Finance Act 2004

Any excess NCDs not allocated to another company under Part 2 shall be carried forward by the distributing company. That company shall be treated as if it had made a non-corporate distribution of the amount carried forward (in addition to any distributions actually made by it) in its next accounting period. Where an allocation is made under paragraph 9(4) references in this paragraph to the distributing company shall be read as references to the company to which that allocation is made (which is treated by virtue of paragraph 6(3) as having made a distribution in the accounting period to which the allocation is made).

For the purposes of section 13AB and this Schedule, a non-corporate distribution made by a company otherwise than in an accounting period of the company shall be treated as made in the next accounting period of the company.

The debits and credits to be brought into account for the purposes of Chapter 2 of Part 4 of the Finance Act 1996 as respects a creditor relationship arising under sub-paragraph (2)(a) must be determined on the basis of fair value accounting.

In Part 15 of that Schedule (interpretation) paragraph 134(a) (references to amounts recognised in profit and loss account) is amended as follows. After “statement of total recognised gains and losses” insert “, statement of changes in equity”. other than an amount recognised for accounting purposes by way of correction of a fundamental error.

Section 730BB of the Taxes Act 1988 (exchange gains and losses on sale and repurchase of securities) is amended as follows. In subsection (2)(c) for the words from “section 93 of the Finance Act 1993” to “sterling)” substitute “section 92B or 92C of the Finance Act 1993 (company preparing accounts or operating in currency other than sterling)”. In subsection (3)— After subsection (3) insert— Omit subsection (12).

In the case of an application for a company to be registered for gross payment (whether as a partner in a firm or otherwise), the following conditions must be satisfied by the company.

The company must, subject to sub-paragraphs (2) and (3), have complied with— A company that has failed to comply with such an obligation or request as— is, in such circumstances as may be prescribed by the regulations, to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request. A company that has failed to comply with such an obligation or request as is referred to in sub-paragraph (1) is to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request if the Board of Inland Revenue are of the opinion that— The company must, if any contribution has at any time during the qualifying period become due from the company under— have paid the contribution when it became due. The company must have complied with any obligations imposed on it by the following provisions of the Companies Act 1985 (c. 6) in so far as those obligations fell to be complied with within the qualifying period— The company must have complied with any obligations imposed on it by the following provisions of the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) in so far as those obligations fell to be complied with within the qualifying period— There must be reason to expect that the company will, in respect of periods after the qualifying period, comply with— Subject to sub-paragraphs (2) and (3), a company is not to be taken for the purposes of this paragraph to have complied with any such obligation or request as is referred to in sub-paragraphs (1) to (6) if there has been a contravention of a requirement as to— the obligation or request was to be complied with.

In Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (miscellaneous exemptions), for section 318 (care for children) substitute—.

Chapter 2 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (employment income: restricted securities) is amended as follows. In section 426 (charge on occurrence of chargeable event), for subsections (1) to (4) substitute—. After section 428 insert—.

Part 11 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (Pay As You Earn) is amended as follows. In section 698 (PAYE: special charges on employment-related securities), after subsection (2) insert—. In section 700 (PAYE: gains from securities options), after subsection (4) insert—.

In section 484(7) of the Income Tax (Earnings and Pensions) Act 2003 (definitions for Chapter 5 of Part 7), omit the definition of “the Contributions and Benefits Act” and the word “and” preceding it. In section 721 (1) of that Act (general definitions), at the appropriate place insert—. the Contributions and Benefits Act section 721(1)

The only sort of event that constitutes a benefit crystallisation event in relation to the individual after the individual has reached the age of 75 is an event that constitutes benefit crystallisation event 3.

For the purposes of benefit crystallisation events 2, 3 and 5 “RVF” is the relevant valuation factor (see section 276).

For the purposes of benefit crystallisation event 2 “P” is the amount of the pension which will be payable to the individual in the period of 12 months beginning with the day on which the individual becomes entitled to it (assuming that it remains payable throughout that period at the rate at which it is payable on that day). If the amount of the pension which will be payable will or may be reduced so as to reflect the amount of any tax under section 215 to be paid by the scheme administrator, that reduction is to be left out of account in determining the amount of the pension which will be payable for the purposes of sub-paragraph (1).

In section 43 (land transactions)—

Section 45 (contract and conveyance: effect of transfer of rights) is amended as follows. In subsection (1)— For subsection (5) substitute—. After that subsection insert—. After section 45 insert—. In section 122 (index of defined expressions), in the entry for “vendor” insert at the end “(see too sections 45(5A) and 45A(9))”.

In section 119 (meaning of “effective date” of a transaction), in subsection (2) (cases where effective date is not date of completion)—

In paragraph 49(4) of that Schedule (partnerships involving companies: provisions for determining credits and debits for company partner), for paragraph (c) substitute—.

For paragraph 50 of that Schedule (partnerships involving companies: application of accounting methods) substitute—.

After that paragraph insert—.

In section 231AA of the Taxes Act 1988 (no tax credit for borrower under stock lending arrangement or interim holder under repurchase agreement) after subsection (1) insert—. In section 231AB of that Act (no tax credit for original owner under repurchase agreement in respect of certain manufactured dividends) after subsection (1) insert—. But this subsection is subject to— section 231AA(1A) (section 233 (1) not to apply to borrower under stock lending arrangement or interim holder under repurchase agreement); section 231AB(1A) (section 233 (1) not to apply to original owner under repurchase agreement in respect of certain manufactured dividends). The amendment made by sub-paragraph (1) (and the amendment made by sub-paragraph (3) so far as relating to that amendment) have effect in relation to any qualifying distribution received by a relevant person on or after the commencement date where a manufactured dividend representative of that distribution is or was paid, or treated as paid, by him on or after that date. In sub-paragraph (4) “the commencement date” means— The amendment made by sub-paragraph (2) (and the amendment made by sub-paragraph (3) so far as relating to that amendment) have effect in relation to any qualifying distribution received by a relevant person on or after the day on which this Act is passed.

For the purposes of this Part the ill-health condition is met if—

“Unsecured pension” means—

For the purposes of this Part the member’s unsecured pension fund in respect of an arrangement consists of such of the sums or assets held for the purposes of the arrangement— When the member reaches the age of 75, any relevant uncrystallised funds are to be treated as having been designated under the arrangement as available for the payment of unsecured pension immediately before the member reached that age. “Relevant uncrystallised funds” means the sums and assets held for the purposes of the arrangement which—

“Alternatively secured pension year” means— When the member dies, the current alternatively secured pension year is the last alternatively secured pension year and ends immediately before the member’s death. But if by virtue of pension rule 2 alternatively secured income is to be paid to a person after the member’s death, sub-paragraph (4) applies instead of sub-paragraph (2). The last alternatively secured pension year is the earlier of—

In the case of a pension scheme with fewer than 50 members, a pension payable to a dependant is a dependants' scheme pension for the purposes of this Part if— In the case of a pension scheme with 50 or more members, a pension payable to a dependant is a dependants' scheme pension if— The condition is that (subject to sub-paragraph (4))— Neither of the following prevents the pension satisfying the condition in sub-paragraph (3)— For the purposes of sub-paragraph (4)(b) the following constitute “state retirement pension”— A relevant 12 month period is any 12 month period which—

The Board of Inland Revenue may by regulations make any modifications of the rules of pension schemes to which paragraph 1 (1) applies if the modifications appear appropriate in consequence of, or in connection with, the provision made by this Part (or the repeals made by this Act in consequence of the provision made by this Part). Any modifications of the rules of a pension scheme made by the regulations have effect until the earlier of— The modifications that may be made by the regulations include, in particular—

Any liabilities or obligations of— incurred in relation to the scheme before 6th April 2006 or by virtue of paragraph 4 are (on and after that date) to be treated as liabilities or obligations of the scheme administrator of the scheme.

In this paragraph— This paragraph applies where— This sub-paragraph applies where— In the case of each user field, the initial portion of the aggregate of the relevant receipts of the participator, and the consequential relevant receipts of each successor, that are referable to— shall not be tax-exempt tariffing receipts (and shall accordingly continue to be tariff receipts). In this paragraph— Expressions used in this paragraph and in section 6A of the Oil Taxation Act 1983 (c. 56) have the same meaning in this paragraph as they have in that section.

“Alternatively secured pension” means income withdrawal.

For the first alternatively secured pension year, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the member’s alternatively secured pension fund on the date on which the member first became entitled to alternatively secured pension in respect of the arrangement. For each other alternatively secured pension year, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the member’s alternatively secured pension fund on the nominated date. “The nominated date” is such day within the period of 60 days ending with the first day of the alternatively secured pension year as is nominated by the scheme administrator (or, if no day is nominated by the scheme administrator, is the first day of the alternatively secured pension year). Paragraph 14 defines “relevant annuity”.

Paragraph 12 is amended as follows. Where the debits or credits to be brought into account for the purposes of this Chapter in respect of any amounts fall to be determined in accordance with sub-paragraph (2) above, Schedule 28AA to the Taxes Act 1988 (provision not at arm’s length) does not apply in relation to those amounts.

In Schedule 18 (company tax returns, assessments and related matters) paragraph 25 is amended as follows. and also extends to consideration of whether to give the company a transfer pricing notice under paragraph 5C of Schedule 28AA to the Taxes Act 1988 (provision not at arm’s length: medium-sized enterprise). But this is subject to the following limitation.

In the case of an application for an individual to be registered for gross payment, the following conditions must be satisfied by the individual. But where the application is for the registration of the individual as a partner in a firm, this Part of this Schedule has effect with the omission of paragraphs 2 and 3.

The applicant must, subject to sub-paragraphs (3) and (4), have complied with— An applicant who at any time in the qualifying period had control of a company is to be taken not to satisfy the condition in sub-paragraph (1) unless the company has satisfied that condition in relation to the period or periods within the qualifying period during which he had control of it; and for this purpose “control” is to be construed in accordance with section 416(2) to (6) of the Taxes Act 1988. An applicant or company that has failed to comply with such an obligation or request as— is, in such circumstances as may be prescribed by the regulations, to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request. An applicant or company that has failed to comply with such an obligation or request as is referred to in sub-paragraph (1) is to be treated as satisfying the condition in that sub-paragraph as regards that obligation or request if the Board of Inland Revenue are of the opinion that— Where the applicant states, for the purpose of showing that he has complied with all obligations imposed on him as mentioned in sub-paragraph (1), that he was not subject to any of one or more obligations in respect of any period within the qualifying period— The applicant must, if any contribution has at any time during the qualifying period become due from him under— have paid the contribution when it became due. There must be reason to expect that the applicant will, in respect of periods after the qualifying period, comply with— Subject to sub-paragraphs (3) and (4), a person is not to be taken for the purposes of this paragraph to have complied with any such obligation or request as is referred to in sub-paragraphs (1) to (5) if there has been a contravention of a requirement as to— the obligation or request was to be complied with.

Section 59D of the Taxes Management Act 1970 is amended as follows. In subsection (4)(d) (amounts taken into account in determining whether repayment is due under subsection (2)) for “by virtue of regulations under section 559A of the principal Act” substitute “by virtue of regulations under section 62 of the Finance Act 2004”.

Section 63 of the Taxes Management Act 1970 (c. 9) is amended as follows. In subsection (3)(b) (application for summary warrant relating to sums due in respect of deductions required to be made under section 559 of the Taxes Act 1988: no requirement to state that 14 days have elapsed since demand) for “section 559 of the principal Act” substitute “section 61 of the Finance Act 2004”.

Section 98A of the Taxes Management Act 1970 is amended as follows. In subsection (1) (regulations which may provide for section 98A to apply) for “section 566 (1) (sub-contractors) of the principal Act” substitute “section 70(1)(a) or 71 of the Finance Act 2004 (sub-contractors)”. In subsection (2)(b) (penalty for failure to make return continuing beyond 12 months)— In subsection (4)(a) (penalty for fraudulently or negligently making incorrect return) after “year of assessment” insert “(in the case of a provision of PAYE regulations) or period (in the case of a provision of regulations under section 70(1)(a) or 71 of the Finance Act 2004)”.

Section 829 of the Taxes Act 1988 is amended as follows. In subsection (2A) (subsections (1) and (2) to have effect in relation to Chapter 4 of Part 13 of the Taxes Act 1988 as if whole deduction under section 559 were deduction of income tax)—

Schedule 1 to the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7) is amended as follows. In paragraph 7 (special penalties in case of certain returns) in sub-paragraph (1) (paragraph 7 to apply to certain returns made at the same time as a return made under regulations under section 566 (1) of the Taxes Act 1988 etc) in paragraph (a) for “section 566 (1) (sub-contractors) of the Income and Corporation Taxes Act 1988” substitute “section 70(1)(a) or 71 (sub-contractors) of the Finance Act 2004”.

Section 54 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) is amended as follows. In subsection (2) (intermediary to be treated, in calculating the deemed employment payment, as if amounts received subject to deduction under section 559 of the Taxes Act 1988 had been received without deduction) for “section 559 of ICTA” substitute “section 61 of the Finance Act 2004”.

In Chapter 11 of Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: miscellaneous exemptions), in section 317 (free or subsidised meals), for subsection (1) substitute—. This amendment has effect for the year 2004-05 and subsequent tax years.

In section 43 of the Finance Act 1989 (c. 26) (Schedule D: computation)— This amendment (which corrects an error in the amendment made by paragraph 157 of Schedule 6 to the Income Tax (Pensions and Earnings) Act 2003 (c. 1)) has effect—

In Schedule 20 to the Finance Act 2000 (c. 17) (tax relief for expenditure on research and development), in paragraph 5 (staffing costs)— In Schedule 22 to the Finance Act 2001 (c. 9) (remediation of contaminated land), in paragraph 5 (employee costs)— These amendments have effect in relation to expenditure incurred on or after 1st April 2004.

In section 59A(8)(b) of the Taxes Management Act 1970 (c. 9) (payments on account of income tax), for “that Act” substitute “the principal Act”. In section 336 of the Taxes Act 1988 (temporary residents in the United Kingdom) for “Cases I, II and III of Schedule E” substitute “determining taxable earnings from an employment under Chapters 4 and 5 of Part 2 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: charge to tax)”. In section 38(9) of the Finance Act 1988 (c. 39) (maintenance payments under existing obligations: 1989-90 onwards)— In section 76 of the Finance Act 1989 (c. 26) (non-approved retirement benefits schemes)—

Section 98 of the Taxes Management Act 1970 (c. 9) is amended as follows. Section 169G(2) of the 1992 Act.

After section 169A of the Taxation of Chargeable Gains Act 1992 (c. 12) insert—.

Section 282 of the Taxation of Chargeable Gains Act 1992 (c. 12) is amended as follows. After subsection (4) insert—.

The amendment in paragraph 1(2) of this Schedule has effect in relation to any notice given— The amendment in paragraph 2(2) of this Schedule has effect in relation to the provision of property on or after 10th December 2003. The amendments in paragraphs 2(3) and 6(2) of this Schedule have effect in relation to any notice given in respect of the year 2004-05 or any subsequent year of assessment. The amendments in paragraphs 3(2), 4, 5(2), 6(3), 7(2), 8(2) and 9(2) of this Schedule have effect in relation to disposals on or after 10th December 2003 (whenever any earlier disposal as mentioned in section 169B(3)(b) or 169C(3)(b) was made). The amendment in paragraph 3(3) of this Schedule has effect in relation to disposals on or after 21st October 2003. The amendment in paragraph 3(4) of this Schedule has effect in relation to the year 2004-05 and subsequent years of assessment. The amendment in paragraph 3(5) of this Schedule has effect in relation to disposals on or after 10th December 2003. The amendments in paragraph 5(3) and (4) of this Schedule have effect in relation to gains accruing on or after 6th April 2004. The amendment in paragraph 5(5) of this Schedule has effect in relation to disposals on or after 6th April 2004.

At the beginning of Chapter 5 of Part 17 of that Act (offshore funds) insert—.

In section 763(6) of the Taxes Act 1988 (offshore income gain treated as consideration given on certain disposals), for “section 757(6)” substitute “section 757(5) or (6)”. Sub-paragraph (1) has effect, and shall be deemed always to have had effect, in relation to disposals on or after 17th April 2002.

For the purposes of this Part an annuity payable to the member is a lifetime annuity if— An annuity is payable until the end of a term certain even if it may, after the death of the member during the term, end on the annuitant— An annuity is a level annuity if its amount does not vary from year to year. An annuity is an increasing annuity if its amount increases from year to year. An annuity is a relevant linked annuity if its amount varies from year to year but only in line with changes in (or by an amount which does not exceed the amount by which it would vary if it varied in line with changes in)— “Freely marketable assets” means assets which are sold on the open market at a price not determined by the member.

“Income withdrawal” means—

For the purposes of this Part a lump sum is a serious ill-health lump sum if— An uncrystallised arrangement is an arrangement in respect of which there has been no previous benefit crystallisation event.

For the purposes of this Part a lump sum is a trivial commutation lump sum if— The commutation period is the period beginning with the day on which a trivial commutation lump sum is first paid to the member and ending 12 months after that day. The nominated date is the day within the period of three months ending with the first day of the commutation period nominated by the member (or, if no date is nominated, is the first day of the commutation period). The commutation limit is 1% of the standard lifetime allowance on the nominated date. The value of the member’s pension rights on the nominated date is the aggregate of—

Expressions used in this Part of this Schedule and in Schedule 28 have the same meaning in this Part of this Schedule as in Schedule 28. Where all or part of the member’s lifetime allowance is available immediately before a lump sum is paid, sub-paragraph (3) applies to the lump sum if— For the purposes of this Schedule, the whole of the lump sum (and not only so much of it as does not exceed the member’s available lifetime allowance) is to be treated as paid when all or part of the member’s lifetime allowance is available. But sub-paragraph (3) does not apply— Where by virtue of paragraph 1(2), 5(2), 6(2) or 10(2) an excess is not an authorised lump sum of one description, that does not prevent the excess being an authorised lump sum of another description. “Authorised lump sum” means a lump sum authorised to be paid by the lump sum rule.

This paragraph applies where— Benefit crystallisation event 1 applies as if, at that time, the circumstances are such that the benefits to be provided are money purchase benefits (with the effect that the sums or assets held for the purposes of the arrangement are to be treated as having been designated as available for the provision of unsecured pension to the individual). Benefit crystallisation event 5 applies as if, at that time, the circumstances are such that the benefits to be provided are defined benefits. The amount crystallised is the greater of the amounts crystallised by the two benefit crystallisation events.

For the purposes of benefit crystallisation event 2 if— the individual is to be treated as becoming entitled to it only on reaching normal minimum pension age.

This paragraph applies for the purposes of benefit crystallisation event 3 if the individual became entitled to the pension on or after 6th April 2006. The permitted margin is the amount by which the annual amount of the pension at the rate at which it was payable on the day on which the individual became entitled to it would be greater if it had been increased by whichever of calculation A and calculation B gives the greater amount. Calculation A involves increasing that annual amount at the relevant annual percentage rate for the whole of the period— The relevant annual percentage rate is— Calculation B involves increasing that annual amount by the relevant indexation percentage. If the retail prices index for the month in which the individual becomes entitled to payment of the pension at the increased rate is higher than it was for the month in which the individual became entitled to the pension, the relevant indexation percentage is the percentage increase in the retail prices index. If it is not, the relevant indexation percentage is 0%.

For the purposes of benefit crystallisation event 6 a lump sum is a relevant lump sum if it is—

This paragraph makes provision for the operation of a lifetime allowance enhancement factor in relation to all benefit crystallisation events occurring in relation to an individual where before 6th April 2006 the individual has acquired rights under a pension scheme within paragraph 1 (1) by virtue of having become entitled to a pension credit. The lifetime allowance enhancement factor is the pre-commencement pension credit factor. The pre-commencement pension credit factor is— where— IAPC is the amount which is the appropriate amount for the purposes of section 29 (1) of WRPA 1999 or Article 26 (1) of WRP(NI)O 1999 in relation to the pension credit, as increased by the percentage specified in sub-paragraph (4), and SLA is £1,500,000 (the standard lifetime allowance for the tax year 2006-07). The percentage is the percentage by which the retail prices index for April 2006 is greater than that for the month in which the rights were acquired. This paragraph does not apply in the case of an individual if paragraph 7 (primary protection) applies in relation to the individual. This paragraph only applies if notice of intention to rely on this paragraph is given to the Inland Revenue in accordance with regulations made by the Board of Inland Revenue.

If the pension condition is met in relation to an individual and a registered pension scheme which is a protected pension scheme, the provisions of Schedule 29 relating to pension commencement lump sums apply in relation to the individual and the pension scheme with the modifications specified in paragraph 34 (but subject to sub-paragraph (2)). Those provisions do not apply with those modifications if the lump sum condition and registration condition in paragraph 24 are met. The pension condition is that the individual becomes entitled to all the pensions payable to the individual under arrangements under the pension scheme (to which the individual did not have an actual entitlement on or before 5th April 2006) on the same date. A registered pension scheme is a protected pension scheme if condition A or condition B is met. Condition A is met if— The lump sum percentage of an individual’s uncrystallised pension rights under a pension scheme on 5th April 2006 is— where— VULSR is the value of the individual’s uncrystallised lump sum rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 32, and VUR is the value of the individual’s uncrystallised rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 33. Condition B is met if the individual is a member of the pension scheme as a result of a block transfer to it from a pension scheme (“the original pension scheme”) in relation to which condition A is met. “Block transfer” has the same meaning as in paragraph 22(6), but treating the references there to the member as references to the individual. Where a pension scheme is a protected pension scheme because condition B is met, Schedule 29 as modified by paragraph 34 applies as if the protected pension scheme were the same pension scheme as the original pension scheme.

The repeal by this Act of section 619(4) of ICTA (election on or before 31st January following tax year in which retirement annuity contract premium is paid to treat premium as paid in earlier tax year) does not prevent the making of an election under that provision (in relation to a premium paid in the tax year 2005-06) at any time on or before 31st January 2007.

The power of the Board of Inland Revenue under section 592(6) of ICTA to direct that a sum paid under an exempt approved scheme otherwise than by way of ordinary annual contribution be treated as an expense to be spread over such period of years as the Board think fit continues to apply in relation to sums paid before 6th April 2006.

If an amount which was paid but had not accrued before 6th April 2006 constituted taxable pension income under Chapter 7 of Part 9 of ITEPA 2003 (former approved superannuation fund annuities), it does not also constitute taxable pension income under Chapter 5A of Part 9 of ITEPA 2003 (as inserted by Schedule 31) when it accrues. If an amount which was received but had not accrued before 6th April 2006 constituted taxable pension income under section 596 of ITEPA 2003 (personal pension annuities), it does not also constitute taxable pension income under Chapter 5A of Part 9 of ITEPA 2003 (as inserted by Schedule 31) when it accrues.

This paragraph applies where, during the period beginning with 6th April 2006 and ending with 7th July 2006, an employer of an individual makes a relevant consolidation contribution in respect of the individual under an arrangement under a registered pension scheme relating to the individual. The pension input amount in respect of the arrangement during the pension input period of the arrangement ending in the tax year 2006-07 is to be reduced by the amount of the contribution. “Relevant consolidation contribution” means a contribution made by way of discharge of any liability incurred by the employer before 6th April 2006 to pay any pension or lump sum to or in respect of the individual.

This paragraph applies where the Board of Inland Revenue allow contributions made by an individual under a pension scheme as deductions under Chapter 2 of Part 5 of ITEPA 2003 for the tax year 2005-06 in accordance with section 355 of that Act (deductions for corresponding payments by non-domiciled employees with foreign employers). Where the individual makes contributions under the pension scheme for any subsequent tax year, the Board of Inland Revenue may allow the contributions as deductions under Chapter 2 of Part 5 of that Act if, as well as the Board of Inland Revenue being satisfied that the conditions in section 355 of that Act are met, the scheme manager complies with any prescribed benefit crystallisation information requirements imposed on the scheme manager. Schedule 34 (non-UK schemes: application of certain charges) applies in relation to the pension scheme and the individual as if allowing the contributions as deductions under Chapter 2 of Part 5 of ITEPA 2003 by virtue of sub-paragraph (2) were the giving of relief by virtue of Schedule 33 (overseas pension schemes: migrant member relief). “Prescribed benefit crystallisation information requirements” means requirements imposed by or under regulations made by the Board of Inland Revenue to provide to the Inland Revenue any information relating to events that are benefit crystallisation events in relation to the individual. The references in sub-paragraphs (2) and (3) to the pension scheme include a pension scheme to which there has been a block transfer from the pension scheme on or after 6th April 2006. “Block transfer” has the same meaning as in paragraph 22(6), but treating the references there to the member as references to the individual.

Section 757 of that Act (disposal of material interests in offshore funds) is amended as follows. In subsection (1)(b) for the words from “the company or unit trust scheme” to the end substitute “the interest was a material interest in a non-qualifying offshore fund”. In subsection (5)— In subsection (6)—

The value of the member’s relevant crystallised pension rights on the nominated date is the aggregate of— The adjustment referred to in sub-paragraph (1)(a) is the multiplication of the value of the member’s relevant crystallised pension rights on 5th April 2006 by— where— SLAN is the standard lifetime allowance on the nominated date, and FSLA is £1,500,000 (the standard lifetime allowance for the tax year 2006-07). The adjustment referred to in sub-paragraph (1)(b) is the multiplication of the amount crystallised by a previous benefit crystallisation event by— where— SLAN is the standard lifetime allowance on the nominated date, and PSLA is the standard lifetime allowance when the previous benefit crystallisation event occurred.

This paragraph applies for the purposes of benefit crystallisation event 3 if the individual became entitled to the pension before 6th April 2006. The permitted margin is the greater of— “P%” is the percentage by which, in accordance with the rules of the pension scheme immediately before 6th April 2006, the annual rate of the pension is to be increased each year.

Subject to sub-paragraph (2), the value of the individual’s uncrystallised lump sum rights under the pension scheme on 5th April 2006 is the aggregate of the value of the individual’s uncrystallised lump sum rights under each arrangement in respect of the individual under the pension scheme, calculated in accordance with paragraph 25(5), on that date. If the pension scheme is a relevant pension scheme, the value of the individual’s uncrystallised lump sum rights on 5th April 2006 under an arrangement— is the amount arrived at in accordance with sub-paragraph (7) or (8). A pension scheme is a relevant pension scheme if it falls within paragraph 1(1)(a) to (d). Whether an arrangement relating to the individual relates to a particular employment is to be determined in accordance with paragraph 9(6). If no other arrangement relating to the individual under a relevant pension scheme relates to the employment to which the arrangement relates, the excess lump sum condition is met in relation to the arrangement if— If one or more other arrangements relating to the individual under a relevant pension scheme or relevant pension schemes relates or relate to the employment to which the arrangement relates, the excess lump sum condition is met in relation to the arrangement if— and the amount by which the aggregate of those values exceeds that amount is the “lump sum excess”. Where the excess lump sum condition is met by virtue of sub-paragraph (5), the value of the individual’s uncrystallised lump sum rights under the arrangement is the amount arrived at in accordance with paragraph 26. Where the excess lump sum condition is met by virtue of sub-paragraph (6), the value of the individual’s uncrystallised lump sum rights under the arrangement is the value of those rights calculated in accordance with paragraph 25(5), less the appropriate proportion of the lump sum excess. The appropriate proportion of the lump sum excess is— where— V is the value of the individual’s uncrystallised lump sum rights under the arrangement, calculated in accordance with paragraph 25(5), and AV is the aggregate of the values of the individual’s uncrystallised lump sum rights under the arrangement and the other arrangement or arrangements, calculated in accordance with paragraph 25(5).

In section 758 of that Act (offshore funds operating equalisation arrangements), after subsection (6) insert—.

The value of the member’s uncrystallised rights on the nominated date is the aggregate value of the member’s uncrystallised rights on that date under each arrangement relating to the member under a registered pension scheme. The value on the nominated date of the member’s uncrystallised rights under such an arrangement is to be calculated in accordance with section 212 (valuation of uncrystallised rights for purposes of section 210).

Subject to sub-paragraph (2), the value of the individual’s uncrystallised rights under the pension scheme on 5th April 2006 is the aggregate of the value of the individual’s uncrystallised rights under each arrangement in respect of the individual under the pension scheme, calculated in accordance with paragraph 8(5). If the pension scheme is a relevant pension scheme, the value of the individual’s uncrystallised rights on 5th April 2006 under an arrangement— is the amount arrived at in accordance with sub-paragraph (7) or (8). A pension scheme is a relevant pension scheme if it falls within paragraph 1(1)(a) to (d). Whether an arrangement relating to the individual relates to a particular employment is to be determined in accordance with paragraph 9(6). If no other arrangement relating to the individual under a relevant pension scheme relates to the employment to which the arrangement relates, the excess rights condition is met in relation to the arrangement if— If one or more other arrangements relating to the individual under a relevant pension scheme or relevant pension schemes relates or relate to the employment to which the arrangement relates, the excess rights condition is met in relation to the arrangement if— and the amount by which the aggregate of those values exceeds that amount is the “rights excess”. Where the excess rights condition is met by virtue of sub-paragraph (5), the value of the individual’s uncrystallised rights under the arrangement is the amount arrived at in accordance with paragraph 9(3). Where the excess rights condition is met by virtue of sub-paragraph (6), the value of the individual’s uncrystallised rights under the arrangement is the value of those rights calculated in accordance with paragraph 8(5), less the appropriate proportion of the rights excess. The appropriate proportion of the rights excess is— where— V is the value of the individual’s uncrystallised rights under the arrangement, calculated in accordance with paragraph 8(5), and AV is the aggregate of the values of the individual’s uncrystallised rights under the arrangement and the other arrangement or arrangements, calculated in accordance with paragraph 8(5).

Section 759 of that Act (material interests in offshore funds) is amended as follows. Omit subsections (1) and (1A). In subsection (2) for “a company, unit trust scheme or arrangements” substitute “an offshore fund”. In subsection (3) for the words from “the assets of” to the end substitute “the assets of the fund”. In subsection (5) for “a company, scheme or arrangements” substitute “an offshore fund”. In subsections (6) and (8)—

Schedule 29 applies with the following modifications. If paragraph 2(2) does not apply and relevant benefit accrual has occurred under the pension scheme in relation to the individual after 5th April 2006, the permitted maximum is— If paragraph 2(2) does not apply and relevant benefit accrual has not occurred under the pension scheme in relation to the individual after 5th April 2006, the permitted maximum is— In this paragraph— VULSR is the value of the individual’s uncrystallised lump sum rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 32 of Schedule 36, CSLA is the current standard lifetime allowance, FSLA is £1,500,000 (the standard lifetime allowance for the tax year 2006-07), and ALSA is the additional lump sum amount. The additional lump sum amount is— where— LS is the lump sum paid (but this is subject to sub-paragraph (7B)), AC is the amount crystallised on the individual becoming entitled to the pension in connection with which the lump sum is paid (see section 216) (but this is subject to sub-paragraph (7B)), and VUR is the value of the individual’s uncrystallised rights under the pension scheme on 5th April 2006, calculated in accordance with paragraph 33 of Schedule 36. Any part of the lump sum and the amount crystallised which represents rights attributable to a disqualifying pension credit is to be disregarded. Paragraph 13 of Schedule 36 specifies when relevant benefit accrual occurs in relation to an individual. Omit paragraph 3 (applicable amount for pension commencement lump sums).

Section 760 of that Act (non-qualifying offshore funds) is amended as follows. In subsection (10)— After subsection (10) insert—.

Schedule 27 to that Act (distributing funds: supplementary) is amended as follows. In paragraph 3 (1) for “section 759(1)(b) or (c)” substitute “section 756A(1)(b) or (c)”. In paragraph 11— After paragraph 20 insert—.

In Schedule 28 to that Act (computation of offshore income gains) after paragraph 8 insert—.

“offshore fund” has the same meaning as in Chapter 5 of Part 17;

In section 212 of the Taxation of Chargeable Gains Act 1992 (c. 12) (annual deemed disposal of holdings of unit trusts etc.) in subsection (6A)—

Schedule 10 to the Finance Act 1996 (c. 8) (loan relationships: collective investment schemes) is amended as follows. In paragraph 7, for “paragraphs (b) and (c) of subsection (1) of section 759” substitute “paragraphs (b) and (c) of subsection (1) of section 756A”. In this paragraph “offshore fund” has the same meaning as in Chapter 5 of Part 17 of the Taxes Act 1988 and references to the assets of an offshore fund shall be construed in accordance with that Chapter.

This paragraph applies where— The disposal condition is that— The contribution condition is that at any time after 17th March 1986 the chargeable person has directly or indirectly provided, otherwise than by an excluded transaction, any of the consideration given by another person for the acquisition of— For the purposes of this paragraph a disposition which creates a new interest in land out of an existing interest in land is to be taken to be a disposal of part of the existing interest. Where this paragraph applies to a person in respect of the whole or part of a year of assessment, an amount equal to the chargeable amount determined under paragraph 4 is to be treated as income of his chargeable to income tax.

Section 222 of the Taxation of Chargeable Gains Act 1992 (c. 12) is amended as follows. In subsection (5)(a) (notice to inspector to determine which of two or more residences is individual’s main residence) for “the inspector” (on both occasions) substitute “an officer of the Board”.

Section 225 of the Taxation of Chargeable Gains Act 1992 is amended as follows. In the opening words— In paragraph (a), for “the trustee” substitute “the trustees”. In paragraph (b)— but section 223 (as so applied) shall apply only on the making of a claim by the trustees.

The amendments in paragraphs 1(2) and 4(4)(a) of this Schedule have effect in relation to any notice given on or after 10th December 2003. The amendments in paragraphs 2(2), 3(2), 4(2), (3), (4)(b) and (5) and 5 of this Schedule have effect in relation to disposals made on or after 10th December 2003. Subject to paragraph 8 of this Schedule, the amendments in paragraphs 2(3) and 6 of this Schedule have effect in relation to gains or parts of gains accruing on later disposals (within the meaning of the section 226A inserted by paragraph 6 of this Schedule) made on or after 10th December 2003 (whenever any relevant earlier disposal was made). In sub-paragraph (3) above “relevant earlier disposal”, in relation to a later disposal (within the meaning of the section 226A inserted by paragraph 6 of this Schedule), means an earlier disposal in respect of which a claim mentioned in subsection (1)(c) of that section is made.

This paragraph applies if the pre-commencement rentals are greater than the total of the actual rental deductions for periods of account up to, but excluding, the transitional period of account. Section 228B shall not apply in relation to— Section 228B is subject to sub-paragraph (4) in its application to— The permitted maximum for that period of account is the total of— But where, in relation to the transitional period of account, the amount given by sub-paragraph (4) is less than the appropriate fraction of the notional rental deduction for that period, the permitted maximum shall be that fraction of that deduction. In this paragraph— In this paragraph— Nothing in sub-paragraphs (3) to (5) prevents the inclusion of an amount in the permitted maximum by virtue of section 228B(3) and (4). This paragraph does not apply in relation to any period of account later than a period of account for which the permitted maximum has been determined in accordance with sub-paragraph (3) to (5).

For any taxable period the chargeable amount in relation to the relevant land is the appropriate rental value (as determined under sub-paragraph (2)), less the amount of any payments which, in pursuance of any legal obligation, are made by the chargeable person during the period to the owner of the relevant land in respect of the occupation of the land by the chargeable person. The appropriate rental value is— where— R is the rental value of the relevant land for the taxable period, DV is— in a case falling within paragraph 3(2)(a)(i), the value as at the valuation date of the interest in the relevant land that was disposed of as mentioned in paragraph 3(2)(b) by the chargeable person or, where the disposal was a non-exempt sale, the appropriate proportion of that value, in a case falling within paragraph 3(2)(a)(ii), such part of the value of the relevant land at the valuation date as can reasonably be attributed to the property originally disposed of by the chargeable person or, where the original disposal was a non-exempt sale, to the appropriate proportion of that property, and in a case falling within paragraph 3(3), such part of the value of the relevant land at the valuation date as can reasonably be attributed to the consideration provided by the chargeable person, and V is the value of the relevant land at the valuation date. The “rental value” of the land for the taxable period is the rent which would have been payable for the period if the property had been let to the chargeable person at an annual rent equal to the annual value. The disposal by the chargeable person of an interest in land is a “non-exempt sale” if (although not an excluded transaction) it was a sale of his whole interest in the property for a consideration paid in money in sterling or any other currency; and, in relation to a non-exempt sale, “the appropriate proportion” is— where— MV is the value of the interest in land at the time of the sale; P is the amount paid. Regulations may— In this paragraph—

This paragraph applies where— The permitted maximum for the period of account in which the leaseback terminates shall also include an amount equal to the amount that the unrelieved portion of the lessee’s excess rentals would have been in the period of account immediately following.

For the purposes of paragraph 4 the annual value of the relevant land is the rent which might reasonably be expected to be obtained on a letting from year to year if— For the purposes of sub-paragraph (1) that rent— In this paragraph “relevant service” means a service other than the repair, insurance or maintenance of the premises.

This paragraph applies if the pre-commencement rentals are greater than the total of the actual taxed rentals for periods of account up to, but excluding, the transitional period of account. Section 228D shall not apply in relation to— Section 228D is subject to sub-paragraph (4) in its application to— The permitted threshold for that period of account is the total of— But where, in relation to the transitional period of account, the amount given by sub-paragraph (4) is less than the appropriate fraction of the notional taxed rental for that period, the permitted threshold shall be that fraction of that rental. In this paragraph— In this paragraph— Nothing in sub-paragraphs (3) to (5) prevents the inclusion of an amount in the permitted threshold by virtue of section 228D(2). This paragraph does not apply in relation to any period of account later than a period of account for which the permitted threshold has been determined in accordance with sub-paragraphs (3) to (5).

In this Schedule— In this Schedule the “appropriate fraction”, in respect of an amount that relates to a particular period, means this fraction— where— “Pre-commencement Period” means the number of days in the part of the period that falls before 17 March 2004, and “Whole Period” means the number of days in the whole of the period.

For the purposes of this Part a lump sum is a pension commencement lump sum if— But if a lump sum falling within sub-paragraph (1) exceeds the permitted maximum, the excess is not a pension commencement lump sum. A pension is a relevant pension if— A lump sum is an excluded lump sum if— Paragraph 2 defines the permitted maximum.

A lump sum is a refund of excess contributions lump sum if— But if a lump sum falling within sub-paragraph (1) exceeds the member’s available excess contributions allowance for the tax year in respect of which it is paid, the excess is not a refund of excess contributions lump sum. The excess contributions condition is met in respect of a member and a tax year if the amount of relievable pension contributions (see section 188(2) and (3)) paid in respect of the member in the tax year exceeds the maximum amount of relief to which the member is entitled for the tax year under section 190 (annual limit for relief). If no refund of excess contributions lump sum has been paid to the member in respect of a tax year (by any registered pension scheme), the available excess contributions allowance for that tax year is— If one or more refund of excess contributions lump sums have been paid to the member in respect of a tax year, the available excess contributions allowance for that tax year is— or, if the amount resulting from that calculation is negative, is nil. In this paragraph— RPC is the amount of the relievable pension contributions paid in respect of the member in the tax year, MAR is the maximum amount of relief to which the member is entitled for the tax year under section 190, and ALS is the aggregate of the refund of excess contributions lump sums previously paid to the member in respect of the tax year.

For the purposes of this Part a lump sum is a lifetime allowance excess lump sum if—

For the purposes of this Part a lump sum death benefit is an unsecured pension fund lump sum death benefit if— A lump sum death benefit is also an unsecured pension fund lump sum death benefit if— But if the amount of a lump sum falling within sub-paragraph (1) or (2) exceeds the permitted maximum, the excess is not an unsecured pension fund lump sum death benefit. The permitted maximum is the aggregate of— representing the member’s or dependant’s unsecured pension fund in respect of the arrangement immediately before the payment is made.

A lump sum death benefit is a trivial commutation lump sum death benefit if— But if the amount of a lump sum falling within sub-paragraph (1) exceeds 1% of the standard lifetime allowance on the date the lump sum is paid, the excess is not a trivial commutation lump sum death benefit.

The provisions of this Part relating to the lifetime allowance charge (“the lifetime allowance provisions”) apply in relation to an individual who is a relieved member of a relieved non-UK pension scheme as if the relieved non-UK pension scheme were a registered pension scheme. Sub-paragraph (1) has effect subject to the provision made by and under paragraphs 14 to 19. A pension scheme is a relieved non-UK pension scheme if— An individual is a relieved member of a relieved non-UK pension scheme if—

The Income and Corporation Taxes Act 1988 (c. 1) is amended as follows.

After section 3 insert—.

In Schedule 1 (allowable expenditure) in Part 1 (extensions of allowable expenditure for assets generating receipts) paragraph 3 is amended as follows. But where— the expenditure shall not be regarded for the purposes of this paragraph as expenditure incurred with a view to the subsequent disposal of the asset or of an interest in it, to the extent that the amount of the expenditure falls to be reduced in accordance with sub-paragraph (2B) below. The reduction is to be made by applying section 7A of this Act in relation to the expenditure as it applies in relation to disposal receipts in respect of a disposal, but with the substitution— and taking the reference in subsection (6)(b) of that section to a reduction made by virtue of that section as a reference to a reduction made by virtue of that section for the purposes of section 7(9) of this Act.

Section 496 (tariff receipts) is amended as follows. In subsection (1)(a) (tariff receipts to be treated as receipts of the separate trade referred to in section 492(1)) after “tariff receipt” insert “or tax-exempt tariffing receipt”. In subsection (2) (activities of participator etc giving rise to tariff receipts to be treated as oil extraction activities) after “tariff receipts” insert “or tax-exempt tariffing receipts”. In subsection (3) (disregard of certain sums in fact received or receivable by person connected with participator)— In consequence of the amendments made by this paragraph, the sidenote to the section becomes “Tariff receipts and tax-exempt tariffing receipts”.

This paragraph applies where— The permitted threshold for the period of account in which the leaseback terminates shall also include an amount equal to the amount that the untaxed portion of the lessor’s excess rentals would have been in the period of account immediately following.

If sub-paragraph (2) applies, the permitted maximum is nil. This sub-paragraph applies if all the member’s rights under the arrangement under which the member becomes entitled to the relevant pension are attributable to a disqualifying pension credit. A pension credit is disqualifying if, when the member becomes entitled to it, the person subject to the corresponding pension debit has an actual (rather than a prospective) right to payment of a pension under the relevant arrangement. The relevant arrangement is the arrangement to which the pension sharing order or provision, by virtue of which the member becomes entitled to the pension credit, relates. If sub-paragraph (2) does not apply, the permitted maximum is the lower of— The available portion of the member’s lump sum allowance is— where— CSLA is the current standard lifetime allowance, and AAC is the aggregate of the amounts crystallised by each benefit crystallisation event which has occurred in relation to the member before the member becomes entitled to the lump sum, as adjusted under sub-paragraph (7) (and if no such benefit crystallisation event has occurred, is nil). The adjustment of an amount crystallised by a previous benefit crystallisation event referred to in the definition of AAC is the multiplication of the amount by— where— CSLA is the current standard lifetime allowance, and PSLA is the standard lifetime allowance at the time of the previous benefit crystallisation event. If the amount given by sub-paragraph (6) is negative, no portion of the member’s lump sum allowance is available.

This paragraph applies in relation to the amount crystallised on the occurrence of an event that is a benefit crystallisation event by virtue of this Schedule in relation to an individual who is a relieved member of a relieved non-UK pension scheme. What would otherwise be the amount crystallised by the event is reduced by so much (if any) of it as exceeds the amount of the untested portion of the relevant relieved amount immediately before the benefit crystallisation event (so that if that amount is nil, there is no amount crystallised). For the purposes of this paragraph and paragraph 15 the relevant relieved amount is the aggregate of— assuming that section 229(3) did not apply. For the purposes of this paragraph and paragraph 15 the untested portion of the relevant relieved amount is so much of the relevant relieved amount as exceeds the aggregate of the amount which (in accordance with sub-paragraph (2)) is the amount crystallised by each previous event that was a benefit crystallisation event by virtue of this Schedule in relation to the individual and the relieved non-UK pension scheme (so that if there has been no such previous event the untested portion of the relevant relieved amount is the whole of that amount).

sections 196 to 200 of the Finance Act 2004 (registered pension schemes); section 246 of that Act (employer-financed retirement benefits schemes).

Where the member becomes entitled to income withdrawal, the applicable amount is one third of the aggregate of— but subject to sub-paragraph (2). Any of the sums and assets so designated which represent rights attributable to a disqualifying pension credit are to be disregarded. Where the member becomes entitled to a lifetime annuity, the applicable amount is one third of the annuity purchase price. “The annuity purchase price” is the aggregate of— as are applied in (or in connection with) the purchase of the annuity, but subject to sub-paragraph (5). Any of the sums and assets applied in (or in connection with) the purchase of the annuity which— are to be disregarded. Where the member becomes entitled to a scheme pension, the applicable amount is— but subject to sub-paragraph (8). In sub-paragraph (6)— LS is the amount of the lump sum, and AC is the amount crystallised by reason of the member becoming entitled to the pension (see section 216). There is to be deducted from the aggregate of the amount of the lump sum and the amount crystallised—

An individual who is a relieved member of a relieved non-UK pension scheme may at any time elect by giving notice to the Inland Revenue in a form specified by the Board of Inland Revenue that a benefit crystallisation event is to be treated as occurring on the date specified in the notice in relation to the individual and the relieved non-UK pension scheme. The amount crystallised on the occurrence of an event that is a benefit crystallisation event by virtue of sub-paragraph (1) is the untested portion of the relevant relieved amount.

In section 56(3)(b) (transfers in deposits and debts: exemption for pensions), for “592(2), 613, 614 (1) to (3) or 620(6)” substitute “613(4) or 614(2) or (3) or section 186 of the Finance Act 2004”.

This paragraph applies on the occurrence of a transfer of sums or assets held for the purposes of, or representing accrued rights under, a relieved non-UK pension scheme which (apart from sub-paragraph (2)) would by virtue of paragraph 13 be a benefit crystallisation event in relation to an individual who is a relieved member of the relieved non-UK pension scheme. The event is not a benefit crystallisation event if the transfer is a block transfer. A transfer is a block transfer if it involves the transfer in a single transaction of all the sums and assets held for the purposes of, or representing accrued rights under, the arrangements under the relieved non-UK pension scheme which relate to—

In section 127(3)(a) (enterprise allowance), for “623(2)(c) or 833(4)(c)” substitute “833(4)(c) or section 189(2)(b) of the Finance Act 2004”.

Section 217 (persons liable to charge) applies with respect to a liability to the lifetime allowance charge arising by reason of the occurrence of an event that is a benefit crystallisation event by virtue of this Schedule in relation to an individual who is a relieved member of a relieved non-UK pension scheme with the omission of references to the scheme administrator.

In section 129B(2) (stock lending fees), for “sections 592(2), 608(2)(a), 613(4), 614(3), 620(6) and 643(2)” substitute “sections 613(4) and 614(3) and section 186 of the Finance Act 2004”.

This paragraph applies where sums and assets held for the purposes of, or representing accrued rights under, a relieved non-UK pension scheme are transferred so as to become held for the purposes of, or to represent rights under, another pension scheme (“the transferee pension scheme”) in circumstances in which, by virtue of paragraph 16, the transfer does not constitute a benefit crystallisation event. Paragraphs 13 to 17 and sub-paragraph (1) have effect after the transfer as if—

In section 227(8)(a) (purchase of own shares: rules about trustees not to apply where shares held under exempt approved scheme), for “an exempt approved scheme as defined in Chapter 1 of Part 14” substitute “a registered pension scheme”.

The provisions of this Part of this Act relating to the lifetime allowance charge apply in relation to an individual who is a relieved member of a relieved non-UK pension scheme subject to any omissions, additions and other modifications contained in regulations made by the Board of Inland Revenue. Regulations under sub-paragraph (1) may—

In section 265(3)(c) (transfer of blind person’s allowance to spouse where allowance exceeds what is left of total income after deductions: deductions to be disregarded), for “593(2) or 639(3)” substitute “ 192 of the Finance Act 2004”.

In section 266 (1) (life assurance premiums), for “sections 274 and 619(6) and Schedules 14 and 15,” substitute “section 274 and Schedules 14 and 15 and sections 192 to 194 of the Finance Act 2004,”.

Section 266A (life assurance premiums paid by employer) is amended as follows. In subsection (1), for “a non-approved” substitute “an employer-financed”. For subsections (3) to (6) substitute—

In section 268(7)(b) (early conversion or surrender of rights: life policies not covered), for “an approved scheme, as defined in Chapter 1 of Part 14;” substitute “a registered pension scheme;”.

In section 273 (payments securing annuities), for “, 617(3) and 619(6)” substitute “and 617(3) and sections 192 to 194 of the Finance Act 2004”.

In section 336(1A)(b) (temporary residents not liable under certain pension tax provisions)—

In section 348(1A)(b) (payments out of profits or gains brought into charge to income tax: exception for certain annuities), for “605 of that Act applies to it (retirement annuity contracts: annuities),” substitute “579A of that Act applies to it because it is an annuity under an annuity contract that is a registered pension scheme,”.

In section 349(1A)(b) (payments not out of profits or gains brought into charge to income tax and annual interest: exception for certain annuities), for “605 of that Act applies to it,” substitute “579A of that Act applies to it because it is an annuity under an annuity contract that is a registered pension scheme,”.

Section 349B(3) (payments in case of which requirement to deduct tax does not apply) is amended as follows. For paragraph (i) substitute—. After paragraph (j) insert “or”. Omit paragraphs (l) and (m).

In section 360A(9)(a) (meaning of “material interest” in section 360: exception from rule about trusts for certain pension scheme trusts), for “an exempt approved scheme as defined in section 592;” substitute “a registered pension scheme;”.

In section 414(7), (close companies: shares held on trust for certain pension schemes), for “an exempt approved scheme as defined in section 592” substitute “a registered pension scheme”.

In section 415(4)(b), (certain quoted companies not to be close companies: shares held on trust for certain pension schemes deemed to be beneficially held for public), for “an exempt approved scheme as defined in section 592,” substitute “a registered pension scheme,”.

For section 431B (life assurance: meaning of “pension business”) substitute—

In section 464(5) (policies and contracts to be disregarded in applying limits on benefits payable to member of friendly society), for paragraph (b) substitute—.

Section 466 (interpretation of Chapter 2 of Part 12) is amended as follows. In subsection (2), omit the definition of “pension business”. After that subsection insert—

In section 467(3) (exemption for trade unions and employers' associations: disregard of certain annuities for purposes of limit), for “approved annuities (as defined in section 620(9))” substitute “annuity contract which constitutes a registered pension scheme or is issued or held in connection with a registered pension scheme other than an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004)”.

In section 503(2) (letting of furnished holiday accommodation treated as a trade for certain purposes), for paragraph (b) and the word “and” before it substitute—

In section 539(2) (policies of life insurance to which Chapter 2 of Part 13) does not apply), for paragraphs (b) to (d) substitute—.

In section 613(4) (parliamentary pension funds)—

Section 657(2) (life annuities to which section 656 does not apply) is amended as follows. In paragraph (b), for “266, 273 or 619 or to any annuity payable under a substituted contract within the meaning of section 622(3);” substitute “266 or 273;”. For paragraphs (d) to (f) substitute—

Section 660A (income arising under a settlement where settlor retains an interest) is amended as follows. In subsection (9), for paragraph (c) and the word “or” before it substitute or For subsections (11) and (12) substitute—

Section 686 (accumulation and discretionary trusts: special rates of tax) is amended as follows. In subsection (2)(c), for the words following “held” substitute “for the purposes of a superannuation fund to which section 615(3) applies”. In subsection (6A)—

In section 715(1)(k) (exceptions from section 713 where exemption could be allowed under section 592(2)), for “section 592(2)” substitute “section 186 of the Finance Act 2004”.

In section 730A(7) (treatment of price differential on sale and repurchase of securities: power to provide eligibility for relief), for “592(2), 608(2)(a), 613(4), 614(2), (3) or (4), 620(6) or 643(2).” substitute “613(4) or 614(2), (3) or (4) or section 186 of the Finance Act 2004.”

In section 737D (1) (manufactured dividends: power to provide eligibility for relief), for “592(2), 608(2)(a), 613(4), 614(2), (3) or (4), 620(6) or 643(2).” substitute “613(4) or 614(2), (3) or (4) or section 186 of the Finance Act 2004.”

In section 824(9) (repayment supplements), after “settlement” insert “, scheme administrators of registered pension schemes”.

In section 828 (orders and regulations), after subsection (5) insert—

Section 832 (1) (interpretation of the Tax Acts) is amended as follows. “registered pension scheme” has the meaning given by section 150(2) of the Finance Act 2004; “scheme administrator”, in relation to a pension scheme, has the meaning given by section 270 of the Finance Act 2004 (but see also sections 271 to 274 of that Act);

In section 840A(1)(b)(iv) (definition of “bank”: exclusion of insurance companies), for “659B(1);” substitute “ 275 of the Finance Act 2004;”.

Section 84 of the Finance Act 1996 (c. 8) (debits and credits to be brought into account) is amended as follows. In subsection (1) omit “in accordance with an authorised accounting method and”. Omit subsections (2) and (4A). For subsection (7) substitute—.

In section 440 of the Taxes Act 1988 (insurance companies: transfers of assets etc.), in subsection (2A) (treatment of asset representing loan relationship), for the words from “any authorised accounting method” to “shall be applied” substitute “Chapter 2 of Part 4 of the Finance Act 1996 applies”.

In the case of an application for an individual or a company to be registered for gross payment as a partner in a firm, the following conditions must be satisfied by the firm.

Subject to sub-paragraphs (2) and (3), each of the persons who are partners at the time of the application must have complied, so far as any such charge to income tax or corporation tax is concerned as falls to be computed by reference to the profits or gains of the firm’s business, with— Where a person has failed to comply with such an obligation or request as— the firm is, in such circumstances as may be prescribed by the regulations, to be treated, in relation to that partner, as satisfying the condition in that sub-paragraph as regards that obligation or request. Where a person has failed to comply with such an obligation or request as is referred to in sub-paragraph (1), the firm is to be treated, in relation to that partner, as satisfying the condition in that sub-paragraph as regards that obligation or request if the Board of Inland Revenue are of the opinion that— There must be reason to expect that each of the persons who are from time to time partners in the firm will, in respect of periods after the qualifying period, comply with such obligations and requests as are referred to in sub-paragraph (1). Subject to sub-paragraphs (2) and (3), a person is not to be taken for the purposes of this paragraph to have complied with any such obligation or request as is referred to in sub-paragraph (1) if there has been a contravention of a requirement as to— the obligation or request was to be complied with.

In this Schedule—

“Loan year” means— But in the period of 12 months in which the loan repayment date falls, the loan year ends on the loan repayment date (and that loan year is the last loan year).

If at any time after a loan is made the loan ceases to be secured by a charge of adequate value, there is an unauthorised payment equal to amount 2 (see paragraph 13).

If at any time after a loan is made— there is an unauthorised payment of an amount calculated in accordance with sub-paragraphs (3) and (4). The deterioration condition is met in relation to a paragraph if— For each paragraph in relation to which the deterioration condition is met, calculate— There is an unauthorised payment of an amount equal to the largest of the amounts calculated under sub-paragraph (3). In this paragraph— AAA, in relation to a paragraph of section 179(2) which was not complied with before the alteration in the repayment terms, is the amount arising when that paragraph is not complied with, calculated after the alteration in the repayment terms, and ABA, in relation to such a paragraph, is the amount arising when that paragraph is not complied with, calculated before the alteration in the repayment terms.

Amount 1 arises if paragraph (a) of section 179 (1) (amount of loan must not exceed 50% of pension scheme assets) is not complied with. Amount 1 is— where— AL is the amount of the loan, and VA is an amount equal to 50% of the aggregate of the amount of the sums, and the market value of the assets, held for the purposes of the pension scheme before the loan is made.

Amount B arises if paragraph (b) of section 179(2) (loan repayment date to be within five years unless postponed) is not complied with. Amount B is— where— DLRP is the number of days in the period which begins with the date on which the loan is made and ends with the loan repayment date, DFY is the number of days in the period which begins with the date on which the loan is made and ends five years after that date, and AO is the amount owing (including interest) at the relevant time. But if the amount produced by the fraction in sub-paragraph (2) is greater than 1, amount B is the amount owing (including interest) at the relevant time. If the loan repayment date has been postponed under section 179(3), sub-paragraph (2) applies as if references to the date on which the loan is made were to the standard loan repayment date on which the loan repayment date was postponed.

For the purposes of this Schedule an overseas pension scheme is a qualifying overseas pension scheme if— In sub-paragraph (1)(c) “prescribed benefit crystallisation information requirements” means requirements imposed by or under regulations made by the Board of Inland Revenue to provide to the Inland Revenue any information relating to events that are benefit crystallisation events in relation to members of the pension scheme who have at any time been relevant migrant members of the pension scheme. An overseas pension scheme is excluded from being a qualifying overseas pension scheme if the Inland Revenue has decided that— and has notified the person or persons appearing to be the scheme manager of that decision (but subject to sub-paragraph (5) and paragraph 6). A failure to comply with prescribed benefit crystallisation information requirements is significant if— The Inland Revenue —

In section 9(1A) of the Taxes Management Act 1970 (tax not to be assessed by a self-assessment), for the words after “any tax” substitute which—

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

The Capital Allowances Act 2001 is amended as follows.

Payments under protected ill-health insurance contracts are not unauthorised member payments. Ill-health insurance contracts are contracts providing insurance against a risk relating to non-payment by a member of a pension scheme of contributions under the pension scheme. An ill-health insurance contract is protected if it was made before 6th April 2006 under—

Relief in respect of contributions made by a member under pre-commencement retirement annuity arrangements is not required to be given in accordance with section 192 (relief at source). If relief in respect of contributions made by a member under pre-commencement retirement annuity arrangements is not given in accordance with section 192, relief in respect of the contributions is to be given in accordance with section 194 (relief on making of claim). “Pre-commencement retirement annuity arrangements” means—

Chapter 9 of Part 9 of ITEPA 2003 (taxation of annuities paid under pre-commencement retirement annuity contracts) continues to have effect until such date as the Treasury may by order appoint. Chapter 5A of that Part (as inserted by Schedule 31) does not have effect in relation to any annuity to which Chapter 9 applies by virtue of sub-paragraph (1). Section 683 of ITEPA 2003 (PAYE income) has effect accordingly. An order under sub-paragraph (1) may include any appropriate transitional provision.

Taxable pension income for the tax year 2006-07 or any subsequent tax year determined in accordance with section 612 of ITEPA 2003 for an annuity to which this paragraph applies is to be treated as being PAYE pension income for the tax year by virtue of section 683(3) of that Act (PAYE income). This paragraph applies to an annuity in payment on 5th April 2006 which—

This paragraph applies if notice of intention to rely on paragraph 12 (enhanced protection) is given to the Inland Revenue in accordance with regulations under that paragraph in the case of an individual. Sections 227 to 238 (annual allowance charge) do not apply in relation to the individual for any tax year if that paragraph applies in relation to the individual throughout the tax year.

Section 392 of ITEPA 2003 (non-approved schemes: relief where no benefits are paid or payable) continues to have effect in relation to a sum charged to tax by virtue of section 386 of ITEPA 2003 or section 595 of ICTA (charges on payments to schemes) before 6th April 2006.

Section 84A of that Act (exchange gains and losses from loan relationships) is amended as follows. For subsection (3) substitute—. Omit subsections (4) to (7). In subsection (8) after “(3)” insert “or (3A)”. In subsection (10) at the end add “and power to make provision subject to an election or to other prescribed conditions”.

In section 730A of that Act (treatment of price differential on sale and repurchase of securities), in subsection (6) (treatment of loan relationships)—

Section 839 of the Taxes Act 1988 (connected persons) applies for the purposes of this Schedule, but as if in that section “relative” included uncle, aunt, nephew and niece and “settlement”, “settlor” and “trustee” had the same meanings as in IHTA 1984.

This paragraph applies where an overseas pension scheme is excluded from being a qualifying overseas pension scheme by a decision of the Inland Revenue under paragraph 5(3). The scheme manager may appeal against the decision. The appeal is to the General Commissioners, except that the scheme manager may elect (in accordance with section 46 (1) of TMA 1970) to bring the appeal before the Special Commissioners instead of the General Commissioners. Paragraphs 1, 2, 8 and 9 of Schedule 3 to TMA 1970 (rules for assigning proceedings to General Commissioners) have effect to identify the General Commissioners before whom an appeal under this paragraph is to be brought, but subject to modifications specified in an order made by the Board of Inland Revenue. An appeal under this paragraph against a decision must be brought within the period of 30 days beginning with the day on which the notification of the decision was given. The Commissioners before whom an appeal under this paragraph is brought must consider whether the overseas pension scheme ought to have been excluded from being a qualifying overseas pension scheme. If they decide that the overseas pension scheme ought to have been excluded from being a qualifying overseas pension scheme, they must dismiss the appeal. If they decide that the overseas pension scheme ought not to have been excluded from being a qualifying overseas pension scheme, the pension scheme is to be treated as having remained a qualifying overseas pension scheme (but subject to any further appeal or any determination on, or in consequence of, a case stated).

In section 13(10B)(b) (attribution of gains to members of non-resident companies), for “section 271(1)(b), (c), (d), (g) or (h) or (2)” substitute “section 271(1)(c) or (1A)”.

In section 4(2A) (expenditure and sums that are not capital expenditure or capital sums), in the definition of “relevant provision”, for paragraph (d) substitute—.

For sections 85 and 86 of that Act (authorised accounting methods and their application) substitute—.

In Schedule 28A of that Act (change in ownership of investment company), in paragraphs 7(1)(d)(ii) and (e)(ii), 11(1)(a) and (3)(c) and 16(1)(d)(ii) and (e)(ii) for “authorised accruals” substitute “amortised cost”.

For sections 239A and 239B (cessation of approval of retirement benefits schemes and withdrawal of approval of personal pension arrangements) substitute—

FA 2004 The Finance Act 2004 (c. 12)

In section 87 of that Act (accounting method where parties have a connection), for subsection (2) substitute—.

In paragraph 7(3) of Schedule 26 to the Transport Act 2000 (c. 38) (transfers under that Act), for “an authorised accounting method” substitute “a basis of accounting”.

“registered pension scheme” has the meaning given by section 150(2) of the Finance Act 2004;

In section 88 of that Act (exemption from section 87 in certain cases), omit subsection (2)(b) and subsection (3)(b).

Paragraph 2 of Schedule 1 (application of exempt amount and reporting limits in cases involving settled property) is amended as follows. In sub-paragraph (7)(b)(ii), for “any such scheme or fund as is mentioned in sub-paragraph (8) below” substitute “a registered pension scheme, a superannuation fund to which section 615(3) of the Taxes Act applies or an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) that is not a registered pension scheme”. Omit sub-paragraph (8).

Section 88A of that Act (accounting method where rate of interest is reset) is amended as follows. In subsection (4) for the words from “the only accounting method authorised” to the end substitute “the debits and credits to be brought into account for the purposes of this Chapter as respects the loan relationship must be determined on the basis of fair value accounting”. Omit subsection (5).

Omit section 90 of that Act (changes of accounting method).

After that section insert—.

Omit section 92 of that Act (convertible securities etc.: creditor relationships). Where at the relevant time a company holds an asset to which section 92 applies— The relevant time for this purpose is immediately before the end of the last period of account before that in relation to which sub-paragraph (1) has effect (see section 52(3) of this Act).

Omit section 92A of that Act (convertible securities etc.: debtor relationships).

Omit sections 93, 93A and 93B of that Act (relationships linked to the value of chargeable assets). Where at the relevant time a company holds an asset to which section 93 applies— The relevant time for this purpose is immediately before the end of the last period of account before that in relation to which sub-paragraph (1) has effect (see section 52(3) of this Act).

Omit section 94 of that Act (indexed gilt-edged securities).

After that section insert—.

In section 95 of that Act (gilt strips), in subsection (1) for the words from “has effect” to “accruals basis of accounting” substitute “applies”.

In section 96 of that Act (special rules for certain other gilts), omit subsection (3).

In section 101 of that Act (financial instruments), after subsection (1) insert—.

Section 103 of that Act (interpretation) is amended as follows. In subsection (1)— Omit subsection (5).

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Excess NCDs falling to be allocated to another company under paragraph 7 (allocation to other group companies) may be allocated to any accounting period identified by this paragraph as a corresponding accounting period. If there is more than one such period, excess NCDs must be allocated to the first to the full extent possible before any allocation is made to the second, and so on. The accounting period of a recipient company that includes the last day of the distribution period is its first corresponding accounting period. Unless that accounting period is shorter than the distribution period, it is the recipient company’s only corresponding accounting period. If the first corresponding accounting period is shorter than the distribution period, any subsequent accounting period of the recipient company beginning before the end of the period specified in sub-paragraph (4) is a corresponding accounting period. The period referred to in sub-paragraph (3) is a period—

This paragraph applies where an amount of excess NCDs allocated to another company in accordance with this Part of this Schedule later proves to be excessive. The excess shall revert to the distributing company. If allocations to two or more companies are involved, the amounts shall revert in the opposite order to that in which the allocations were made. In the case of allocations made at the same time, the amounts reverting to the distributing company shall be in proportion to the original allocations.

For the purposes of section 13AB and this Schedule a company and all its 51% subsidiaries form a group, and if any of those subsidiaries have 51% subsidiaries the group includes them and their 51% subsidiaries, and so on. The question whether a company is a 51% subsidiary shall be determined in accordance with section 838, subject to the following provisions. A company (“company A”) shall be treated for the purposes of this Schedule as if it were a 51% subsidiary of another company (“company B”) if company B has rights to, or in fact receives, more than 50% of the distributions made by company A. For the purposes of this paragraph a company shall be treated as not being the owner—

For the purposes of section 13AB and this Schedule a holding company that is not otherwise carrying on a business shall be deemed to be carrying on a business and to be within the charge to corporation tax. For this purpose “a holding company” means a company that has one or more 51% subsidiaries from which it receives or has received one or more distributions.

Section 100 of the Taxes Act 1988 is amended as follows. After subsection (1) insert—.

Schedule 9 to the Finance Act 1996 (c. 8) (loan relationships: special computational provisions) is amended as follows.

For paragraph 16 (imputed interest) substitute—.

In Schedule 11 to the Finance Act 1996 (c. 8) paragraph 4 is amended as follows. In sub-paragraph (2), in the words following paragraph (b) (which require a reduction under that sub-paragraph to be made before any deduction by virtue of section 76 of the Taxes Act 1988 for expenses of management) for “any deduction by virtue of section 76 of the Taxes Act 1988 of any expenses of management” substitute “any expenses deduction under section 76 of the Taxes Act 1988”. In sub-paragraph (3) (claim to carry back whole or part of excess of deficit over net income and gains) in the opening words, omit “net”. In sub-paragraph (4) (deficit, so far as not set off, to be carried forward and included in expenses of management for following period) for “an amount to be included in the company’s expenses of management for the period following the deficit period” substitute “expenses payable which are referable to the period following the deficit period and are to be brought into account at Step 3 in section 76(7) of the Taxes Act 1988”. In sub-paragraph (11) (meaning of references in sub-paragraph (10) to deductions by virtue of section 76 of the Taxes Act 1988) for “the deductions by way of management expenses” substitute “the expenses deduction”. In sub-paragraph (12) (treatment of section 76(5) amount attributable to a claim under sub-paragraph (3) etc)— In sub-paragraph (13) (treatment of section 76(5) amount to which the sub-paragraph applies) for “section 76(5) amount” substitute “section 76(13) amount”. In sub-paragraph (14) (the section 76(5) amount attributable to a claim under sub-paragraph (3))— The amendment made by sub-paragraph (4) also has effect where the deficit period is the last accounting period of the company to begin before 1st April 2004.

Paragraph 5 (bad debts etc) is amended as follows. no credit in respect of the release shall be required to be brought into account in the case of that company if any of the four conditions set out below is satisfied. Condition 1 is that the release is part of a relevant arrangement or compromise, within the meaning given by section 74(2) of the Taxes Act 1988. Condition 2 is that the debtor relationship is one as respects which section 87 of this Act (accounting method where parties have a connection) requires the use of an authorised accruals basis of accounting. Condition 3 is that— In the application of paragraphs (a) to (d) of paragraph 6A(1) below for the purposes of paragraph (a) above, references in those paragraphs to the company which has the creditor relationship are to be taken as references to the company releasing the amount. Condition 4 is that— In the application of paragraphs (a) to (d) of paragraph 6A(1) below for the purposes of paragraph (b) above, references in those paragraphs to the company which has the creditor relationship are to be taken as references to the company which has the debtor relationship. The amendments made by this paragraph have effect in relation to any release made on or after 10th December 2003.

Paragraph 18 (discounted securities of close companies) is amended as follows. In sub-paragraph (1) (application of paragraph) after paragraph (a) insert—. In paragraph (c) of that sub-paragraph (debt not owed to limited partnership which is a collective investment scheme) for the words from “a limited partnership” to the end of the sub-paragraph substitute “a CIS limited partnership, as defined in paragraph 2(6) above”. Omit sub-paragraph (3A) (meaning of connection between companies, an expression no longer used in the paragraph). The amendments made by this paragraph have effect for accounting periods ending on or after 10th December 2003.

Paragraph 13 is amended as follows. The Treasury may by order amend— An order under this paragraph may provide for any of its provisions to have effect in relation to accounting periods ending on or after the day on which the order comes into force (whenever beginning). In consequence of the amendment made by sub-paragraph (2), the heading to the paragraph accordingly becomes “Power to amend paragraphs 2 to 12 and Part 9”.

In paragraph 33(4)(b) (which refers to a subsequent statement of recommended practice issued by Financial Services Authority) omit “issued by the Financial Services Authority”. This amendment has effect in relation to accounting periods beginning on or after 1st February 2004.

An annuity payable to a dependant is a dependants' short-term annuity if— “Level annuity”, “increasing annuity” and “relevant linked annuity” have the same meaning as in paragraph 17.

“Unsecured pension year” means— But when the dependant reaches the age of 75 or dies before reaching that age, the current unsecured pension year is the last unsecured pension year and ends immediately before the dependant’s death or 75th birthday.

The period of five unsecured pension years beginning with the first unsecured pension year, and each succeeding period of five unsecured pension years, is a “reference period”; and the first day of each reference period is, in relation to that period, “the reference date”. For the first unsecured pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant’s unsecured pension fund on the nominated date (but subject to sub-paragraph (5)). “The nominated date”— For each other unsecured pension year falling within a reference period, the basis amount is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant’s unsecured pension fund— (but subject to sub-paragraph (5) ). On the occasion of each additional fund designation during an unsecured pension year, the basis amount for that unsecured pension year is to be recalculated in accordance with sub-paragraph (6). The basis amount for the unsecured pension year is the annual amount of the relevant annuity which could have been purchased by the application of the sums and assets representing the dependant’s unsecured pension fund immediately after the additional fund designation. “Annuity purchase” means the purchase of a dependants' scheme pension or dependants' annuity by the application of sums or assets representing the whole or part of the dependant’s unsecured pension fund. “Additional fund designation” means the designation under the arrangement of further sums and assets held for the purposes of the arrangement as available for the payment of unsecured dependants' pension to the dependant. An annuity purchase or additional fund designation is “recent” if it took place during the period— Paragraph 14 defines “relevant annuity”.

The side-note to section 694 of the Taxes Act 1988 becomes “Trustees chargeable to income tax in certain cases at higher rate reduced by rate applicable to trusts”.

In Schedule 24 to the Taxes Act 1988, paragraph 20 shall cease to have effect.

Section 768B of the Taxes Act 1988 is amended as follows. In subsection (1) (case where section applies) for “an investment company” substitute “a company with investment business”. In subsection (6) (treatment of expenses of management disbursed in the accounting period)— In subsection (8) (treatment of capital allowances apportioned to either part of the accounting period) for “75(4)” substitute “75(7)”. In subsection (9) (which prevents certain sums being deducted under section 75 of the Taxes Act 1988) in paragraph (a) for “sums disbursed” substitute “expenses of management deductible”. In subsection (14) (meaning of “investment company”) for ““investment company”” substitute ““company with investment business””. The sidenote to the section accordingly becomes “Change in ownership of company with investment business: deductions generally”.

Section 768E of the Taxes Act 1988 is amended as follows. In subsection (1) (change in ownership of investment company) for “an investment company” substitute “a company with investment business”. In subsection (7) (definition of “investment company”) for ““investment company”” substitute ““company with investment business””.

The Treasury may by order made by statutory instrument amend this Schedule by— a condition for registration for gross payment. No statutory instrument containing an order under this paragraph shall be made unless a draft of the instrument has been laid before and approved by a resolution of the House of Commons.

Chapter 5 of Part 7 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) (employment income: securities options) is amended as follows. In section 476 (charge on occurrence of chargeable event), for subsections (1) to (4) substitute—. In section 480 (deductible amounts), omit subsection (7). In section 481 (deductible amount in respect of secondary Class 1 contributions met by employee)— In section 482 (deductible amount in respect of special contribution met by employee)—

Section 119A of the Taxation of Chargeable Gains Act 1992 (c. 12) (increase in expenditure by reference to tax charged in relation to employment-related securities) is amended as follows. For subsection (5) (determination of relevant amount) substitute—. Omit subsection (8). Nothing in this paragraph affects the operation of section 119A(5) of the Taxation of Chargeable Gains Act 1992 (c. 12), as inserted by paragraph 50 (1) of Schedule 22 to the Finance Act 2003 (c. 14), in relation to amounts deducted under section 481 or 482 of the Income Tax (Earnings and Pensions) Act 2003 (c. 1) before the amendment of those sections by this Schedule.

In Chapter 1 of Part 6 of the Income Tax (Earnings and Pensions) Act 2003 (payments to non-approved pension schemes), for section 389 (exception: employments where earnings charged on remittance) substitute—. This amendment has effect for the year 2003-04 and subsequent tax years.

In section 25(2) of the Finance Act 1990 (c. 29) (donations to charity by individuals: qualifying conditions), in paragraph (i)(i) for the words from “or performs duties” to “performed in the United Kingdom” substitute “or is in Crown employment as defined in section 28(2) of the Income Tax (Earnings and Pensions) Act 2003”. This amendment (which supersedes the amendment made by paragraph 166(3) of Schedule 6 to the Income Tax (Earnings and Pensions) Act 2003) has effect for the year 2003-04 and subsequent years of assessment.

In Schedule 29 to the Finance Act 2002 (c. 23) (gains and losses of a company from intangible fixed assets), paragraph 113 (delayed payments of emolument) is amended as follows. In the heading, for “emoluments” substitute “employees' remuneration”. In sub-paragraph (1)— Sub-paragraph (1) applies whether the amount is in respect of particular employments or in respect of employments generally. This paragraph applies to potential employees' remuneration as it applies to employees' remuneration. For this purpose— In sub-paragraph (5)— For the purposes of this section remuneration is paid when it— In this paragraph— These amendments have effect for accounting periods ending after 5th April 2003.

The amendments made by this Part have effect in relation to shares issued on or after 6th April 2004 which are shares by reference to which an individual is given relief under Part 1 of Schedule 15B to the Taxes Act 1988. But nothing in this Act affects the continuing operation of Schedule 5C to the Taxation of Chargeable Gains Act 1992 (c. 12) for the purposes of section 151B(8)(b)(ii) of that Act.

Section 165 of the Taxation of Chargeable Gains Act 1992 is amended as follows. In subsection (1) (circumstances in which subsection (4) applies, subject to certain provisions) for “and 169” substitute “, 169, 169B and 169C”. In subsection (3) (relief not to apply to disposal in certain cases) after paragraph (b) insert—. In subsection (8) (definitions) for paragraph (aa) substitute—. In subsection (10) (deduction to be allowed in computing chargeable gain on subsequent disposal by transferee, where disposal by transferor is chargeable transfer for inheritance tax purposes) for “after 13th March 1989, in respect of which a claim is made under this section,” substitute “in relation to which subsection (4) above applies”.

Section 281 of the Taxation of Chargeable Gains Act 1992 is amended as follows. In subsection (2) (option to pay capital gains tax by instalments by giving notice to inspector) for “the inspector” substitute “an officer of the Board”. Subsection (2) above applies in relation to a chargeable gain accruing to a transferor under section 169C(7) (clawback of relief under section 165 or 260 if settlement becomes settlor-interested etc) as it applies in relation to a gain accruing to a person on a disposal if— Where subsection (2) above so applies, subsections (4) to (7) above apply accordingly but as if for paragraphs (a) and (b) of subsection (7) there were substituted “any part of the subject-matter of the relevant disposal in question is disposed of for valuable consideration under a subsequent disposal (whether made by the trustees to whom that relevant disposal was made or by some other person).

Schedule 7 to the Taxation of Chargeable Gains Act 1992 is amended as follows. In paragraph 2 (1) (circumstances in which section 165(4) applies, subject to certain provisions, in relation to disposals by trustees of settlement) for “and 169” substitute “, 169, 169B and 169C”.

Section 223 of the Taxation of Chargeable Gains Act 1992 is amended as follows. In subsection (4) (dwelling-house let as residential accommodation) in paragraph (a), omit the unnecessary words “or those provisions as applied by section 225”. After subsection (7) insert—.

After section 225 of the Taxation of Chargeable Gains Act 1992 insert—.

This paragraph has effect where section 226A of the Taxation of Chargeable Gains Act 1992 (c. 12) (as inserted by paragraph 6 of this Schedule) (“section 226A”) applies in circumstances in which— was made before 10th December 2003. Section 226A shall have effect subject to the following modifications. In subsection (2), omit “not” and at the end insert “subject to the modifications set out in subsections (2A) to (2C) below”. After subsection (2) insert—. In subsection (3), omit “never” and at the end insert “subject to the modifications set out in subsections (2A) to (2C) above”. In this paragraph “relevant earlier disposal”, in relation to a later disposal, means an earlier disposal in respect of which a claim mentioned in subsection (1)(c) of section 226A is made. This paragraph is to be construed as one with section 226A. Subsections (5) and (6) of section 223 of the Taxation of Chargeable Gains Act 1992 apply in relation to the subsection (2B)(b) treated as inserted by sub-paragraph (4) above as they apply in relation to subsections (1) and (2)(a) of that section.

In paragraph 5(3) of Schedule 27 to the Taxes Act 1988 (offshore funds: assumptions to be made in computing UK equivalent profits), after paragraph (c) insert—; and. Paragraph 3 of Schedule 10 to the Finance Act 1996 (c. 8) (assumptions to be made in relation to creditor relationships) shall cease to have effect. In relation to a fund established on or before the day on which this Act is passed, this paragraph only has effect if an election that it should have effect has been made by or on behalf of the fund. Any such election— For the purpose of determining the United Kingdom equivalent profits of an offshore fund for the first account period of the fund in relation to which this paragraph has effect— In this paragraph—

Chapter 3 of Part 7 of the Taxes Act 1988 (enterprise investment scheme) is amended as set out in sub-paragraphs (2) to (4). In section 293 (qualifying companies), in subsection (3C)(b) for “oil rigs” substitute “offshore installations”. In section 297 (qualifying trades), in subsection (6) for “oil rigs” substitute “offshore installations”. In section 298 (provisions supplementary to sections 293 and 297), in subsection (5) omit the definition of “oil rig”. This paragraph has effect in relation to shares issued on or after 6th April 2004. Nothing in this paragraph affects the operation of any of the following provisions in relation to shares issued before that date—

For the purposes of this Part a lump sum death benefit is a pension protection lump sum death benefit if— But if the amount of a lump sum falling within sub-paragraph (1) exceeds the pension protection limit, the excess is not a pension protection lump sum death benefit. The pension protection limit is— where— AC is the amount crystallised by reason of the member becoming entitled to the pension (see section 216), AP is the amount of the pension paid in respect of the period between the member becoming entitled to the pension and the member’s death, and TPLS is the total amount of pension protection lump sum death benefit previously paid in respect of the pension under this paragraph.

“Loan repayment date” means the date by which the total amount owing (including interest) must be paid. A standard loan repayment date is a loan repayment date before the end of the period of five years beginning with the date on which the loan is made.

If a loan does not comply with section 179 (1) (authorised employer loan) when it is made, there is an unauthorised payment of an amount equal to the largest of such of amounts 1, 2, A, B, and C as arise in relation to the loan. Paragraphs 12 to 16 explain amounts 1, 2, A, B and C.

If at any time after a loan is made— there is an unauthorised payment of an amount equal to the larger of such of amounts A, B, and C (see paragraphs 14 to 16) as arise when that paragraph or those paragraphs are not complied with.

If the aggregate amount of the unauthorised payments in relation to a loan under paragraphs 5 to 10 exceeds the amount of the loan when it was made, the excess is to be treated as not being an unauthorised payment.

Amount A arises if paragraph (a) of section 179(2) (interest rate to be not less than prescribed amount) is not complied with. Amount A is— where— IR is the rate of interest payable at the relevant time, PIR is the rate of interest prescribed by regulations under that paragraph, and AO is the amount owing (not including interest) at the relevant time.

The Oil Taxation Act 1983 (c. 56) is amended in accordance with the following provisions of this Part.

Section 4 (expenditure related to exempt gas and deballasting) is amended as follows. After subsection (5) insert—.

In Part 2 of Schedule 1, paragraph 7 is amended as follows. In sub-paragraph (1)(c) (use of asset otherwise than in connection with a taxable field between acquisition etc and first use in connection with oil field)—

Schedule 28B to the Taxes Act 1988 (venture capital trusts) is amended as set out in sub-paragraphs (2) to (4). In paragraph 3 (requirements as to company’s business), in sub-paragraph (8)(b) for “oil rigs” substitute “offshore installations”. In paragraph 4 (qualifying trades), in sub-paragraph (7) for “oil rigs” substitute “offshore installations”. In paragraph 5 (provisions supplemental to paragraph 4), in sub-paragraph (1) omit the definition of “oil rig”. This paragraph has effect for the purpose of determining whether shares or securities issued on or after 6th April 2004 are, for the purposes of section 842AA of the Taxes Act 1988, to be regarded as comprised in a company’s qualifying holdings. Nothing in this paragraph affects the operation of Schedule 28B to the Taxes Act 1988 as it has effect for the purpose of determining whether shares or securities issued before that date are, for the purposes of section 842AA of the Taxes Act 1988, to be regarded as comprised in a company’s qualifying holdings.

Section 677 of the Taxes Act 1988 (sums paid to settlor otherwise than as income) is amended as follows. In subsection (2) (the amount of income available up to the end of a year) in paragraph (h) (deduction of amount equal to tax at the rate applicable to trusts on the undistributed income less the income etc referred to in certain paragraphs) for “paragraphs (c), (d), (e), (f) and (g) above” substitute “each of paragraphs (c) to (g) above”. whichever is the least. After subsection (7) insert—.

Schedule 22 to the Finance Act 2000 (c. 17) (tonnage tax) is amended as follows.

The Finance Act 2002 (c. 23) is amended as follows.

Section 76B of the Taxes Act 1988 is amended as follows. In subsection (1) (certain sums paid by an investment company to be treated as expenses of management) for “an investment company” substitute “a company with investment business”. In subsection (2) (repayment to investment company to be charged under Case VI of Schedule D)—

Section 768C of the Taxes Act 1988 is amended as follows. In subsection (1) (case where section applies) in paragraph (a) for “an investment company” substitute “a company with investment business”. In subsection (7) (no deduction under section 75 from an amount of total profits equal to the amount of the relevant gain) in paragraph (a) for “sums disbursed” substitute “expenses of management deductible”. “company with investment business” has the same meaning as in Part 4.

Section 85 of the Finance Act 1989 (c. 26) is amended as follows. In subsection (2) (receipts excluded from subsection (1) omit paragraphs (c) to (d). After subsection (2) insert—.

In section 210A(10) of the Taxation of Chargeable Gains Act 1992 (c. 12) (ring-fencing of losses: policy holders' share of chargeable gains or losses), in paragraph (b) (case where policy holders' share of relevant profits does not exceed BLAGAB profits), for “of the company for the accounting period bears to those relevant profits” substitute “for the accounting period bears to those BLAGAB profits”. Sub-paragraph (1) has effect in relation to accounting periods beginning on or after 17th March 2004.

In paragraph 22A of that Schedule (deemed assignment of derivative contracts on company ceasing to be resident in UK etc.), omit sub-paragraph (5).

In paragraph 5(3) of Schedule 27 to the Taxes Act 1988 (offshore funds: assumptions to be made in computing UK equivalent profits), after paragraph (d) (inserted by paragraph 1 above) insert—and Paragraph 35 of Schedule 26 to the Finance Act 2002 (c. 23) (assumptions to be made in relation to derivative contracts) shall cease to have effect. In relation to a fund established on or before the day on which this Act is passed, this paragraph only has effect if an election that it should have effect has been made by or on behalf of the fund. Any such election— For the purpose of determining the United Kingdom equivalent profits of an offshore fund for the first account period of the fund in relation to which this paragraph has effect— In this paragraph—

In section 94 of the Capital Allowances Act 2001 (expenditure on ships that is not long-life asset expenditure) omit subsections (2)(b) and (3).

In paragraph 23 of that Schedule (derivative contracts for unallowable purposes), in sub-paragraphs (2) and (3) omit “given by the authorised accounting method used”.

Section 153 of the Capital Allowances Act 2001 (ships that are not qualifying ships) is amended as follows. For subsection (2) substitute— Omit subsection (3).

Paragraph 25 of that Schedule (debits and credits treated as relating to capital expenditure) is amended as follows. In sub-paragraph (1) omit “given by an authorised accounting method”. Where a debit is brought into account by a company in accordance with sub-paragraph (1), no debit shall be brought into account in respect of—

offshore installation (except in Chapter 13 of Part 2) section 837C of ICTA

In paragraph 30 of that Schedule (transactions within groups: authorised mark to market basis of accounting)—

Paragraphs 8 to 10 have effect— In this paragraph “chargeable period” has the meaning given by section 6 of the Capital Allowances Act 2001.

In paragraph 31A of that Schedule (amounts imputed under Schedule 28AA to the Taxes Act 1988), in sub-paragraph (2) omit “, notwithstanding the provisions of any authorised accounting method,”.

Schedule 10 to the Finance Act 1996 (c. 8) (loan relationships: collective investment schemes) is amended as follows.

In section 40 of the Income Tax (Earnings and Pensions) Act 2003 (duties on board vessel or aircraft), in subsection (5) for paragraph (b) (meaning of ship) substitute—.

A charge is of adequate value if it meets conditions A, B and C. Condition A is that, at the time the charge is given, the market value of the assets subject to the charge— Condition B is that if, at any time after the charge is given, the market value of the assets charged is less than would be required under condition A if the charge were given at that time, the reduction in value is not attributable to any step taken by the pension scheme, the sponsoring employer or a person connected with the sponsoring employer. Condition C is that the charge takes priority over any other charge over the assets.

“The required amount”, in relation to a period beginning with the date on which the loan is made and ending with the last day of a loan year, is— where— L is the amount of the loan, TIP is the total interest payable on the loan, TLY is the total number of loan years, and NLY is the number of loan years in the period.

This paragraph applies for the purposes of benefit crystallisation event 2 if the scheme pension is funded (in whole or in part) by the surrender of sums or assets representing the whole or part of the individual’s unsecured pension fund. The amount crystallised by the event is to be reduced by the amount (or an appropriate proportion of the amount) previously crystallised on the designation of the sums or assets as available for the payment of unsecured pension.

This paragraph has effect if— Benefit crystallisation event 2 applies as if— Benefit crystallisation event 4 does not apply in relation to the lifetime annuity.

For the purposes of benefit crystallisation event 3 “excepted circumstances” means—

For the purposes of benefit crystallisation event 5 “DP” is the annual rate of the scheme pension to which the individual would be entitled if, on the date on which the individual reaches 75, the individual acquired an actual (rather than a prospective) right to receive it. For the purposes of benefit crystallisation event 5 “DSLS” is the amount of any lump sum to which the individual would be entitled (otherwise than by way of commutation of pension) if, on that date, the individual acquired an actual (rather than a prospective) right to receive it.

This paragraph applies for the purposes of benefit crystallisation event 8. Where any of the sums or assets transferred represent the whole or part of the individual’s unsecured pension fund, the amount crystallised by the event is to be reduced by the amount (or the appropriate proportion of the amount) previously crystallised on the designation of the sums or assets as available for the payment of unsecured pension. Where after the transfer a scheme pension to which the individual has become entitled before the transfer is to be payable out of sums or assets transferred, the amount crystallised by the event is to be reduced by the amount (or the appropriate proportion of the amount) previously crystallised in relation to the scheme pension.

This Part of this Schedule contains amendments to Parts 4 and 5 of the Finance Act 2003 (c. 14) (stamp duty land tax and stamp duty) corresponding, subject to certain changes, to those made by the Stamp Duty and Stamp Duty Land Tax (Variation of the Finance Act 2003) (No. 2) Regulations 2003 (S.I. 2003/2816) (made under section 109 of that Act). Those regulations are revoked.

For sections 58 and 59 (relief for certain exchanges of residential property and relocation relief) substitute—. After Schedule 6 insert—. In section 81 (further return where relief withdrawn)— In section 87 (interest on unpaid tax)—

After section 81A (inserted by paragraph 19 above) insert—.

In section 125(5) (abolition of stamp duty except on instruments relating to stock or marketable securities: instruments to which the section applies)—

This Part of this Schedule applies in relation to any transaction of which the effective date (within the meaning of Part 4 of the Finance Act 2003 (c. 14)) is on or after the day on which this Act is passed.

For paragraph 1A (investment trusts and venture capital trusts: capital reserves) substitute—.

In section 305 of the Income Tax (Earnings and Pensions) Act 2003 (offshore oil and gas workers: mainland transfers), in subsection (6) omit the definition of “offshore installation”.

This paragraph applies for the purposes of benefit crystallisation event 4 if the lifetime annuity is purchased (in whole or in part) with sums or assets representing the whole or part of the individual’s unsecured pension fund. The amount crystallised by the event is to be reduced by the amount (or an appropriate proportion of the amount) previously crystallised on the designation of the sums or assets as available for the payment of unsecured pension.

Paragraph 2A (authorised unit trusts) is amended as follows. In the heading at the end add “: capital profits, gains or losses”. In sub-paragraph (1) omit “, notwithstanding section 84(2)(b) of this Act”. For the purposes of this paragraph “capital profits, gains or losses”— In sub-paragraph (2) for the words “For the purposes of this paragraph” substitute “In the cases mentioned in sub-paragraph (1A)(a)”. In sub-paragraph (5) after “the definition of capital profits, gains or losses” insert “in sub-paragraphs (2) to (4)”.

For section 385 of the Income Tax (Earnings and Pensions) Act 2003 substitute—

Paragraph 2B (open-ended investment companies) is amended as follows. In the heading at the end add “: capital profits, gains or losses”. In sub-paragraph (1) omit “, notwithstanding section 84(2)(b) of this Act”. For the purposes of this paragraph “capital profits, gains or losses”— In sub-paragraph (2) for the words “For the purposes of this paragraph” substitute “In the cases mentioned in sub-paragraph (1A)(a)”. In sub-paragraph (5) after “the definition of capital profits, gains or losses” insert “in sub-paragraphs (2) to (4)”.

offshore installation section 837C of ICTA

Paragraph 4 (company holdings in unit trusts and offshore funds) is amended as follows. The debits and credits to be brought into account for the purposes of this Chapter as respects the company’s relevant holdings must be determined on the basis of fair value accounting. In sub-paragraph (4) for the words from the beginning to “for the purposes of this Chapter,” substitute “Sub-paragraph (3) shall not be taken, as respects any accounting period,”.

Paragraphs 12 to 15 have effect for the year 2004-05 and subsequent years of assessment.

In Schedule 11 to the Finance Act 1996 (c. 8) (loan relationships: special provision for insurers), in paragraph 1(1A) for “sections 92(1)(f), 93(1)(a) and (b) and 96(1)(b)” substitute “section 96(1)(b).

Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 (enterprise management incentives) is amended as follows. In paragraph 18 (excluded activities: leasing of certain ships), in sub-paragraph (1) for “oil rigs” substitute “offshore installations”. In paragraph 18(2) for “oil rig” substitute “offshore installation”. In paragraph 18(8) omit the definition of “oil rig”. offshore installation section 837C of ICTA This paragraph has effect in relation to a right to acquire shares in a company granted on or after 6th April 2004. Nothing in this paragraph affects the operation of Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 in relation to a right to acquire shares in a company granted before that date.