption arrangements

(1) The Treasury may by regulations provide for—

(a) section 261F (deemed manufactured payments: effect on repurchase price),

(b) section 261G (price differences under repos: effect on repurchase price),

(c) section 263A (agreements for sale and repurchase of securities),

(d) section 263D (gains accruing to persons paying manufactured dividends), or

(e) any of those sections,

to apply with modifications in relation to cases involving redemption arrangements.

(2) The power in subsection (1) to make provision for section 263A or 263D to apply with modifications is exercisable only so far as the section applies to cases falling within section 607 of ITA 2007 (treatment of price differences under repos).

(3) A case involves redemption arrangements if—

(a) arrangements, corresponding to those made in cases where there is a repo, are made by an agreement, or one or more related agreements, in relation to securities that are to be redeemed in the period after their sale,

(b) the securities are UK shares, UK securities or overseas securities, and

(c) the arrangements are such that the seller or a person connected with the seller (instead of being required to repurchase the securities or acquiring an option to do so) is granted rights in respect of the benefits that will result from the redemption.

(4) Expressions used in this section and in section 613 of ITA 2007 (powers to modify repo provisions: redemption arrangements) have the same meanings in this section as in that section.”

338 U.K. After section 263G insert—

“263H Sections 263F and 263G: supplementary provisions

(1) Regulations under section 263F or 263G may make different provision for different cases.

(2) Regulations under either section may contain incidental, supplemental, consequential and transitional provision and savings.

(3) The incidental, supplemental and consequential provision may include—

(a) in the case of regulations about section 261G, modifications of section 261F, and

(b) in the case of regulations about section 263A or 263D, modifications of the operation of this Act in relation to cases where, by virtue of the regulations, any acquisition or disposal is excluded from those which are to be ignored for the purposes of capital gains tax.

(4) In this section and sections 263F and 263G “modifications” includes exceptions and omissions.

(5) Accordingly, a power in sections 263F and 263G to provide for a provision to apply with modifications in relation to a particular case includes power to provide for the provision not to apply in relation to that case.”

339 U.K. After section 263H insert—

“263I Powers about manufactured overseas dividends

(1) The Treasury may by regulations make provision as mentioned in subsection (2) about prescribed cases where a person—

(a) pays or receives a manufactured overseas dividend as mentioned in section 581(1) of ITA 2007 (manufactured overseas dividends), or

(b) is treated as doing so for any purposes of Chapter 2 of Part 11 of that Act or regulations made under it (manufactured payments).

(2) The regulations may provide for adjusting a relevant amount by reference to a provision which has effect under the law of a territory outside the United Kingdom.

(3) A “relevant amount” is an amount which is treated for prescribed capital gains tax purposes as the amount paid or payable to a person in respect of a relevant transaction.

(4) A “relevant transaction” is a sale, repurchase or other transfer of the overseas securities to which the manufactured overseas dividend relates.

(5) In this section “prescribed” means prescribed in regulations under this section.

(6) Subject to that, expressions used in this section and in section 582 of ITA 2007 (manufactured payments: powers about manufactured overseas dividends) have the same meanings in this section as in that section.”

340 (1) Amend section 271 (miscellaneous exemptions) as follows. U.K.

(2) In subsection (3) for the words from “In this subsection” to the end substitute— “In this subsection—

“health service body” has the meaning given by section 519A of the Taxes Act, and

“local authority association” has the meaning given by section 1000 of ITA 2007.”

(3) After subsection (7) insert—

“(7A) Chargeable gains are exempt from tax if they accrue to a bank, or issue department of a bank, to which this subsection applies for the time being.

(7B) Her Majesty may by Order in Council direct that subsection (7A) applies to a bank or its issue department if it appears to Her Majesty that the bank—

(a) is not resident in the United Kingdom, and

(b) is entrusted by the government of a territory outside the United Kingdom with the custody of the territory's principal foreign exchange reserves.

(7C) No recommendation may be made to Her Majesty in Council to make an order under subsection (7B) unless a draft of the order has been laid before and approved by a resolution of the House of Commons.”

341 U.K. After section 285 insert—

“285A European Economic Interest Groupings

(1) The following rules about European Economic Interest Groupings apply for the purposes of charging tax in respect of chargeable gains—

Rule 1

A grouping is treated as acting as the agent of its members.

Rule 2

The activities of a grouping are treated as those of its members acting jointly.

Rule 3

Each member of a grouping is treated as having a share of the grouping's property, rights and liabilities.

Rule 4

Any trade or profession carried on by the grouping is treated as carried on in partnership by members of the grouping.

Rule 5

A person is to be regarded as acquiring or disposing of a share of the assets of the grouping not only where there is an acquisition or disposal of assets by the grouping while he is a member of it, but also where he becomes or ceases to be a member of a grouping or there is a change in his share of the property of the grouping.

(2) For the purposes of Rule 3, a member's share of any property, rights or liabilities of a grouping is determined according to the contract under which the grouping is established.

(3) If the contract does not provide for this, the member's share is determined by reference to the share of the profits of the grouping to which the member is entitled under the contract.

(4) If the contract does not provide for this either, the members are treated as having equal shares of the property, rights and liabilities of the grouping.

(5) “European Economic Interest Grouping” means a European Economic Interest Grouping formed under Council Regulation (EEC) No 2137/85 of 25th July 1985, whether registered in Great Britain, Northern Ireland or elsewhere.”

342 (1) Amend section 288 (interpretation) as follows. U.K.

(2) In subsection (1)—

(a) in the definition of “allowable loss” after “16” insert “ , 261B, 261D ”,

(b) after the definition of “ITTOIA 2005” insert—

““ITA 2007” means the Income Tax Act 2007;”,

(c) in the definition of “local authority” for “section 842A of the Taxes Act” substitute “ section 999 of ITA 2007 ”,

(d) after the definition of “the Management Act” insert—

““net income” has the same meaning as in the Income Tax Acts (see section 989 of ITA 2007);”,

(e) in the definition of “period of account” for “section 832(1) of the Taxes Act” substitute “ section 989 of ITA 2007 ”,

(f) in the definition of “property investment LLP” for “section 842B of the Taxes Act” substitute “ section 1004 of ITA 2007 ”,

(g) in the definition of “recognised stock exchange” for “section 841 of the Taxes Act” substitute “ section 1005 of ITA 2007 ”,

(h) in the definition of “venture capital trust” for “the meaning given by section 842AA of the Taxes Act” substitute “ the same meaning as in Part 6 of ITA 2007 ”, and

(i) in the definition of “year of assessment” for the words from “ “1992-93”” to the end substitute “year of assessment 1992-93” means the year of assessment beginning on 6th April 1992 (and any corresponding expression in which two years are similarly mentioned is to be read in the same way) ”.

(3) In subsection (2) for “section 833(2) of the Taxes Act” substitute “ section 989 of ITA 2007 ”.

(4) In subsection (3) for “section 282 of the Taxes Act” substitute “ section 1011 of ITA 2007 ”.

343 U.K. In paragraph 22(1) of Schedule A1 (application of taper relief) in the definition of “ordinary share capital” for “section 832(1) of the Taxes Act” substitute “ section 989 of ITA 2007 ”.

344 U.K. In paragraph 14 of Schedule 4A (deemed disposal of underlying assets where disposal of interest in settled property: exception) for “691(2) of the Taxes Act (certain income of maintenance funds for historic buildings not to be income of settlor etc)” substitute “ 508 of ITA 2007 (trustees' election in respect of income arising from heritage maintenance property) ”.

345 (1) Amend Schedule 5B (enterprise investment scheme: re-investment) as follows. U.K.

(2) In paragraph 1(2) (application of Schedule)—

(a) in paragraph (e) after “that Act)” insert “ , or the requirements of section 183 of ITA 2007, ”, and

(b) in paragraph (g) after “Taxes Act” insert “ or section 175(3) of ITA 2007 ”.

(3) In paragraph 1A (failure of conditions of application)—

(a) in sub-paragraph (4A) after “Taxes Act” insert “ or section 175(3) of ITA 2007 ”,

(b) in sub-paragraph (5) for “or section 310(2) of the Taxes Act” substitute “ , section 310(2) of the Taxes Act or section 241(3) of ITA 2007 ”, and

(c) in sub-paragraph (7) after “Taxes Act” insert “ or section 236(1) of ITA 2007 ”.

(4) In paragraph 4 (gains accruing on chargeable event)—

(a) in sub-paragraph (4) after “Taxes Act” insert “ or Part 5 of ITA 2007 ” and after “that Chapter”, in each place where it occurs, insert “ or that Part ”,

(b) in sub-paragraph (4A) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”, after “that Chapter” insert “ or that Part ” and for “that Act” substitute “ the Taxes Act or section 245 of ITA 2007 ”, and

(c) in sub-paragraph (4C) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

(5) In paragraph 6 (claims)—

(a) in sub-paragraph (1) after “Taxes Act” insert “ or sections 202(1), 203(1) and 204 to 207 of ITA 2007 ” and for “that Act in respect of eligible shares” substitute “ the Taxes Act or Part 5 of ITA 2007 in respect of eligible or relevant shares ”,

(b) in sub-paragraph (2) for “That section” substitute “ Section 306 ”, and

(c) after that sub-paragraph insert—

“(3) Sections 202(1), 203(1) and 204 to 207 of ITA 2007, as they so apply, shall have effect as if any reference to the requirements for the relief were a reference to the conditions for the application of this Schedule.”

(6) In paragraph 7(1) (reorganisations)—

(a) after “the Taxes Act” insert “ or Part 5 of ITA 2007 ”, and

(b) after “that Chapter” insert “ or that Part ”.

(7) In paragraph 8 (acquisition of share capital by new company)—

(a) in sub-paragraph (1)(e)(ii) for “subsection (2) of section 306 of the Taxes Act” substitute “ section 306(2) of the Taxes Act or section 203(1) of ITA 2007 ” and for “that section” substitute “ section 306 of the Taxes Act or sections 204 and 205 of ITA 2007 ”,

(b) in sub-paragraph (5)(a) after “Taxes Act” insert “ or section 203(1) of ITA 2007 ”, and

(c) in sub-paragraph (7) after “Taxes Act” insert “ or section 185 of ITA 2007 ”.

(8) In paragraph 9 (other reconstructions and amalgamations)—

(a) in sub-paragraph (1) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”,

(b) in sub-paragraph (3) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”, and

(c) in sub-paragraph (4)(b) for “subsection (2) of section 306 of the Taxes Act” substitute “ section 306(2) of the Taxes Act or section 203(1) of ITA 2007 ” and for “that section” substitute “ section 306 of the Taxes Act or sections 204 and 205 of ITA 2007 ”.

(9) In paragraph 11(5) (pre-arranged exits)—

(a) after “trading group” insert “ (a) ”, and

(b) at the end insert “, or

(b) is a reference to a company that meets the trading requirement in section 181(2)(b) of ITA 2007.”

(10) In paragraph 13(5) (value received by investor) after “Taxes Act” insert “ or Chapter 2 of Part 5 of ITA 2007 ”.

(11) In paragraph 13C (provision supplemental to paragraph 13B)—

(a) in sub-paragraph (3) for “Sub-paragraph (4) below” substitute “ This sub-paragraph ”, and

(b) for sub-paragraph (4) substitute—

“(4) Where either of the following applies—

(a) sub-paragraph (3) above, and

(b) section 223(3) of ITA 2007 (which makes corresponding provision in relation to EIS relief under Part 5 of that Act),

the person who subscribes for the shares shall not by virtue of his subscription for those shares or any other shares in the same issue be treated as making a qualifying investment for the purposes of this Schedule.”

(12) In paragraph 14(3) (value received by other persons)—

(a) after “Taxes Act”, in the first place where it occurs, insert “ or Part 5 of ITA 2007 ”,

(b) for “that Act” substitute “ the Taxes Act or section 209 or 216(2)(a) of ITA 2007 ”, and

(c) after “section 300 of the Taxes Act” insert “ or 214 of ITA 2007 ”.

(13) In paragraph 16 (information)—

(a) in sub-paragraph (4)—

(i) after “Taxes Act”, in the first place where it occurs, insert “ or section 203(1) of ITA 2007 ”, and

(ii) after “Taxes Act”, in the second place where it occurs, insert “ or section 175(3) of ITA 2007 ”,

(b) in sub-paragraph (4A) after “Taxes Act” insert “ or section 175(3) of ITA 2007 ”,

(c) in sub-paragraph (6) after “Taxes Act” insert “ or section 176(4)(b) or (5)(b), 182(2) or (4), 183(6), 185(1), 190(1)(e) or 191(2)(c), (3), (4) or (5) of ITA 2007 ”,

(d) in sub-paragraph (7)—

(i) in paragraph (a) after “Taxes Act” insert “ or section 182(2) or (4) of ITA 2007 ”,

(ii) in paragraph (aa) after “Taxes Act” insert “ or section 176(4)(b) or (5)(b), 183(6) or 191(3), (4) or (5) of ITA 2007 ”, and

(iii) in paragraph (c) after “Taxes Act” insert “ or section 185(1), 190(1)(e) or 191(2)(c) of ITA 2007 ”, and

(e) in sub-paragraph (7A)—

(i) after “Taxes Act” insert “ and subsections (3), (4) and (5) of section 191 of ITA 2007 ”, and

(ii) for “that Act” substitute “ the Taxes Act or section 190(2) of ITA 2007 ”.

(14) In paragraph 19(1) (interpretation)—

(a) in the definition of “eligible shares” for “that Act” substitute “ the Taxes Act or means shares that meet the requirement in section 173 (2) of ITA 2007 ”,

(b) in the definition of “ordinary share capital” for “the same meaning as in the Taxes Act” substitute “ the meaning given by section 989 of ITA 2007 ”,

(c) in the definition of “qualifying business activity” after “Taxes Act” insert “ or section 179 of ITA 2007 ”,

(d) for the definition of “qualifying company” substitute—

““qualifying company”, in relation to any eligible shares, means a company which, in relation to those shares, is—

(a) a qualifying company for the purposes of Chapter 3 of Part 7 of the Taxes Act (except that for the purposes of this Schedule the reference in section 293(1B)(b)(i) of that Act to section 304A of that Act shall be read as a reference to paragraph 8 above), or

(b) a qualifying company for the purposes of Part 5 of ITA 2007 (except that for the purposes of this Schedule the reference in section 184(1)(c)(i) of that Act to section 247 of that Act shall be read as a reference to paragraph 8 above).”

(e) in the definition of “the relevant period” for “that Act” insert “ the Taxes Act or section 159(2) of ITA 2007 ”, and

(f) in the definition of “termination date” after “Taxes Act” insert “ or section 256 of ITA 2007 ”.

(15) In paragraph 19(3) omit the “and” immediately before paragraph (c) and after that paragraph insert “; and

(d) references to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued on or after 6th April 2007”.

346 U.K. In paragraph 1(1)(a) of Schedule 5BA (enterprise investment scheme: application of taper relief) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

347 U.K. In paragraph 3(1)(f) of Schedule 5C (VCTs: deferred charge on re-investment) for “section 842AA(8) of the Taxes Act” substitute “ section 281(3) of ITA 2007 ”.

348 (1) Amend Schedule 7C (reliefs for transfers to approved share plans) as follows. U.K.

(2) In paragraph 2(6) (conditions relating to the disposal), in the definition of “ordinary share capital” for “section 832(1) of the Taxes Act” substitute “ section 989 of ITA 2007 ”.

(3) In paragraph 7(1) and (3) (shares: special provision) after “Taxes Act” insert “ or Part 5 of ITA 2007 ”.

349 U.K. In Schedule 8 (leases), in paragraph 5(6) for “any amount chargeable to tax under section 348 or 349 of the Taxes Act” substitute “ any amount from which a sum representing income tax is required to be deducted under Part 15 of ITA 2007 ”.