After section 380 insert—

“380AFSCS payments representing interest

(1)

Any payment representing interest which is made under the FSCS is treated as interest for the purposes of this Act.

(2)

“Payment representing interest” means a payment calculated in the same way as interest which would have been paid to the recipient but for the circumstances giving rise to the making of payments under the FSCS.

(3)

Where a payment representing interest is made net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest, the amount treated as interest by this section is the aggregate of the payment representing interest and that sum.

(4)

This section applies to payments made under the FSCS whether or not they are made (in whole or in part) on behalf of the Treasury or any other person.

(5)

In this section “the FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000).”

In ITA 2007, after section 979 insert—

“979AFSCS payments representing interest

(1)

This section applies where a payment is made under the FSCS representing interest net of an amount equal to a sum representing income tax that would have been deducted on the payment of interest but for the circumstances giving rise to the making of payments under the FSCS.

(2)

A payment of the relevant gross amount is treated as having been made under the FSCS after there has been deducted from it a sum representing income tax of that amount.

(3)

That sum is accordingly taken into account under section 59B of TMA 1970 in determining the income tax payable by, or repayable to, the recipient.

(4)

“The relevant gross amount” means the aggregate of the amount of the payment representing interest which is made and that sum.

(5)

If the recipient requests it in writing, the scheme manager of the FSCS must provide the recipient with a statement showing—

(a)

the relevant gross amount,

(b)

the amount of the sum treated as deducted, and

(c)

the amount of the payment representing interest.

(6)

The duty to comply with a request under subsection (5) is enforceable by the recipient.

(7)

In this section—

“the FSCS” means the Financial Services Compensation Scheme (established under Part 15 of the Financial Services and Markets Act 2000);

“payment representing interest” has the same meaning as in section 380A of ITTOIA 2005.”

After section 378 insert—

“378AOffshore fund distributions

(1)

This section applies where—

(a)

a dividend is paid by an offshore fund, and

(b)

the offshore fund fails to meet the qualifying investments test at any time in the relevant period.

(2)

The dividend is treated as interest for income tax purposes.

(3)

For the purposes of this section, an offshore fund fails to meet the qualifying investments test if the market value of the fund's qualifying investments exceeds 60% of the market value of all of the assets of the fund (excluding cash awaiting investment).

(4)

“The relevant period” means—

(a)

the relevant period of account of the offshore fund, or

(b)

if longer, the period of 12 months ending on the last day of that period.

(5)

“The relevant period of account” means—

(a)

the last period of account ending before the dividend is paid, in a case in which the profits available for distribution at the end of that period (and not used since then by distribution or otherwise) equal or exceed the amount of the dividend (aggregated with any other distribution made by the offshore fund at the same time), and

(b)

the period of account in which the dividend is paid, in any other case.

(6)

This section applies to a manufactured overseas dividend if, and only if, it is representative of a distribution to which this section would apply.

(7)

In this section—

“dividend” includes any distribution that (but for this section) would be treated as a dividend for income tax purposes;

“manufactured overseas dividend” has the same meaning as in Chapter 2 of Part 11 of ITA 2007 (manufactured payments);

“offshore fund” has the same meaning as in Chapter 5 of Part 17 of ICTA (see sections 756A to 756C of that Act);

“qualifying investments” has the meaning given in section 494 of CTA 2009.”

In section 476(1) (definitions for purposes of Parts 5 and 6), after the definition of “profit sharing arrangements” insert—

““release debit”, in relation to a company, means a debit in respect of a release by the company of a liability under a creditor relationship of the company,”.

After that subsection insert—

“(3A)

In subsection (2)(d) “relevant deduction” means a deduction allowed in calculating the profits of a trade, UK property business or overseas property business.”

After that subsection insert—

“(4A)

In subsection (3)(f) “relevant deduction” has the meaning given in section 479(3A).”

In Part 14 of ITA 2007 (income tax: miscellaneous rules), after Chapter 1 insert—

“Chapter 1AExemption for persons not domiciled in United Kingdom

828AIntroduction

This Chapter provides for an exemption from liability to income tax for an individual for a tax year if—

(a)

the individual is UK resident in the tax year but not domiciled in the United Kingdom in the tax year,

(b)

section 809B does not apply to the individual for the tax year, and

(c)

conditions A to F in section 828B are met.

828BConditions to be met

(1)

Condition A is that in the tax year the individual has income from an employment the duties of which are performed wholly or partly in the United Kingdom.

(2)

Condition B is that, if the individual's income for the tax year consists of or includes relevant foreign earnings—

(a)

the amount of the relevant foreign earnings does not exceed £10,000, and

(b)

all of that amount is subject to a foreign tax.

(3)

Condition C is that, if the individual's income for the tax year consists of or includes income that is relevant foreign income by virtue of section 830(2)(e) of ITTOIA 2005—

(a)

the amount of that income does not exceed £100, and

(b)

all of that amount is subject to a foreign tax.

(4)

Condition D is that the individual has no other foreign income and gains for the tax year.

(5)

Condition E is that the individual would not for the tax year be liable to income tax at a rate other than the basic rate or the starting rate for savings if this Chapter did not apply to the individual for the tax year.

(6)

Condition F is that the individual does not make a return under section 8 of TMA 1970 for the tax year.

828CThe exemption

(1)

The exemption is given by deducting the relevant amount from what would otherwise be the amount of the individual's liability to income tax for the tax year under section 23.

(2)

“The relevant amount” is so much of the amount of the individual's liability to income tax as is attributable to the individual's foreign income or gains for the tax year.

(3)

But if for the tax year the individual's total income is reduced by any deductions which fall to be made at Step 3 of the calculation in section 23 from the individual's foreign income or gains for the tax year, subsection (2) has effect as if the individual's foreign income or gains for the tax year were reduced by the amount of the deductions.

(4)

And if the individual is entitled under—

(a)

section 788 of ICTA (double taxation arrangements: relief by agreement), or

(b)

section 790(1) of that Act (relief for foreign tax where no double taxation arrangements),

to a tax reduction in respect of the individual's foreign income or gains for the tax year, what would otherwise be the relevant amount is reduced by the amount of that reduction.

828DInterpretation of Chapter

(1)

This section applies for the purposes of this Chapter.

(2)

“Employed” and “employment” have the same meaning as in the employment income Parts of ITEPA 2003: see Chapter 1 of Part 2 of that Act.

(3)

“Foreign income and gains”, in relation to an individual, means what would be the individual's foreign income and gains for the purposes of Chapter A1 of this Part if section 809B applied to the individual (see section 809Z7(2)).

(4)

“Foreign tax” means any tax chargeable under the law of a territory outside the United Kingdom.

(5)

“Relevant foreign earnings”, in relation to an individual, means what would be the individual's relevant foreign earnings for the purposes of Chapter A1 of this Part if section 809B applied to the individual (see section 809Z7(3)).”

In section 2(14) of ITA 2007 (overview), after paragraph (a) insert—

“(aa)

exemption for persons not domiciled in United Kingdom (Chapter 1A),”.

In section 122 (price of car), the existing provision becomes subsection (1) of that section and after that subsection insert—

“(2)

This is subject to section 124A (automatic car for a disabled employee).”

After section 124 insert—

“124AAutomatic car for a disabled employee

(1)

This section applies where—

(a)

a car has automatic transmission (“the automatic car”),

(b)

at any time in the year when the automatic car is available to the employee (“E”), E holds a disabled person's badge, and

(c)

by reason of E's disability, E must, in the event of wanting to drive a car, drive a car which has automatic transmission.

(2)

If, under section 122 to 124, the price of the automatic car is more than it would have been if the automatic car had been an equivalent manual car, the price of the automatic car is to be the price of an equivalent manual car.

(3)

In subsection (2) “an equivalent manual car” means a car which—

(a)

is first registered at or about the same time as the automatic car, and

(b)

does not have automatic transmission, but otherwise is the closest variant available of the make and model of the automatic car.

(4)

For the purposes of this section a car has automatic transmission if—

(a)

the driver of the car is not provided with any means by which the driver may vary the gear ratio between the engine and the road wheels independently of the accelerator and the brakes, or

(b)

the driver is provided with such means, but they do not include—

(i)

a clutch pedal, or

(ii)

a lever which the driver may operate manually.

(5)

For the purposes of this section a car is available to an employee at a particular time if it is then made available, by reason of the employment and without any transfer of the property in it, to the employee.”

In section 266(3) (exemption of non-cash vouchers for exempt benefits), omit the “or” at the end of paragraph (e) and insert at the end“or

(g)

section 320B (health screening and medical check-ups).”

In section 267(2) (exemption of credit-tokens used for exempt benefits), omit the “and” at the end of paragraph (g) and insert at the end“and

(i)

section 320B (health screening and medical check-ups).”

After section 320A insert—

“Health-screening and medical check-ups

320BHealth-screening and medical check-ups

(1)

No liability to income tax arises in respect of the provision for an employee, on behalf of an employer, of a health-screening assessment or a medical check-up.

(2)

Subsection (1) does not apply—

(a)

to more than one health-screening assessment provided in a tax year by any one employer or by any of a number of persons who are employers of the employee at the same time, or

(b)

to more than one medical check-up so provided.

(3)

In this section—

“health-screening assessment” means an assessment to identify employees who might be at particular risk of ill-health, and

“medical check-up” means a physical examination of the employee by a health professional for (and only for) determining the employee's state of health.”

Before section 805 insert—

“804GReduction in credit: payment by reference to foreign tax

(1)

This section applies if—

(a)

credit for foreign tax falls to be allowed to a person (“P”) under any arrangements, and

(b)

a payment is made by a tax authority to P, or any person connected with P, by reference to the foreign tax.

(2)

The amount of that credit is to be reduced by an amount equal to that payment.

(3)

Section 839 applies for the purposes of determining whether or not a person is connected with P.”

After subsection (3) insert—

“(3A)

If—

(a)

income of any person (“P”) is treated under subsection (1) as reduced by a sum paid in respect of tax on that income in the place where the income has arisen (“foreign tax”), and

(b)

a payment is made by a tax authority to P, or any person connected with P, by reference to the foreign tax,

the amount of P's income is to be increased by an amount equal to the payment made to P or the connected person.

(3B)

Section 839 applies for the purposes of determining whether or not a person is connected with P.”

In section 798A (section 797: trade income), after subsection (3) insert—

“(3A)

Subsection (3) is subject to subsection (3B) if—

(a)

the taxpayer is a bank or a company connected with a bank, and

(b)

the amount of the included funding costs is significantly less than the amount of the notional funding costs.

(3B)

The amount of the notional funding costs is to be included in the subsection (3) total, but only to the extent that it exceeds the amount of the included funding costs.

(3C)

In subsections (3A) and (3B) and this subsection—

“bank” has the meaning given by section 840A;

“connected” has the meaning given by section 839;

“included funding costs” means the total of the funding costs that are—

(a)

incurred by the taxpayer, or any company connected with the taxpayer, in respect of capital used to fund the relevant transaction, and

(b)

included in the subsection (3) total (before the application of subsection (3B));

“notional funding costs” means the funding costs that the relevant bank would incur (on the basis of its average funding costs) in respect of the capital that would be needed to wholly fund the relevant transaction if that transaction were funded in that way (and for this purpose “relevant bank” means the bank that is the taxpayer, or with which the taxpayer is connected);

“relevant transaction” means the transaction, arrangement or asset from which the income or gain arises;

“subsection (3) total” means the amount to be taken into account under subsection (3) for the purposes of section 797(1).”

Section 798B (section 798A: special cases), after subsection (4) insert—

“(4A)

Income of a person (“D”) is to be treated for the purposes of section 798A as trade income (if it is not otherwise trade income) of D in a case where—

(a)

the income is received by D as part of a scheme or arrangement entered into by D and a connected person (“C”),

(b)

if C had received the income, it would be reasonable to assume that it would be trade income of C, and

(c)

a main purpose of the scheme or arrangement is to produce the result that section 798A will not have effect in relation to the income because it is received by D.

(4B)

For the purposes of subsection (4A)(b) it is to be assumed that, in the case of any relevant transaction to which a relevant person is a party, C were that party to that transaction.

(4C)

In subsections (4A) and (4B) and this subsection—

“connected person” means a person with whom D is connected (within the meaning of section 839);

“relevant person” means—

(a)

D, or

(b)

any other connected person who is a party to the scheme or arrangement;

“relevant transaction” means any of the transactions giving rise to the income.”

In section 393A of ICTA (set off of losses against profits of same or earlier accounting period), after subsection (2D) insert—

“(2E)

But subsection (2A) above does not apply by reason of a company ceasing to carry on a trade if—

(a)

on the company ceasing to carry on the trade, any of the activities of the trade begin to be carried on by a person who is not (or by persons any or all of whom are not) within the charge to corporation tax, and

(b)

the company's ceasing to carry on the trade is part of a scheme or arrangement the main purpose, or one of the main purposes, of which is to secure that subsection (2A) above applies to a loss by reason of the cessation.”

In section 346 (deduction for employee liabilities), after subsection (2) insert—

“(2A)

Nor is a deduction allowed for a payment which falls within paragraph A, B or C if the payment is made in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax.”

After section 556 insert—

“556ADeductible payments made pursuant to tax avoidance arrangements

No deduction may be made under section 555 if the deductible payment is made in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax.”

In section 128 of ITA 2007 (employment loss relief against general income), after subsection (5) insert—

“(5A)

No claim may be made in respect of the loss if and to the extent that it is made as a result of anything done in pursuance of arrangements the main purpose, or one of the main purposes, of which is the avoidance of tax.”

After that section insert—

“105ALease premiums

(1)

For the purposes of section 105(4B)(b) an amount is attributed to the relevant period “in respect of a lease premium” if—

(a)

the property consists of premises, or a part of premises, that are subject to a lease,

(b)

the premises are not mainly used by P for a purpose other than the provision of living accommodation to which this Chapter applies,

(c)

the lease is for a term of 10 years or less, and

(d)

the net amount payable by P in relation to the lease by way of lease premium is greater than zero.

(2)

The amount so attributed is—

$\frac{A}{C}\times C$

where—

A is the relevant period (in days),

B is the term of the lease (in days), and

C is the net amount payable by P in relation to the lease by way of lease premium.

(3)

For provision about the application of this section in relation to certain leases with break clauses, see section 105B.

(4)

For the purposes of this section the net amount payable by P in relation to a lease by way of lease premium is—

(a)

the total amount (if any) that has been paid, or is or will become payable, by P in relation to the lease by way of lease premium, less

(b)

any amount within paragraph (a) that has been repaid or is or will become repayable.

(5)

In this section and section 105B “lease premium” means any premium payable—

(a)

under a lease, or

(b)

otherwise under the terms on which a lease is granted.

(6)

In the application of this section to Scotland “premium” includes a grassum.

105BLease premiums in the case of leases with break clauses

(1)

This section applies to a lease (“the original lease”) that contains one or more relevant break clauses.

(2)

For the purposes of this section—

(a)

“break clause” means a provision of a lease that gives a person a right to terminate it so that its term is shorter than it otherwise would be, and

(b)

a break clause contained in the original lease is “relevant” if the right to terminate the lease that it confers is capable of being exercised in such a way that the term of the original lease is 10 years or less.

(3)

For the purposes of section 105A—

(a)

the term of the original lease, and

(b)

the net amount payable by P in relation to the lease by way of lease premium,

are to be determined on the assumption that any relevant break clause is exercised in such a way that the term of the lease is as short as possible.

(4)

If a relevant break clause is not in fact exercised in such a way that the term of the original lease is as short as possible, the parties to the lease are treated for the purposes of section 105A as if they were parties to another lease (a “notional lease”) the term of which—

(a)

begins immediately after the time at which the term of the original lease would have ended, if that break clause had been so exercised, and

(b)

ends at the time mentioned in subsection (5).

(5)

The term of a notional lease ends—

(a)

at the time the term of the original lease would end, on the assumption that any relevant break clause that is exercisable only after the beginning of the term of the notional lease is exercised in such a way that the term of the original lease is as short as possible, or

(b)

if earlier, the tenth anniversary of the beginning of the term of the original lease.

(6)

For the purposes of section 105A the net amount payable by P in relation to a notional lease by way of lease premium is, in the case of a notional lease the term of which ends under paragraph (a) of subsection (5)—

(a)

the net amount that would be payable by P in relation to the original lease by way of lease premium on the assumption mentioned in that paragraph, less

(b)

any part of that amount that has already been attributed to a period in respect of a lease premium under section 105(4B)(b).

(7)

For the purposes of section 105A the net amount payable by P in relation to a notional lease by way of lease premium is, in the case of a notional lease the term of which ends under paragraph (b) of subsection (5), the relevant proportion of—

(a)

the net amount that would be payable by P in relation to the original lease by way of lease premium, on the assumption that no break clause is exercised, less

(b)

any part of that amount that has already been attributed to a period in respect of a lease premium under section 105(4B)(b).

(8)

In subsection (7) “the relevant proportion” means—

$\frac{D}{E}$

where—

D is the term of the notional lease (in days), and

E is the sum of—

• (a) the term of the notional lease (in days), and

• (b) the number of days by which the term of the original lease would exceed 10 years, on the assumption that no break clause is exercised.”