12ASavings income charged at the savings nil rate

1

This section applies in relation to an individual if—

a

the amount of the individual's Step 3 income is greater than £L, where £L is the amount of the starting rate limit for savings, and

b

when the individual's Step 3 income is split into two parts—

i

one (“the individual's income up to the starting rate for savings”) consisting of the lowest £L of the individual's Step 3 income, and

ii

the other (“the individual's income above the starting rate limit for savings”) consisting of the rest of the individual's Step 3 income,

some or all of the individual's income above the starting rate limit for savings consists of savings income (whether or not some or all of the individual's income up to the starting rate limit for savings consists of savings income).

2

In this section—

• £A is the amount of the individual's savings allowance (see section 12B),

• “the excess” is so much of the individual's income above the starting rate limit for savings as consists of savings income, and

• £X is the amount of the excess.

3

If £X is less than or equal to £A, income tax is charged at the savings nil rate (rather than the basic, higher or additional rate) on the excess.

4

If £X is more than £A, income tax is charged at the savings nil rate (rather than the basic, higher or additional rate) on the lowest £A of the excess.

5

Subsections (3) and (4) are subject to any provisions of the Income Tax Acts (apart from section 10) which provide for income to be charged at different rates of income tax in some circumstances.

6

Section 16 has effect for determining the extent to which the individual's income above the starting rate limit for savings consists of savings income.

7

For the purposes of this section, an individual's “Step 3 income” is the individual's net income less allowances deducted at Step 3 of the calculation in section 23.

12BIndividual's entitlement to a savings allowance

1

Subsections (2) to (4) determine the amount of an individual's savings allowance for a tax year.

2

If any of the individual's income for the year is additional-rate income, the individual's savings allowance for the year is nil.

3

If—

a

any of the individual's income for the year is higher-rate income, and

b

none of the individual's income for the year is additional-rate income,

the individual's savings allowance for the year is £500.

4

If none of the individual's income for the year is higher-rate income, the individual's savings allowance for the year is £1,000.

5

The Treasury may by regulations substitute a different amount for the amount for the time being specified in subsection (2), (3) or (4); and regulations under this subsection that have effect for a tax year may be made at any time before the end of that tax year.

6

If regulations under subsection (5) reduce any amount, the regulations may not be made unless a draft of the instrument containing them (whether alone or together with regulations under subsection (5) which increase any amount) has been laid before, and approved by a resolution of, the House of Commons.

7

Section 1014(4) (negative procedure) does not apply to regulations under subsection (5) which increase any amount if—

a

the instrument containing them also contains regulations under subsection (5) which reduce any amount, and

b

a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

8

For the purposes of this section—

a

each of the following is “additional-rate income”—

i

income on which income tax is charged at the additional rate or dividend additional rate,

ii

income on which income tax would be charged at the additional rate but for section 12A (income charged at savings nil rate),

iii

income on which income tax would be charged at the dividend additional rate but for section 13A (income charged at dividend nil rate), and

iv

income of an individual who is a Scottish taxpayer or Welsh taxpayer which would, if the individual were not a Scottish taxpayer or Welsh taxpayer (as the case may be), be income on which income tax is charged at the additional rate, and

b

each of the following is “higher-rate income”—

i

income on which income tax is charged at the higher rate or dividend upper rate,

ii

income on which income tax would be charged at the higher rate but for section 12A (income charged at savings nil rate),

iii

income on which income tax would be charged at the dividend upper rate but for section 13A (income charged at dividend nil rate), and

iv

income of an individual who is a Scottish taxpayer or Welsh taxpayer which would, if the individual were not a Scottish taxpayer or Welsh taxpayer (as the case may be), be income on which income tax is charged at the higher rate.

aa

the extent to which a person's income above the starting rate limit for savings consists of savings income,

savings allowance

section 12B

savings nil rate

section 7

a

income charged at the additional rate or the higher rate were charged at the basic rate, and

b

income charged at the dividend additional rate or the dividend upper rate were charged at the dividend ordinary rate.

13AIncome charged at the dividend nil rate

1

Subsection (2) applies if, ignoring this section, at least some of an individual's income would be charged to income tax at the dividend ordinary rate, the dividend upper rate or the dividend additional rate.

2

Income tax is charged at the dividend nil rate (rather than the dividend ordinary rate, dividend upper rate or dividend additional rate) on one or more amounts of the individual's income as follows—

• Step 1 Identify the amount (“D”) of the individual's income which would, ignoring this section, be charged at the dividend ordinary rate.Rule 1A: If D is more than £5,000, the first £5,000 of D is charged at the dividend nil rate (rather than the dividend ordinary rate), and is the only amount charged at the dividend nil rate.Rule 1B: If D is equal to £5,000, D is charged at the dividend nil rate (rather than the dividend ordinary rate), and is the only amount charged at the dividend nil rate.Rule 1C: If D is less than £5,000 but more than nil, D is charged at the dividend nil rate (rather than the dividend ordinary rate).

• Step 2 If D is less than £5,000, identify the amount (“U”) of the individual's income which would, ignoring this section, be charged at the dividend upper rate.Rule 2A: If the total of D and U is more than £5,000—

  1. a

     the first £M of U is charged at the dividend nil rate (rather than the dividend upper rate), where £M is the difference between £5,000 and D, and

  2. b

     the amounts charged under this Rule and Rule 1C are the only amounts charged at the dividend nil rate.

  Rule 2B: If the total of D and U is equal to £5,000, U is charged at the dividend nil rate (rather than the dividend upper rate), and the amounts charged under this Rule and Rule 1C are the only amounts charged at the dividend nil rate.Rule 2C: If the total of D and U is less than £5,000 but more than nil, U is charged at the dividend nil rate (rather than the dividend upper rate).

• Step 3 If the total of D and U is less than £5,000, identify the amount (“A”) of the individual's income which would, ignoring this section, be charged at the dividend additional rate.Rule 3A: If the total of D, U and A is more than £5,000, the first £X of A is charged at the dividend nil rate (rather than the dividend additional rate), where £X is the difference between—

  • £5,000, and

  • the total of D and U,

  and the amounts charged under this Rule, and Rules 1C and 2C, are the amounts charged at the dividend nil rate.Rule 3B: If the total of D, U and A is less than or equal to £5,000, A is charged at the dividend nil rate (rather than the dividend additional rate), and the amounts charged under this Rule, and Rules 1C and 2C, are the amounts charged at the dividend nil rate.

“dividend nil rate” means the rate of income tax specified in section 8(A1),

9AOverview of sections 10 to 15

The general effect of sections 10 to 15 is outlined in the following table—

Type of taxpayer	Rates payable on savings income	Rates payable on most dividend income	Rates payable on other income
UK resident individual who is neither a Scottish taxpayer nor a Welsh taxpayer	Savings rates	Dividend rates	Main rates
Scottish taxpayer	Savings rates	Dividend rates	Scottish rates
Welsh taxpayer	Savings rates	Dividend rates	Main rates while section 11B is not in force; Welsh rates if that section is in force
Non-UK resident individual	Savings rates	Dividend rates	Default rates
Non-individual, except that some trustees in some circumstances are subject instead to the trust rate or the dividend trust rate	Default basic rate	Dividend ordinary rate	Default basic rate

Note: the table does not address the effect of some exceptions referred to in sections 10 to 15.

6CThe default basic, higher and additional rates

The default basic rate, default higher rate and default additional rate for a tax year are the rates determined as such by Parliament for the tax year.

7AThe savings basic, higher and additional rates

The savings basic rate, savings higher rate and savings additional rate for a tax year are the rates determined as such by Parliament for the tax year.

section 11C (income charged at the default basic, higher and additional rates: non-UK resident individuals),

section 11D (savings income charged at the savings basic, higher and additional rates: individuals),

section 12 (savings income charged at the starting rate for savings),

11CIncome charged at the default basic, higher and additional rates: non-UK resident individuals

1

Income tax on a non-UK resident individual's income up to the basic rate limit is charged at the default basic rate.

2

Income tax is charged at the default higher rate on a non-UK resident individual's income above the basic rate limit and up to the higher rate limit.

3

Income tax is charged at the default additional rate on a non-UK resident individual's income above the higher rate limit.

4

Subsections (1) to (3) are subject to—

• section 11D (savings income charged at the savings basic, higher and additional rates),

• section 12 (savings income charged at the starting rate for savings),

• section 12A (savings income charged at the savings nil rate),

• section 13 (income charged at the dividend ordinary, upper and additional rates: individuals), and

• any other provisions of the Income Tax Acts (apart from section 10) which provide for income to be charged at different rates of income tax in some circumstances.

11DIncome charged at the savings basic, higher and additional rates

1

Income tax is charged at the savings basic rate on an individual's income which—

a

is saving income, and

b

would otherwise be charged at the basic rate or the default basic rate.

2

Income tax is charged at the savings higher rate on an individual's income which—

a

is savings income, and

b

would otherwise be charged at the higher rate or the default higher rate.

3

Income tax is charged at the savings additional rate on an individual's income which—

a

is savings income, and

b

would otherwise be charged at the additional rate or the default additional rate.

4

Subsections (1) to (3)—

a

have effect after sections 12 and 12A have been applied (so that any reference in subsections (1) to (3) to income which would otherwise be charged at a particular rate does not include income charged at the starting rate for savings or at the savings nil rate), and

b

are subject to any other provisions of the Income Tax Acts (apart from sections 10 and 11C) which provide for income to be charged at different rates of income tax in some circumstances.

5

Section 16 has effect for determining the extent to which an individual's savings income above the starting rate limit for savings would otherwise be charged at the basic, higher or additional rate or the default basic, default higher or default additional rate.

6

In relation to an individual who is a Scottish taxpayer, references in this section to income which would otherwise be charged at a particular rate are to be read as references to income that would, if the individual were not a Scottish taxpayer (but were UK resident), be charged at that rate (and subsection (5) is to be read accordingly).

ab

the rate at which income tax would be charged on a person's savings income above the starting rate limit for savings apart from sections 11D and 12A,

“default additional rate” means the rate of income tax of that name determined pursuant to section 6C,

“default basic rate” means the rate of income tax of that name determined pursuant to section 6C,

“default higher rate” means the rate of income tax of that name determined pursuant to section 6C,

“savings additional rate” means the rate of income tax of that name determined pursuant to section 7A,

“savings basic rate” means the rate of income tax of that name determined pursuant to section 7A,

“savings higher rate” means the rate of income tax of that name determined pursuant to section 7A,

default additional rate

section 6C (as applied by section 989)

default basic rate

section 6C (as applied by section 989)

default higher rate

section 6C (as applied by section 989)

savings additional rate

section 7A (as applied by section 989)

savings basic rate

section 7A (as applied by section 989)

savings higher rate

section 7A (as applied by section 989)

1A

Where this Chapter applies to any living accommodation—

a

the living accommodation is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms on which it is provided to any of those persons constitute a fair bargain), and

b

sections 102 to 108 provide for the cash equivalent of the benefit of the living accommodation to be treated as earnings.

4

In a case where the cash equivalent of the benefit of the living accommodation is nil—

a

subsections (2) and (3) do not apply, and

b

the full amount mentioned in subsection (1)(b) constitutes earnings from the employment for the year under Chapter 1.

1A

Where this Chapter applies to a car or van, the car or van is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms on which it is made available to the employee or member constitute a fair bargain).

117Meaning of car or van made available by reason of employment

1

For the purposes of this Chapter a car or van made available by an employer to an employee or member of an employee's family or household is to be regarded as made available by reason of the employment unless subsection (2) or (3) excludes the application of this subsection.

2

Subsection (1) does not apply where—

a

the employer is an individual, and

b

the car or van in question is made available in the normal course of the employer's domestic, family or personal relationships.

3

Subsection (1) does not apply where—

a

the employer carries on a vehicle hire business under which cars or vans of the same kind are made available to members of the public for hire,

b

the car or van in question is hired to the employee or member in the normal course of that business, and

c

in hiring that car or van the employee or member is acting as an ordinary member of the public.

1A

Where this Chapter applies to a loan—

a

the loan is a benefit for the purposes of this Chapter (and accordingly it is immaterial whether the terms of the loan constitute a fair bargain), and

b

sections 175 to 183 provide for the cash equivalent of the benefit of the loan (where it is a taxable cheap loan) to be treated as earnings in certain circumstances.

b

20% for the tax year 2016-17;

c

20% for the tax year 2017-18;

d

40% for the tax year 2018-19;

e

60% for the tax year 2019-20;

f

80% for the tax year 2020-21;

g

90% for the tax year 2021-22.

323ATrivial benefits provided by employers

1

No liability to income tax arises in respect of a benefit provided by, or on behalf of, an employer to an employee or a member of the employee's family or household if—

a

conditions A to D are met, or

b

in a case where subsection (2) applies, conditions A to E are met.

2

This subsection applies where—

a

the employer is a close company, and

b

the employee is—

i

a person who is a director or other office-holder of the employer, or

ii

a member of the family or household of such a person.

3

Condition A is that the benefit is not cash or a cash voucher within the meaning of section 75.

4

Condition B is that the benefit cost of the benefit does not exceed £50.

5

In this section “benefit cost”, in relation to a benefit, means—

a

the cost of providing the benefit, or

b

if the benefit is provided to more than one person and the nature of the benefit or the scale of its provision means it is impracticable to calculate the cost of providing it to each person to whom it is provided, the average cost per person of providing the benefit.

6

For the purposes of subsection (5)(b), the average cost per person of providing a benefit is found by dividing the total cost of providing the benefit by the number of persons to whom the benefit is provided.

7

Condition C is that the benefit is not provided pursuant to relevant salary sacrifice arrangements or any other contractual obligation.

8

“Relevant salary sacrifice arrangements”, in relation to the provision of a benefit to an employee or to a member of an employee's family or household, means arrangements (whenever made, whether before or after the employment began) under which the employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of the benefit.

9

Condition D is that the benefit is not provided in recognition of particular services performed by the employee in the course of the employment or in anticipation of such services.

10

Condition E is that—

a

the benefit cost of the benefit provided to the employee, or

b

in a case where the benefit is provided to a member of the employee's family or household who is not an employee of the employer, the amount of the benefit cost allocated to the employee in accordance with section 323B(4),

does not exceed the employee's available exempt amount (see section 323B).

323BSection 323A: calculation of available exempt amount

1

The “available exempt amount”, in relation to an employee of an employer, is the amount found by deducting from the annual exempt amount the aggregate of—

a

the benefit cost of eligible benefits provided earlier in the tax year by, or on behalf of, the employer to the employee, and

b

any amounts allocated to the employee in accordance with subsection (4) in respect of eligible benefits provided earlier in the tax year by, or on behalf of, the employer to a member of the employee's family or household who was not at that time an employee of the employer.

2

The annual exempt amount is £300.

3

For the purposes of subsection (1) “eligible benefits” means benefits in respect of which conditions A to D in section 323A are met.

4

The amount allocated to an employee of an employer in respect of a benefit provided to a person (“P”) who—

a

is a member of the employee's family or household, and

b

is not an employee of the employer,

is the benefit cost of that benefit divided by the number of persons who meet the condition in subsection (5) and are members of P's family or household.

5

This condition is met if the person is—

a

a director or other office-holder of the employer,

b

an employee of the employer who is a member of the family or household of a person within paragraph (a), or

c

a former employee of the employer who—

i

was a director or other office-holder at any time when the employer was a close company, or

ii

is a member of the family or household of such a person.

6

In this section “benefit cost” has the same meaning as in section 323A.

323CPower to amend sections 323A and 323B

1

The Treasury may by regulations amend section 323A so as to alter the conditions which must be met for the exemption conferred by section 323A(1) to apply.

2

Regulations under subsection (1) may include any amendment of section 323B that is appropriate in consequence of an amendment made under subsection (1).

3

The Treasury must not make regulations under subsection (1) unless a draft of the regulations has been laid before and approved by a resolution of the House of Commons.

fa

section 323A(4) (trivial benefits provided by employers: cost of providing benefit),

fb

section 323B(2) (trivial benefits provided by employers: annual exempt amount),

339ATravel for necessary attendance: employment intermediaries

1

This section applies where an individual (“the worker”)—

a

personally provides services (which are not excluded services) to another person (“the client”), and

b

the services are provided not under a contract directly between the client or a person connected with the client and the worker but under arrangements involving an employment intermediary.

This is subject to the following provisions of this section.

2

Where this section applies, each engagement is for the purposes of sections 338 and 339 to be regarded as a separate employment.

3

This section does not apply if it is shown that the manner in which the worker provides the services is not subject to (or to the right of) supervision, direction or control by any person.

4

Subsection (3) does not apply in relation to an engagement if—

a

Chapter 8 of Part 2 applies in relation to the engagement,

b

the conditions in section 51, 52 or 53 are met in relation to the employment intermediary, and

c

the employment intermediary is not a managed service company.

5

This section does not apply in relation to an engagement if—

a

Chapter 8 of Part 2 does not apply in relation to the engagement merely because the circumstances in section 49(1)(c) are not met,

b

assuming those circumstances were met, the conditions in section 51, 52 or 53 would be met in relation to the employment intermediary, and

c

the employment intermediary is not a managed service company.

6

In determining for the purposes of subsection (4) or (5) whether the conditions in section 51, 52 or 53 are or would be met in relation to the employment intermediary—

a

in section 51(1)—

i

disregard “either” in the opening words, and

ii

disregard paragraph (b) (and the preceding or), and

b

read references to the intermediary as references to the employment intermediary.

7

Subsection (8) applies if—

a

the client or a relevant person provides the employment intermediary (whether before or after the worker begins to provide the services) with a fraudulent document which is intended to constitute evidence that, by virtue of subsection (3), this section does not or will not apply in relation to the services,

b

that section is taken not to apply in relation to the services, and

c

in consequence, the employment intermediary does not under PAYE regulations deduct and account for an amount that would have been deducted and accounted for under those regulations if this section had been taken to apply in relation to the services.

8

For the purpose of recovering the amount referred to in subsection (7)(c) (“the unpaid tax”)—

a

the worker is to be treated as having an employment with the client or relevant person who provided the document, the duties of which consist of the services, and

b

the client or relevant person is under PAYE regulations to account for the unpaid tax as if it arose in respect of earnings from that employment.

9

In subsections (7) and (8) “relevant person” means a person, other than the client, the worker or a person connected with the employment intermediary, who—

a

is resident, or has a place of business, in the United Kingdom, and

b

is party to a contract with the employment intermediary or a person connected with the employment intermediary under or in consequence of which—

i

the services are provided, or

ii

the employment intermediary, or a person connected with the employment intermediary, makes payments in respect of the services.

10

In determining whether this section applies, no regard is to be had to any arrangements the main purpose, or one of the main purposes, of which is to secure that this section does not to any extent apply.

11

In this section—

• “arrangements” includes any scheme, transaction or series of transactions, agreement or understanding, whether or not enforceable, and any associated operations;

• “employment intermediary” means a person, other than the worker or the client, who carries on a business (whether or not with a view to profit and whether or not in conjunction with any other business) of supplying labour;

• “engagement” means any such provision of service as is mentioned in subsection (1)(a);

• “excluded services” means services provided wholly in the client's home;

• “managed service company” means a company which—

  1. a

     is a managed service company within the meaning given by section 61B, or

  2. b

     would be such a company disregarding subsection (1)(c) of that section.

688BTravel expenses of workers providing services through intermediaries: recovery of unpaid tax

1

PAYE regulations may make provision for, or in connection with, the recovery from a director or officer of a company, in such circumstances as may be specified in the regulations, of amounts within any of subsections (2) to (5).

2

An amount within this subsection is an amount that the company is to account for in accordance with PAYE regulations by virtue of section 339A(7) to (9) (persons providing fraudulent documents).

3

An amount within this subsection is an amount which the company is to deduct and pay in accordance with PAYE regulations by virtue of section 339A in circumstances where—

a

the company is an employment intermediary,

b

on the basis that section 339A does not apply by virtue of subsection (3) of that section, the company has not deducted and paid the amount, but

c

the company has not been provided by any other person with evidence from which it would be reasonable in all the circumstances to conclude that subsection (3) of that section applied (and the mere assertion by a person that the manner in which the worker provided the services was not subject to (or to the right of) supervision, direction or control by any person is not such evidence).

4

An amount within this subsection is an amount that the company is to deduct and pay in accordance with PAYE regulations by virtue of section 339A in a case where subsection (4) of that section applies (services provided under arrangements made by intermediaries).

5

An amount within this subsection is any interest or penalty in respect of an amount within any of subsections (2) to (4) for which the company is liable.

6

In this section—

• “company” includes a limited liability partnership;

• “director” has the meaning given by section 67;

• “employment intermediary” has the same meaning as in section 339A;

• “officer”, in relation to a company, means any manager, secretary or other similar officer of the company, or any person acting or purporting to act as such

CHAPTER 3BCertain debts of companies under section 339A of ITEPA (travel expenses of workers providing services through employment intermediaries)

97ZGInterpretation of Chapter 3B: “relevant PAYE debt” and “relevant date”

1

In this Chapter “relevant PAYE debt”, in relation to a company means an amount within any of paragraphs (2) to (5).

2

An amount within this paragraph is an amount that the company is to account for in accordance with these Regulations by virtue of section 339A(7) to (9) of ITEPA (persons providing fraudulent documents).

3

An amount within this paragraph is an amount which a company is to deduct and pay in accordance with these Regulations by virtue of section 339A of ITEPA in circumstances where—

a

the company is an employment intermediary,

b

on the basis that section 339A of ITEPA does not apply by virtue of subsection (3) of that section the company has not deducted and paid the amount, but

c

the company has not been provided by any other person with evidence from which it would be reasonable in all the circumstances to conclude that subsection (3) of that section applied (and the mere assertion by a person that the manner in which the worker provided the services was not subject to (or to the right of) supervision, direction or control by any person is not such evidence).

4

An amount within this paragraph is an amount that the company is to deduct and pay in accordance with these Regulations by virtue of section 339A of ITEPA in a case where subsection (4) of that section applies (services provided under arrangements made by intermediaries).

5

An amount within this paragraph is any interest or penalty in respect of an amount within any of paragraphs (2) to (4) for which the company is liable.

6

In this Chapter “the relevant date” in relation to a relevant PAYE debt means the date on which the first payment is due on which PAYE is not accounted for.

97ZHInterpretation of Chapter 3B: general

In this Chapter—

• “company” includes a limited liability partnership;

• “director” has the meaning given by section 67 of ITEPA;

• “personal liability notice” has the meaning given by regulation 97ZI(2);

• “the specified amount” has the meaning given by regulation 97ZI(2)(a).

97ZILiability of directors for relevant PAYE debts

1

This regulation applies in relation to an amount of relevant PAYE debt of a company if the company does not deduct that amount by the time by which the company is required to do so.

2

HMRC may serve a notice (a “personal liability notice”) on any person who was, on the relevant date, a director of the company—

a

specifying the amount of relevant PAYE debt in relation to which this regulation applies (“the specified amount”), and

b

requiring the director to pay to HMRC—

i

the specified amount, and

ii

specified interest on that amount.

3

The interest specified in the personal liability notice—

a

is to be at the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 86 of TMA, and

b

is to run from the date the notice is served.

4

A director who is served with a personal liability notice is liable to pay to HMRC the specified amount and the interest specified in the notice within 30 days beginning with the day the notice is served.

5

If HMRC serve personal liability notices on more than one director of the company in respect of the same amount of relevant PAYE debt, the directors are jointly and severally liable to pay to HMRC the specified amount and the interest specified in the notices.

97ZJAppeals in relation to personal liability notices

1

A person who is served with a personal liability notice in relation to an amount of relevant PAYE debt of a company may appeal against the notice.

2

A notice of appeal must—

a

be given to HMRC within 30 days beginning with the day the personal liability notice is served, and

b

specify the grounds of the appeal.

3

The grounds of appeal are —

a

that all or part of the specified amount does not represent an amount of relevant PAYE debt, of the company, to which regulation 97ZI applies, or

b

that the person was not a director of the company on the relevant date.

4

But a person may not appeal on the ground mentioned in paragraph (3)(a) if it has already been determined, on an appeal by the company, that—

a

the specified amount is a relevant PAYE debt of the company, and

b

the company did not deduct, account for, or (as the case may be) pay the debt by the time by which the company was required to do so.

5

Subject to paragraph (6), on an appeal that is notified to the tribunal, the tribunal is to uphold or quash the personal liability notice.

6

In a case in which the ground of appeal mentioned in paragraph (3)(a) is raised, the tribunal may also reduce or increase the specified amount so that it does represent an amount of relevant PAYE debt, of the company, to which regulation 97ZI applies.

97ZKWithdrawal of personal liability notices

1

A personal liability notice is withdrawn if the tribunal quashes it.

2

An officer of Revenue and Customs may withdraw a personal liability notice if the officer considers it appropriate to do so.

3

If a personal liability notice is withdrawn, HMRC must give notice of that fact to the person upon whom the notice was served.

97ZLRecovery of sums due under personal liability notice: application of Part 6 of TMA

1

For the purposes of this Chapter, Part 6 of TMA (collection and recovery) applies as if—

a

the personal liability notice were an assessment, and

b

the specified amount, and any interest on that amount under regulation 97ZI(2)(b)(ii), were income tax charged on the director upon whom the notice is served,

and that Part of that Act applies with the modification in paragraph (2) and any other necessary modifications.

2

Summary proceedings for the recovery of the specified amount, and any interest on that amount under regulation 97ZI(2)(b)(ii), may be brought in England and Wales or Northern Ireland at any time before the end of the period of 12 months beginning with the day after the day on which the personal liability notice is served.

97ZMRepayment of surplus amounts

1

This regulation applies if—

a

one or more personal liability notices are served in respect of an amount of relevant PAYE debt of a company, and

b

the amounts paid to HMRC (whether by directors upon whom notices are served or the company) exceed the aggregate of the specified amount and any interest on it under regulation 97ZI(2)(b)(ii).

2

HMRC is to repay the difference on a just and equitable basis and without unreasonable delay.

3

HMRC is to pay interest on any sum repaid.

4

The interest—

a

is to be at the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 824 of ICTA, and

b

is to run from the date the amounts paid to HMRC come to exceed the aggregate mentioned in subsection (1)(b).

1A

But Chapters 1 and 10 of Part 3 do not have effect in relation to—

a

the acquisition of employment-related securities options (within the meaning of Chapter 5 of Part 7), or

b

chargeable events (within the meaning given by section 477) occurring in relation to such options.

za

section 418(1A) (acquisition of, and chargeable events occurring in relation to, employment-related securities options);

1A

Where the value of a relevant step would (apart from this subsection) count as employment income of more than one person—

a

the value of the relevant step is to be apportioned between each of those persons on a just and reasonable basis, and

b

subsection (1) applies as if the reference to the value of the relevant step in relation to A were a reference to so much of the value of the relevant step that is apportioned to A.

, and

d

there is no connection (direct or indirect) between the payment and a tax avoidance arrangement.

a

where sub-paragraph (2A) or (2B) applies, the earnings mentioned in sub-paragraph (1)(f)(i) or any return on those earnings mentioned in sub-paragraph (1)(f)(ii), and

b

in any other case, the earnings mentioned in sub-paragraph (1)(f)(i).

2A

This sub-paragraph applies where—

a

the agreement mentioned in sub-paragraph (1)(d)(i) is made before 1 April 2017, and

b

A or B pays, or otherwise accounts for, any tax as mentioned in sub-paragraph (1)(e) in accordance with that agreement.

2B

This sub-paragraph applies where—

a

the decision mentioned in sub-paragraph (1)(d)(ii) is made before 1 April 2017, and

b

A or B pays, or otherwise accounts for, any tax as mentioned in sub-paragraph (1)(e) before 1 April 2017.

5

For the purposes of sub-paragraph (1)(e), a person is not to be regarded as having paid, or otherwise accounted for, any tax by reason only of making—

a

a payment on account of income tax,

b

a payment that is treated as a payment on account under section 223(3) of FA 2014 (accelerated payments), or

c

a payment pending determination of an appeal made in accordance with section 55 of TMA 1970.

2

The standard lifetime allowance for the tax years 2016-17 and 2017-18 is £1,000,000.

2A

The standard lifetime allowance for any later tax year (“the subsequent tax year”) is the same as the standard lifetime allowance for the tax year immediately preceding the subsequent tax year, unless subsection (2C) provides for it to be higher.

2B

Subsection (2C) applies if—

a

the consumer prices index for the month of September in any tax year (“the prior tax year”) is higher than it was for the previous September, and

b

the prior tax year is the tax year 2017-18 or a later tax year.

2C

The standard lifetime allowance for the tax year following the prior tax year is the standard lifetime allowance for the prior tax year—

a

increased by the percentage increase in the index, and

b

if the result is not a multiple of £100, rounded up to the nearest amount which is such a multiple.

2D

The Treasury must before the tax year 2018-19, and before each subsequent tax year, make regulations specifying the amount given by subsections (2A) to (2C) as the standard lifetime allowance for the tax year concerned.

5BC

Where the operation of a lifetime allowance enhancement factor is provided for by any of sections 220, 222, 223 and 224 and the time mentioned in the definition of SLA in the section concerned fell within the period consisting of the tax year 2014-15 and the tax year 2015-16, subsection (4) has effect as if the amount to be multiplied by LAEF were £1,250,000 if that is greater than SLA.

5BD

Where more than one lifetime allowance enhancement factor operates, subsection (5BC) does not apply if any of subsections (5A), (5B) and (5BA) applies.

5E

Where benefit crystallisation event 7 occurs on or after 6 April 2016 by reason of the payment of a relevant lump sum death benefit in respect of the death of the individual during the period consisting of the tax year 2014-15 and the tax year 2015-16, the standard lifetime allowance at the time of the benefit crystallisation event is £1,250,000.

5F

Where—

a

benefit crystallisation event 5C occurs by reason of the designation on or after 6 April 2015 of sums or assets held for the purposes of an arrangement relating to the individual, and

b

the individual died before 6 April 2012,

the standard lifetime allowance at the time of the benefit crystallisation event is £1,800,000.

5G

Where—

a

benefit crystallisation event 5C occurs by reason of the designation on or after 6 April 2015 of sums or assets held for the purposes of an arrangement relating to the individual, and

b

the individual died in the period consisting of the tax year 2012-13 and the tax year 2013-14,

the standard lifetime allowance at the time of the benefit crystallisation event is £1,500,000.

5H

Where—

a

benefit crystallisation event 5C occurs by reason of the designation on or after 6 April 2016 of sums or assets held for the purposes of an arrangement relating to the individual, and

b

the individual died in the period consisting of the tax year 2014-15 and the tax year 2015-16,

the standard lifetime allowance at the time of the benefit crystallisation event is £1,250,000.

5I

Where—

a

benefit crystallisation event 5D occurs by reason of a person becoming entitled on or after 6 April 2016 to an annuity in respect of the individual, and

b

the individual died in the period beginning with 3 December 2014 and ending with 5 April 2016,

the standard lifetime allowance at the time of the benefit crystallisation event is £1,250,000.

3

Subsection (2) does not apply to an instrument containing only regulations under section 218(2D).

1A

Sub-paragraph (1) is subject to paragraphs 16AA and 16AB.

16AA

Paragraphs 16B and 16C do not apply if—

a

each benefit crystallisation event that has occurred in relation to the member by reference to arrangements relating to the member under the scheme is benefit crystallisation event 5B (having unused funds under a money purchase arrangement at age 75), or

b

paragraph 12 of Schedule 36 (enhanced protection by reference to pre-6 April 2006 rights) applies in the case of the member immediately before the member's death.

16AB

1

Paragraph 16B does not apply if, at all times in the post-death year (as defined in that paragraph), the payable annual rate is less than the limit.

2

Paragraph 16C does not apply in relation to a period of 12 months within paragraph (a) or (b) of paragraph 16C(1) if, at all times in that period of 12 months, the payable annual rate is less than the limit.

3

“The payable annual rate”, at any time, is arrived at as follows—

a

identify each dependants' scheme pension payable in respect of the member under the scheme to which a dependant of the member is actually entitled at that time, and

b

identify the annual rate at which each pension identified at paragraph (a) is payable at that time, and

c

if only one pension is identified at paragraph (a), the payable annual rate is the annual rate identified at paragraph (b), and

d

if two or more pensions are identified at paragraph (a), the payable annual rate is the total of the annual rates identified at paragraph (b).

4

“The limit”, at any time, is—

a

the general limit at that time (see paragraph 16AC), or,

b

if higher, the personal limit at that time (see paragraph 16AD).

16AC

1

This paragraph applies for the purposes of paragraph 16AB(4).

2

“The general limit” at a time in the tax year 2016-17 is £25,000.

3

“The general limit” at a time in a later tax year (“year T”)—

a

is given by—

$G+(G\times U\text{\%})$

where G is the general limit at times in the tax year (“year P”) that precedes year T, or

b

if the amount given by paragraph (a) is not a multiple of £100, is that amount rounded up to the nearest amount that is such a multiple.

4

See paragraph 16AE for the meaning of U%.

16AD

1

This paragraph applies for the purposes of paragraph 16AB(4).

2

“The personal limit” at a time in the tax year in which the member dies is arrived at as follows—

a

identify each scheme pension under the scheme to which the member is actually or prospectively entitled immediately before the member's death, and

b

as regards each pension identified at paragraph (a)—

i

if it is one to which the member is actually entitled immediately before the member's death, identify the annual rate at which it is payable immediately before the member's death, or

ii

if it is one to which the member is prospectively entitled immediately before the member's death, identify the annual rate at which it would have been payable immediately before the member's death had the member been actually entitled to it immediately before the member's death, and

c

if only one pension is identified at paragraph (a), the personal limit is the annual rate identified at paragraph (b), and

d

if two or more pensions are identified at paragraph (a), the personal limit is the total of the annual rates identified at paragraph (b).

3

“The personal limit” at a time in a tax year (“year S”) later than the tax year in which the member dies—

a

is given by—

$L+(L\times U\text{\%})$

where L is the personal limit at times in the tax year (“year P”) that precedes year S, or

b

if the amount given by paragraph (a) is not a multiple of £100, is that amount rounded up to the nearest amount that is such a multiple.

4

See paragraph 16AE for the meaning of U%.

5

If the scheme is a public service pension scheme, ignore any abatement when identifying at sub-paragraph (2)(b) the annual rate of any scheme pension under the scheme.

16AE

1

In paragraphs 16AC(3) and 16AD(3), U% means the highest of—

a

5%,

b

CPI% (see sub-paragraph (2)), and

c

RPI% (see sub-paragraph (3)).

2

If the consumer prices index for September in year P is higher than the consumer prices index for September in the tax year preceding year P, CPI% is the percentage increase in the index (but is otherwise 0%).

3

If the retail prices index for September in year P is higher than the retail prices index for September in the tax year preceding year P, RPI% is the percentage increase in the index (but is otherwise 0%).

4

In this paragraph “year P” has the same meaning as in paragraph 16AC or (as the case may be) paragraph 16AD.

642ANetherlands Benefit Act for Victims of Persecution 1940-1945

No liability to income tax arises on a pension, annuity, allowance or other payment provided in accordance with the provisions of the scheme established under the law of the Netherlands and known as Wet uitkeringen vervolgingsslachtoffers 1940-1945.

in respect of—

a

the use of the person's home for the purposes of the trade, or

b

where the person is a firm, the use of a partner's home for those purposes.

4A

Qualifying work” means—

a

work done by the person, or any employee of the person, in the person's home wholly and exclusively for the purposes of the trade, or

b

where the person is a firm, work done by a partner, or any employee of the firm, in the partner's home wholly and exclusively for those purposes.

4B

Where more than one person does qualifying work in the same home at the same time, any hour spent wholly and exclusively on that work is to be taken into account only once for the purposes of subsection (4).

5A

Where a firm makes a deduction for a period under this section in respect of the use of a partner's home for the purposes of a trade, the only deduction which the firm may make for the period in respect of the use of any other partner's home for those purposes is a deduction under this section.

used as a home by—

i

the person carrying on the trade, or

ii

where that person is a firm, a partner of the firm,

6A

Where a person makes a deduction for a period under this section in respect of expenses incurred in relation to premises falling within subsection (1)(b), the only deduction which the person may make for the period in respect of expenses incurred in relation to any other premises falling within subsection (1)(b) is a deduction under this section.

222ACircumstances in which claim for five-year averaging may be made

1

An averaging claim may be made under this section in relation to five consecutive tax years in which a taxpayer is or has been carrying on the qualifying trade, profession or vocation if the volatility condition in subsection (2) is met.

2

The volatility condition is that—

a

one of the following is less than 75% of the other—

i

the average of the relevant profits of the first four tax years to which the claim relates;

ii

the relevant profits of the last of the tax years to which the claim relates; or

b

the relevant profits of one or more (but not all) of the five tax years to which the claim relates are nil.

3

Any of the first four tax years to which an averaging claim under this section relates may be a tax year in relation to which an averaging claim under this section or section 222 has already been made.

4

An averaging claim (“the subsequent claim”) may not be made under this section if an averaging claim in respect of the trade, profession or vocation has already been made under this section or section 222 in relation to a tax year which is later than the last of the tax years to which the subsequent claim relates.

5

An averaging claim may not be made under this section in relation to the tax year in which the taxpayer starts, or permanently ceases, to carry on the trade, profession or vocation.

6

An averaging claim under this section must be made on or before the first anniversary of the normal self-assessment filing date for the last of the tax years to which the claim relates.

7

But see section 225(4) (extended time limit if profits adjusted for some other reason).

Tax reductions for non-deductible costs of a dwelling-related loan

274AReduction for individuals: entitlement

1

If for a tax year an individual has—

a

a relievable amount in respect of a property business, or

b

two or more relievable amounts each in respect of a different property business,

the individual is entitled to relief under this section for that year in respect of that relievable amount or (as the case may be) each of those relievable amounts.

2

An individual has a relievable amount for a tax year in respect of a property business if for that year the individual has any one or more of the following in respect of that business—

a

a current-year amount;

b

a current-year estate amount;

c

a brought-forward amount.

3

An individual's relievable amount for a tax year in respect of a property business is the total of—

a

the individual's current-year amount (if any) for that year in respect of that business,

b

the individual's current-year estate amounts (if any) for that year in respect of that business, and

c

the individual's brought-forward amount (if any) for that year in respect of that business.

4

An individual has a current-year amount for a tax year in respect of a property business if—

a

an amount (“A”) would be deductible in calculating the profits for income tax purposes of that business for that year but for section 272A,

b

the individual is liable for income tax on N% of those profits, where N is a number—

i

greater than 0, and

ii

less than or equal to 100, and

c

that liability is not under Chapter 6 of Part 5 (estate income),

in which event the individual's current-year amount for that tax year in respect of that business is equal to N% of A.

5

An individual has a current-year estate amount for a tax year (“the current year”), in respect of a property business and a particular deceased person's estate, if—

a

an amount (“A”) would, but for section 272A, be deductible in calculating the profits for income tax purposes of that business for a particular tax year (“the profits year”), whether that year is the current year or an earlier tax year,

b

the personal representatives of the deceased person are liable for income tax on N% of those profits, where N is a number—

i

greater than 0, and

ii

less than or equal to 100,

c

the individual is liable for income tax on estate income treated under Chapter 6 of Part 5 as arising in the current year from an interest in the estate, and

d

the basic amount of that estate income consists of, or includes, an amount representative of E% of the personal representatives' N% of the profits of the business for the profits year, where E is a number—

i

greater than 0, and

ii

less than or equal to 100,

in which event the individual's current-year estate amount for the current tax year, in respect of that business and estate and the profits year, is equal to E% of N% of A.

6

As to whether an individual has a brought-forward amount for a tax year in respect of a property business, see section 274AA(4).

7

In this section and section 274AA—

• “estate income”, and

• “basic amount” in relation to any estate income,

have the same meaning as in Chapter 6 of Part 5 (see sections 649 and 656(4)).

274AAReduction for individuals: calculation

1

This section applies if for a tax year an individual is entitled to relief under section 274A in respect of a relievable amount or in respect of each of two or more relievable amounts, and in the following subsections of this section “relievable amount” means that relievable amount or (as the case may be) any of those relievable amounts.

2

In respect of a relievable amount, the actual amount on which relief for the year is to be given is (subject to subsection (3)) the amount (“L”) that is the lower of—

a

the relievable amount, and

b

the total of—

i

the profits for income tax purposes of the property business concerned for the year after any deduction under section 118 of ITA 2007 (“the adjusted profits”) or, if less, the share (if any) of the adjusted profits on which the individual is liable to income tax otherwise than under Chapter 6 of Part 5, and

ii

so much (if any) of the relievable amount as consists of current-year estate amounts.

3

If S is greater than the individual's adjusted total income for the year (“ATI”), the actual amount on which relief for the year is to be given in respect of a relievable amount is given by—

$\frac{\mathrm{ATI}}{S}\times L$

where—

S is the total obtained by identifying the amount that is L for each relievable amount and then finding the total of the amounts identified, and

L has the same meaning as in subsection (2).

4

Where—

a

a relievable amount,

is greater than—

b

the actual amount on which relief for the year is to be given in respect of the relievable amount,

the difference is the individual's brought-forward amount for the following tax year in respect of the property business concerned.

5

The amount of the relief for the year in respect of a relievable amount is given by—

$\mathrm{AA}\times \mathrm{BR}$

where—

AA is the actual amount on which relief for the year is to be given in respect of the relievable amount, and

BR is the basic rate of income tax for the year,

6

For the purposes of this section, an individual's adjusted total income for a tax year is identified as follows—

• Step 1 Identify the individual's net income for the year (see Step 2 of the calculation in section 23 of ITA 2007).

• Step 2 Exclude from that net income—

  1. a

     so much of it as is within section 18(3) or (4) of ITA 2007 (income from savings), and

  2. b

     so much of it as is dividend income.

• Step 3 Reduce what is left after Step 2 of this calculation by the amount of any allowances deducted for the year in the individual's case at Step 3 of the calculation in section 23 of ITA 2007. The result is the individual's adjusted total income for the year.

274BReduction for accumulated or discretionary trust income: entitlement

1

If for a tax year the trustees of a settlement have—

a

a relievable amount in respect of a property business, or

b

two or more relievable amounts each in respect of a different property business,

the trustees of the settlement are entitled to relief under this section for that year in respect of that relievable amount or (as the case may be) each of those relievable amounts.

2

The trustees of a settlement have a relievable amount for a tax year in respect of a property business if for that year the trustees of the settlement have a current-year amount, or brought-forward amount, in respect of that business (or have both).

3

In the case of trustees of a settlement, their relievable amount for a tax year in respect of a property business is the total of—

a

their current-year amount (if any) for that year in respect of that business, and

b

their brought-forward amount (if any) for that year in respect of that business.

4

The trustees of a settlement have a current-year amount for a tax year in respect of a property business if—

a

an amount (“A”) would be deductible in calculating the profits for income tax purposes of that business for that year but for section 272A,

b

the trustees of the settlement are liable for income tax on N% of those profits, where N is a number—

i

greater than 0, and

ii

less than or equal to 100, and

c

in relation to the trustees of the settlement, that N% of those profits is accumulated or discretionary income,

in which event the current-year amount of the trustees of the settlement for that tax year in respect of that business is equal to N% of A.

5

As to whether the trustees of a settlement have a brought-forward amount for a tax year in respect of a property business, see section 274C(3).

6

In this section and section 274C “accumulated or discretionary income” has the meaning given by section 480 of ITA 2007.

274CReduction for accumulated or discretionary trust income: calculation

1

This section applies if for a tax year the trustees of a settlement are entitled to relief under section 274B in respect of a relievable amount or in respect of each of two or more relievable amounts, and in the following subsections of this section “relievable amount” means that relievable amount or (as the case may be) any of those relievable amounts.

2

The amount of the relief in respect of a relievable amount is given by—

$L\times \mathrm{BR}$

where—

BR is the basic rate of income tax for the year, and

L is the lower of—

1. a

   the relievable amount, and

2. b

   the profits for income tax purposes of the property business concerned for the year after any deduction under section 118 of ITA 2007 (“the adjusted profits”) or, if less, the share of the adjusted profits—

   1. i

      on which the trustees of the settlement are liable for income tax, and

   2. ii

      which, in relation to the trustees of the settlement, is accumulated or discretionary income.

3

Where L in the case of a relievable amount is less than the relievable amount, the difference between them is the brought-forward amount of the trustees of the settlement for the following tax year in respect of the property business concerned.

694ADeceased investors

1

In section 694(1) “income of an individual from investments under a plan” includes—

a

income (of any person) from administration-period investments under a plan, and

b

income (of any person) from the estate of a deceased person (“D”) where the whole or any part of the income of D's personal representatives is income from administration-period investments under a plan.

2

For the purposes of sections 694(3)(a) and (4) and 695(1) “individual”, in relation to investments that are administration-period investments, includes—

a

the personal representatives of the deceased individual concerned, and

b

any other person on whose directions plan managers agree to act in relation to the investments.

3

In sections 699 and 701 “investor” includes a person entitled to an exemption given by investment plan regulations by virtue of subsection (1) of this section.

4

Investments are “administration-period investments” if—

a

an individual dies, and

b

immediately before the individual's death—

i

the investments were held under a plan,

ii

the individual was entitled to the income from the investments, and

iii

as a result of investment plan regulations, the individual's income from investments under the plan was exempt from income tax (either wholly or to an extent specified in the regulations).

5

Investments are also “administration-period investments” if (directly or indirectly) they represent investments that are administration-period investments as a result of subsection (4).

6

Investment plan regulations may provide that investments are administration-period investments as a result of subsection (4) or (5) only at times specified in, or ascertained in accordance with, the regulations.

7

Provision under subsection (6) may (in particular) be framed by reference to the completion of the administration of a deceased individual's estate.

8

In the application of subsection (7) in relation to Scotland, the reference to the completion of the administration is to be read in accordance with section 653(2).

4A

The Treasury may by regulations make provision having effect in place of subsection (4)(b) above in a case where there has been a time when the personal representatives—

a

held the asset acquired by the legatee, and

b

would, if they had disposed of the asset at that time—

i

by way of a bargain at arm's length, and

ii

otherwise than to a legatee,

have been entitled as a result of regulations under section 151 (investments under plans) to relief from capital gains tax in respect of any chargeable gain accruing on the disposal.

4B

Provision made by regulations under subsection (4A) above may (in particular) treat a person who acquires an asset as legatee as doing so at a time or for a consideration, or at a time and for a consideration, ascertained as specified by the regulations.

ka

generating or exporting electricity or making electricity generating capacity available,

kb

generating heat,

kc

generating any form of energy not within paragraph (ka) or (kb),

kd

producing gas or fuel, and

ka

generating or exporting electricity or making electricity generating capacity available,

kb

generating heat,

kc

generating any form of energy not within paragraph (ka) or (kb),

kd

producing gas or fuel, and