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Income Tax Act 2007 (c. 3)

(The document as of February, 2008)

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(a) describe the qualifying interest in land,

(b) specify the date of the disposal, and

(c) state that the charity has acquired the qualifying interest in land.

442 Qualifying interests in land held jointly

(1) This section applies if the qualifying investment is a qualifying interest in land.

(2) It applies if two or more persons ("the owners")--

(a) are jointly beneficially entitled to the qualifying interest in land, or

(b) are, taken together, beneficially entitled in common to the qualifying interest in land.

(3) Relief under this Chapter is available if--

(a) at least one of the owners is an individual, and

(b) all the owners dispose of the whole of their beneficial interests in the qualifying interest in land to the charity.

(4) Relief under this Chapter is available to each of the owners who is an individual.

(5) The amount of relief under this Chapter to be given to an individual is such share of the relievable amount as is allocated to the individual by an agreement made between those owners who are--

(a) individuals, or

(b) qualifying companies.

(6) A company is a qualifying company if--

(a) it is not itself a charity, and

(b) it is not within section 587B(8)(a) of ICTA.

(7) If one or more of the owners is not an individual--

(a) for the purpose of determining whether the owners' beneficial interests are disposed of as mentioned in subsection (3)(b) of this section, subsections (2) to (4) of section 433 apply as if references to an individual included a reference to a person who is not an individual, and

(b) the total amount of relief given under this Chapter and section 587B of ICTA as a result of the disposal of the qualifying interest in land is not to exceed the relievable amount.

443 Calculation of relievable amount where joint disposal of interest in land

(1) This section applies for the purpose of calculating the relievable amount in a case where relief under this Chapter is available as a result of section 442(3).

(2) Calculate the relievable amount as if--

(a) the owners were a single individual, and

(b) the disposals of the owners' beneficial interests were a single disposal by that single individual of the whole of the beneficial interest in the qualifying interest in land.

(3) In particular, calculate the consideration mentioned at Step 1 in section 434(4) by--

(a) calculating, for each owner, the consideration for which the disposal of the owner's beneficial interest is treated as made for the purposes of TCGA 1992 as a result of section 257(2)(a) of that Act, and

(b) adding together all the consideration calculated under paragraph (a).

(4) Subsection (5) applies if one or more of the owners is neither--

(a) an individual, nor

(b) a qualifying company (see section 442(6)).

(5) In calculating the relievable amount make just and reasonable adjustments to reduce the relievable amount to reflect the fact that relief under this Chapter or section 587B of ICTA is not available to that owner or to those owners.

(6) If one or more of the owners is a company within paragraph (b) of section 587B(8) of ICTA, in calculating the relievable amount make just and reasonable adjustments to reduce the relievable amount to reflect the requirements of sub-paragraph (ii) of that paragraph.

444 Disqualifying events

(1) This section applies if the qualifying investment is a qualifying interest in land.

(2) If a disqualifying event occurs at any time in the provisional period, the following are treated as never having been entitled to relief under this Chapter in respect of the disposal of the qualifying interest in land--

(a) in a case to which section 442 does not apply, the individual who made the disposal, or

(b) in a case to which section 442 applies, each individual who is an owner.

(3) All such assessments and adjustments of assessments are to be made as are necessary to give effect to subsection (2).

(4) A disqualifying event occurs if a person mentioned in subsection (5) becomes, otherwise than for full consideration in money or money's worth--

(a) entitled to an interest or right in relation to all or part of the land to which the disposal relates, or

(b) party to an arrangement under which the person enjoys some right in relation to all or part of that land.

(5) The persons are--

(a) in a case to which section 442 does not apply--

(i) the individual who made the disposal, or

(ii) a person connected with that individual, and

(b) in a case to which section 442 applies--

(i) a person who is an owner, or

(ii) a person connected with such a person.

(6) A disqualifying event does not occur if a person becomes entitled to an interest or right as mentioned in subsection (4)(a) as a result of a disposition of property on death (whether the disposition is effected by will, under the law relating to intestacy or otherwise).

(7) "The provisional period" is the period beginning with the date of the disposal of the qualifying interest in land and ending with the fifth anniversary of the normal self-assessment filing date for the tax year in which the disposal was made.



Supplementary

445 Prohibition against double relief

(1) If a claim is made for relief under this Chapter in respect of a disposal--

(a) section 108 of ITTOIA 2005 (gifts of trading stock to charities etc) does not apply in relation to the disposal, and

(b) no relief in respect of the disposal is allowable under any other provision of the Income Tax Acts.

(2) For the effect on capital gains tax or corporation tax on chargeable gains where an individual is entitled to relief under this Chapter, see section 257(2A) to (2C) of TCGA 1992 (gifts to charities etc).

446 "Charity" to include exempt bodies

In this Chapter "charity" includes--

(a) the Trustees of the National Heritage Memorial Fund,

(b) the Historic Buildings and Monuments Commission for England, and

(c) the National Endowment for Science, Technology and the Arts.



Chapter 4 Annual payments and patent royalties

447 Overview of Chapter

(1) This Chapter gives relief for some of the payments from which sums representing income tax must be deducted under Chapter 6 of Part 15 (deduction from annual payments and patent royalties).

(2) For the payments which attract relief, see sections 448 and 449.

448 Relief for individuals

(1) This section applies to a payment made in a tax year if--

(a) the person who makes it is an individual,

(b) a sum representing income tax is required by section 900(2) or 903(5) (deduction from annual payments and patent royalties) to be deducted from it, and

(c) the payment is not deductible in calculating the individual's income from any source.

(2) The individual is entitled to relief for the tax year equal to the gross amount of the payment.

(3) But this is subject to the restrictions in subsection (4) and section 451.

(4) The total amount of relief given under this section to an individual for a tax year cannot be greater than the amount of the individual's modified net income for the tax year (see section 1025).

(5) The relief is given by deducting the amount of the relief in calculating the individual's net income for the tax year (see Step 2 of the calculation in section 23).

449 Relief for other persons

(1) This section applies to a payment made in a tax year if--

(a) the person who makes it is not an individual,

(b) a sum representing income tax is required by section 901(3) or 903(6) (deduction from annual payments and patent royalties) to be deducted from it, and

(c) the payment is not deductible in calculating the person's income from any source.

(2) The person who makes the payment is entitled to relief for the tax year equal to the gross amount of the payment.

(3) But this is subject to the restrictions in subsections (4) and (5) and section 451.

(4) Relief is not given for the payment so far as it is ineligible for relief (see section 450).

(5) The total amount of relief given under this section to a person for a tax year cannot be greater than the amount of the person's modified net income for the tax year (see section 1025).

(6) The relief is given by deducting the amount of the relief in calculating the person's net income for the tax year (see Step 2 of the calculation in section 23).

450 Other persons: payments ineligible for relief

(1) This section sets out the circumstances in which a payment to which section 449 applies, or part of it, is ineligible for relief.

(2) The payment is ineligible for relief if, or so far as, it can lawfully be made only out of--

(a) capital, or

(b) income that is exempt from income tax.

(3) If the payment or any part of it is charged to capital, the payment or that part is ineligible for relief.

(4) If--

(a) the person who makes the payment treats it or any part of it as made out of income that is exempt from income tax, and

(b) the rights or obligations of any person are or may in the future be different from what they would have been if the payment or part had not been so treated,

the payment, or the part concerned, is ineligible for relief.

(5) If the payment or a part of it is not ultimately borne by the person who makes it, the payment or the part concerned is ineligible for relief.

(6) But subsection (5) does not apply to a payment or part of a payment if--

(a) the person who makes the payment is liable to income tax on an amount, and

(b) it is because the person receives that amount or benefits from it in some other way that the payment or the part concerned is not ultimately borne by that person.

451 Special rule for persons affected by section 733 of ICTA

(1) This section applies if--

(a) interest payable to a person in respect of securities ("the affected income") is attributable to a tax year,

(b) because of section 733(1) of ICTA (dividend buying etc: persons entitled to exemptions), some part of the affected income is not exempt from income tax, and

(c) the person makes one or more relievable payments in the tax year which are qualifying annual payments.

(2) Relief under this Chapter for those payments is given only for--

(a) the sum of the gross amounts of the payments, or

(b) if less, the amount of the person's non-affected income.

(3) The person's non-affected income is--

(a) the person's modified net income for the tax year (see section 1025), less

(b) the affected income.

(4) Apply this section before working out the result of section 448(4) or 449(5).

(5) In this section--

  • "interest" and "securities" are to be read in accordance with section 731(9) of ICTA,

  • "relievable payment" means a payment to which section 448 or 449 applies, and

  • "qualifying annual payment" has the same meaning as in Chapter 6 of Part 15 (see section 899).

452 The gross amount of a payment

References in this Chapter to the gross amount of a payment are to the amount of the payment before deduction of the sum representing income tax deductible from it under Chapter 6 of Part 15 (deduction from annual payments and patent royalties).



Chapter 5 Qualifying maintenance payments

453 Tax reduction for qualifying maintenance payments

(1) An individual who makes a claim is entitled to a tax reduction for a tax year in which any qualifying maintenance payments made by the individual fall due.

(2) The amount of the tax reduction is 10% of--

(a) the total amount of qualifying maintenance payments made by the individual which fall due in the tax year, or

(b) if less, the amount specified in section 43 (tax reductions for married couples and civil partners: meaning of "the minimum amount").

(3) The tax reduction is given effect at Step 6 of the calculation in section 23.

454 Meaning of "qualifying maintenance payment"

(1) For the purposes of section 453 a payment is a "qualifying maintenance payment" if conditions A to E are met.

(2) Condition A is that the payment is a periodical payment made by--

(a) one of the parties to a marriage or civil partnership (including a marriage or civil partnership which has been dissolved or annulled) to or for the benefit of the other party and for the maintenance of the other party, or

(b) one parent of a child to the child's other parent for the maintenance of the child by the other parent or by one person to another for the maintenance by the other of a relevant child of theirs.

(3) Condition B is that--

(a) in a case falling within subsection (2)(a), either of the parties to the marriage or civil partnership was born before 6 April 1935, and

(b) in a case falling within subsection (2)(b), either the person who made the payment, or the person to whom it is made, was born before that date.

(4) Condition C is that the payment is made--

(a) under an order made by a court in a member State, or

(b) under a written agreement the law applicable to which is the law of a member State or of a part of a member State.

(5) Condition D is that the payment is due at a time when--

(a) in a case falling within subsection (2)(a)--

(i) the two parties are not a married couple, or civil partners of each other, living together (see section 1011), and

(ii) the party to whom or for whose benefit the payment is made has not entered into a new marriage or a new civil partnership, and

(b) in a case falling within subsection (2)(b), the person making the payment and the person to whom the payment is made are not living together.

(6) Condition E is that relief from tax in respect of the payment is not available to the person making it under any provision of the Income Tax Acts other than section 453.

(7) In subsection (4) the reference to an order made by a court in a member State includes a reference to a maintenance calculation.

(8) "Maintenance calculation" means--

(a) a maintenance calculation made under the Child Support Act 1991 (c. 48), or

(b) a maintenance assessment made under the Child Support (Northern Ireland) Order 1991 (S.I. 1991/2628 (N.I. 23)).

(9) In this section--

  • "child" means a person under 21 years of age,

  • "periodical payment" does not include an instalment of a lump sum, and

  • "relevant child", in relation to any two persons, means a child who (not being a child who has been boarded out with them by a public authority or voluntary organisation) has been treated by both of them as a child of their family.

455 Child support maintenance payments

(1) Condition A in section 454(2) is treated as met in relation to a payment if--

(a) it is a periodical payment made under a maintenance calculation by any person,

(b) another person is, for the purposes of the Child Support Act 1991 or (as the case may be) the Child Support (Northern Ireland) Order 1991 (S.I. 1991/2628 (N.I. 23)), a parent of the child or children with respect to whom the calculation has effect,

(c) the calculation was not made under section 7 of the Child Support Act 1991 (right of child in Scotland to apply for maintenance calculation), and

(d) any of the conditions mentioned in subsection (2) is met.

(2) The conditions are that--

(a) the payment is made to the Secretary of State in accordance with regulations made under section 29 of the Child Support Act 1991 by virtue of subsection (3)(a)(ii) of that section (collection of child support maintenance: payment to or through Secretary of State),

(b) the payment is retained by the Secretary of State in accordance with regulations made under section 41 of that Act (arrears of child support maintenance),

(c) the payment is made to the Department of Health, Social Services and Public Safety for Northern Ireland in accordance with regulations made under Article 29 of the Child Support (Northern Ireland) Order 1991 (S.I. 1991/2628 (N.I. 23)), by virtue of paragraph (3)(a)(ii) of that Article (collection of child support maintenance: payment to or through Department), or

(d) the payment is retained by the Department of Health, Social Services and Public Safety for Northern Ireland in accordance with regulations made under Article 38 of that Order (arrears of child support maintenance).

(3) "Maintenance calculation" and "periodical payment" have the meanings given in section 454(8) and (9).

456 Payments under orders for recovery of benefit etc

(1) Condition A in section 454(2) is treated as met in relation to a payment made by any person if--

(a) it is a periodical payment made to the Secretary of State or to the Department of Health, Social Services and Public Safety for Northern Ireland, and

(b) it is made under a recovery of benefit order.

(2) A "recovery of benefit order" is--

(a) one made under section 106 of the Social Security Administration Act 1992 (c. 5) or section 101 of the Social Security Administration (Northern Ireland) Act 1992 (c. 8) (recovery of expenditure on benefit from person liable for maintenance) in respect of income support claimed by any other person, or

(b) one made by virtue of section 23 of the Jobseekers Act 1995 (c. 18) or Article 25 of the Jobseekers (Northern Ireland) Order 1995 (S.I. 1995/2705 (N.I. 15)) (recovery of sums in respect of maintenance), in respect of an income-based jobseeker's allowance claimed by any other person.

(3) In subsection (2) "income-based jobseeker's allowance" has the same meaning as in--

(a) the Jobseekers Act 1995, or

(b) for Northern Ireland, the Jobseekers (Northern Ireland) Order 1995 (S.I. 1995/2705 (N.I. 15)).

(4) "Periodical payment" has the meaning given in section 454(9).



Chapter 6 Miscellaneous other reliefs

Payments for life insurance etc

457 Payments to trade unions

(1) An individual who makes a payment to a trade union in a tax year is entitled to relief for the tax year if--

(a) part of the payment (the "qualifying amount") is attributable to the provision of superannuation, life insurance or funeral benefits,

(b) the individual meets the requirements of section 460 (residence etc), and

(c) the individual makes a claim.

(2) The amount of the relief is equal to half the qualifying amount.

(3) But the maximum amount of relief under this section to which an individual is entitled for a tax year is £100.

(4) The relief is given by deducting the amount of the relief in calculating the individual's net income for the tax year (see Step 2 of the calculation in section 23).

(5) "Trade union" has the meaning given by section 1 of the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52).

458 Payments to police organisations

(1) An individual who makes a payment to a police organisation in a tax year is entitled to relief for the tax year if--

(a) part of the payment (the "qualifying amount") is attributable to the provision of superannuation, life insurance or funeral benefits,

(b) the sum of the qualifying amounts for all the payments which the individual makes in the tax year is at least £20,

(c) the individual meets the requirements of section 460 (residence etc), and

(d) the individual makes a claim.

(2) The amount of the relief is equal to half the qualifying amount.

(3) But the maximum amount of relief under this section to which an individual is entitled for a tax year is £100.

(4) The relief is given by deducting the amount of the relief in calculating the individual's net income for the tax year (see Step 2 of the calculation in section 23).

(5) "Police organisation" means an organisation of persons in police service.

459 Payments for benefit of family members

(1) An individual who pays a sum, or from whose earnings a sum is deducted, in a tax year is entitled to a tax reduction for the tax year if--

(a) the sum is paid or deducted under an Act or the individual's terms and conditions of employment,

(b) the sum is for the purpose of--

(i) securing a deferred annuity after the individual's death for the individual's surviving spouse or civil partner, or

(ii) making provision after the individual's death for the individual's children,

(c) the individual meets the requirements of section 460 (residence etc), and

(d) the individual makes a claim.

(2) The amount of the tax reduction is equal to income tax at the basic rate on the total of all the sums paid or deducted in the tax year.

(3) But the maximum amount of the tax reduction under this section to which an individual is entitled for a tax year is equal to income tax at the basic rate on £100.

(4) A tax reduction under this section is given effect at Step 6 of the calculation in section 23.

(5) There is no entitlement to a tax reduction under this section in respect of a contribution paid by any person under--

(a) Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4), or

(b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).

(6) This section is also subject to sections 192 to 194 of FA 2004 (relief for pension contributions).

(7) In this section "earnings" has the meaning given by section 62 of ITEPA 2003.

460 Residence etc of claimants

(1) This section applies in relation to an individual who claims--

(a) relief under section 457 or 458 (payments to trade unions and police organisations) for a tax year, or

(b) a tax reduction under section 459 (payments for benefit of family members) for a tax year.

(2) The individual meets the requirements of this section if the individual--

(a) is UK resident for the tax year, or

(b) meets the condition in subsection (3).

(3) An individual meets the condition in this subsection if, at any time in the tax year, the individual--

(a) is resident in the Isle of Man or the Channel Islands,

(b) has previously resided in the United Kingdom and is resident abroad for the sake of the health of--

(i) the individual, or

(ii) a member of the individual's family who is resident with the individual,

(c) is a person who is or has been employed in the service of the Crown,

(d) is employed in the service of any territory under Her Majesty's protection,

(e) is employed in the service of a missionary society, or

(f) is a person whose late spouse or late civil partner was employed in the service of the Crown.



Patent royalty receipts

461 Spreading of patent royalty receipts

(1) A person who makes a claim is entitled to a tax reduction for a tax year in which the person receives a payment of a royalty or other sum if--

(a) the payment is in respect of the use of a patent,

(b) the use of the patent has extended over a period of two years or more, and

(c) the payment is one from which a sum representing income tax is required to be deducted under section 903.

(2) The amount of the tax reduction is the difference between--

(a) the amount of income tax payable by the person in respect of the payment, and

(b) the total amount of income tax which would have been payable by the person in respect of the payment on the assumptions in subsection (3).

(3) Those assumptions are that--

(a) the payment was made in a number of equal instalments at yearly intervals,

(b) the last instalment was paid on the date on which the payment was in fact made, and

(c) the number of instalments was the same as the number of complete years in the period over which the use of the patent extended, but subject to a maximum of 6.

(4) The tax reduction is given effect at Step 6 of the calculation in section 23.



Part 9 Special rules about settlements and trustees

Chapter 1 Introduction

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462 Overview of Part

(1) This Part sets out special rules about settlements and trustees.

(2) Chapter 2 contains general provision about settlements and trustees, for example, definitions of expressions relating to settlements.

(3) Chapter 3 provides for income tax to be charged at the dividend trust rate or at the trust rate on certain amounts included in the net income of the trustees of a settlement.

(4) Chapter 4 provides--

(a) for expenses of the trustees of a settlement to be set against the trustees' trust rate income (see section 463(2)), and

(b) consequentially, for the amount of the trust rate income to be reduced.

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