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Finance Act 2007 (c. 11)

(The document as of February, 2008)

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Finance Act 2007

2007 CHAPTER 11

CONTENTS

Content
  1. Part 1

    Charges, rates, thresholds etc

    1. Income tax

      1. 1. Charge and rates for 2007-08

    2. Corporation tax

      1. 2. Charge and main rates for financial year 2008

      2. 3. Small companies' rates and fractions for financial year 2007

    3. Inheritance tax

      1. 4. Rates and rate bands for 2010-11

    4. Alcohol and tobacco

      1. 5. Rates of duty on alcoholic liquor

      2. 6. Rates of tobacco products duty

    5. Gambling

      1. 7. Rates of gaming duty

      2. 8. Remote gaming duty

      3. 9. Amusement machine licence duty

    6. Environment

      1. 10. Fuel duty rates and rebates

      2. 11. Rates of vehicle excise duty

      3. 12. Rates of air passenger duty

      4. 13. Rates of climate change levy

      5. 14. Rate of aggregates levy

      6. 15. Rates of landfill tax

      7. 16. Emissions trading: charges for allocations

  2. Part 2

    Environment

    1. Energy-saving: houses

      1. 17. Corporation tax deduction for expenditure on energy-saving items

      2. 18. Extension of income tax deduction for expenditure on energy-saving items

      3. 19. SDLT relief for new zero-carbon homes

    2. Domestic microgeneration

      1. 20. Income tax exemption for domestic microgeneration

      2. 21. Renewables obligation certificates for domestic microgeneration

    3. Other measures

      1. 22. Aggregates levy: exemption for aggregate removed from railways etc

      2. 23. Climate change levy: reduced-rate supplies etc

      3. 24. Landfill tax: bodies concerned with the environment

  3. Part 3

    Income tax, corporation tax and capital gains tax

    1. Anti-avoidance

      1. 25. Managed service companies

      2. 26. Restrictions on trade loss relief for partners

      3. 27. Extension of restrictions on allowable capital losses

      4. 28. Restriction on expenses of management

      5. 29. Life policies etc: effect of rebated or reinvested commission

      6. 30. Avoidance involving financial arrangements

      7. 31. Companies carrying on business of leasing plant or machinery

      8. 32. Restrictions on companies buying losses or gains: tax avoidance schemes

      9. 33. Lloyd's corporate members: restriction of group relief

      10. 34. Employee benefit contributions

      11. 35. Schemes etc designed to increase double taxation relief

    2. Capital allowances

      1. 36. Industrial and agricultural buildings allowances

      2. 37. Temporary increase in first-year capital allowances for small enterprises

    3. Insurance and friendly societies

      1. 38. Insurance companies: gross roll-up business etc

      2. 39. Insurance companies: basis of taxation etc

      3. 40. Insurance companies: transfers etc

      4. 41. Insurance companies: miscellaneous

      5. 42. Technical provisions made by general insurers

      6. 43. Lloyd's: cessation of business by corporate members

      7. 44. Transfers of business by friendly societies to insurance companies etc

      8. 45. Tax exempt business of friendly societies

      9. 46. Purchased life annuities: self-assessment

    4. Repos

      1. 47. Sale and repurchase of securities

    5. CFCs

      1. 48. Controlled foreign companies

    6. R&D

      1. 49. Vaccine research relief: amount of deduction for SMEs

      2. 50. Research and development tax relief: definition of SME etc

    7. Venture capital schemes etc

      1. 51. Venture capital schemes etc

    8. REITs

      1. 52. Real Estate Investment Trusts

      2. 62. Benefits code: whether employment is "lower-paid employment"

      3. 63. Armed forces redundancy schemes

      4. 64. Armed forces: the Operational Allowance

      5. 65. Service charge income

      6. 66. Charge on benefits received by former owner of property: late elections

      7. 67. Unpaid remuneration and employee benefit contributions

  4. Part 4

    Pensions

    1. 68. Abolition of contributions relief for life assurance premium contributions

    2. 69. Alternatively secured pensions etc

    3. 70. Miscellaneous

  5. Part 5

    SDLT, stamp duty and SDRT

    1. SDLT: anti-avoidance provisions

      1. 71. Anti-avoidance

      2. 72. Partnerships

    2. Reliefs in relation to shares etc

      1. 73. Exemptions: intermediaries, repurchases etc

      2. 74. Acquisition relief: disregard of company holding own shares

    3. Other reliefs etc

      1. 75. SDLT: alternative finance arrangements

      2. 76. SDLT: exchanges

      3. 77. SDLT: shared ownership trusts

      4. 78. SDLT: shared ownership lease

      5. 79. Certain transfers of school land

    4. SDLT: administration

      1. 80. Payment of tax

      2. 81. Self-certificate declarations

  6. Part 6

    Investigation, administration etc

    1. Investigation etc

      1. 82. Criminal investigations: powers of Revenue and Customs

      2. 83. Northern Ireland criminal investigations

      3. 84. Sections 82 and 83: supplementary

      4. 85. Criminal investigations: Scotland

      5. 86. Search warrants

      6. 87. Cross-border exercise of powers

    2. Filing dates

      1. 88. Personal tax returns

      2. 89. Trustee's tax return

      3. 90. Partnership tax returns

      4. 91. Consequential amendments

      5. 92. Commencement

    3. Other administration

      1. 93. Mandatory electronic filing of returns

      2. 94. Mandatory electronic payment

      3. 95. Payment by cheque

      4. 96. Enquiry into returns

      5. 97. Penalties for errors

  7. Part 7

    Miscellaneous

    1. Value added tax and insurance premium tax

      1. 98. VAT: joint and several liability of traders in supply chain where tax unpaid

      2. 99. VAT: non-business use etc of business goods

      3. 100. VAT: transfers of going concerns

      4. 101. IPT: meaning of "premium"

    2. Petroleum revenue tax

      1. 102. Abolition of PRT for fields recommissioned after earlier decommissioning

      2. 103. Tax-exempt tariffing receipts

      3. 104. Allowance of unrelievable loss from abandoned field

    3. Other miscellaneous measures

      1. 105. Amendments connected with Gambling Act 2005

      2. 106. VED: exempt vehicles

      3. 107. Limitation period in old actions for mistake of law relating to direct tax

      4. 108. Disclosure of tax avoidance schemes

      5. 109. Meaning of "recognised stock exchange" etc

      6. 110. Mergers Directive: regulations

      7. 111. Excise duties: small consignment relief

      8. 112. Updating references to Standing Committees

  8. Part 8

    Final provisions

    1. 113. Interpretation

    2. 114. Repeals

    3. 115. Short title

    1. Schedule 1

      Remote gaming duty

      1. Part 1

        Imposition of duty

      2. Part 2

        Consequential amendments

    2. Schedule 2

      Climate change levy: reduced-rate supplies etc

    3. Schedule 3

      Managed service companies

      1. Part 1

        Amendments of ITEPA 2003

      2. Part 2

        Calculation of profits of MSCs: deduction for deemed employment payments

    4. Schedule 4

      Restrictions on trade loss relief for partners

    5. Schedule 5

      Avoidance involving financial arrangements

    6. Schedule 6

      Companies carrying on business of leasing plant or machinery

    7. Schedule 7

      Insurance business: gross roll-up business etc

      1. Part 1

        Amendments

      2. Part 2

        Transitional provisions

    8. Schedule 8

      Insurance companies: basis of taxation etc

      1. Part 1

        Amendments

      2. Part 2

        Transitional provisions

    9. Schedule 9

      Insurance companies: transfers etc

    10. Schedule 10

      Insurance companies: miscellaneous

    11. Schedule 11

      Technical provisions made by general insurers

    12. Schedule 12

      Friendly societies: transfers to insurance companies etc

    13. Schedule 13

      Sale and repurchase of securities

    14. Schedule 14

      Sale and repurchase of securities: minor and consequential amendments

    15. Schedule 15

      Controlled foreign companies

    16. Schedule 16

      Venture capital schemes etc

      1. Part 1

        Limit on number of employees of company in which investment is made

      2. Part 2

        Limit on amount raised annually by company through risk capital schemes

      3. Part 3

        Excluded activities: receipt of royalties and licence fees

      4. Part 4

        Meaning of "qualifying 90% subsidiary"

      5. Part 5

        Other amendments

    17. Schedule 17

      Real Estate Investment Trusts

    18. Schedule 18

      Pensions schemes: abolition of relief for life assurance premium contributions etc

    19. Schedule 19

      Alternatively secured pensions and transfer lump sum death benefit etc

    20. Schedule 20

      Pension schemes etc: miscellaneous

    21. Schedule 21

      Exemptions from stamp duty and SDRT: intermediaries, repurchases etc

    22. Schedule 22

      Amendments and repeals consequential on extension of HMRC powers

      1. Part 1

        Amendments

      2. Part 2

        Repeals

    23. Schedule 23

      Extension of HMRC powers: Scotland

    24. Schedule 24

      Penalties for errors

      1. Part 1

        Liability for penalty

      2. Part 2

        Amount of penalty

      3. Part 3

        Procedure

      4. Part 4

        Miscellaneous

      5. Part 5

        General

    25. Schedule 25

      Amendments connected with Gambling Act 2005

      1. Part 1

        Amendments of the Tax Acts

      2. Part 2

        Amendments of BGDA 1981

      3. Part 3

        Amendments of FA 1993 relating to lottery duty

      4. Part 4

        Amendments of FA 1997 relating to gaming duty

      5. Part 5

        Miscellaneous amendments

      6. Part 6

        Commencement

    26. Schedule 26

      Meaning of "recognised stock exchange" etc

    27. Schedule 27

      Repeals

      1. Part 1

        Environment

      2. Part 2

        Income tax, corporation tax and capital gains tax

      3. Part 3

        Pensions

      4. Part 4

        SDLT, stamp duty and SDRT

      5. Part 5

        Investigation, administration etc

      6. Part 6

        Miscellaneous

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

[19th July 2007]

Most Gracious Sovereign

We , Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:--



Part 1 Charges, rates, thresholds etc

Income tax

1 Charge and rates for 2007-08

Income tax is charged for the tax year 2007-08; and for that tax year--

(a) the starting rate is 10%,

(b) the basic rate is 22%, and

(c) the higher rate is 40%.



Corporation tax

2 Charge and main rates for financial year 2008

(1) Corporation tax is charged for the financial year 2008; and for that year the rate of corporation tax is--

(a) 28% on profits of companies other than ring fence profits, and

(b) 30% on ring fence profits of companies.

(2) In this section "ring fence profits" has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A)).

3 Small companies' rates and fractions for financial year 2007

(1) For the financial year 2007 the small companies' rate is--

(a) 20% on profits of companies other than ring fence profits, and

(b) 19% on ring fence profits of companies.

(2) For the financial year 2007 the fraction mentioned in section 13(2) of ICTA is--

(a) 1/40th in relation to profits of companies other than ring fence profits ("the standard fraction"), and

(b) 11/400ths in relation to ring fence profits of companies ("the ring fence fraction").

(3) If--

(a) a company makes a claim under subsection (2) of section 13 of ICTA in respect of any accounting period any part of which falls in the financial year 2007, and

(b) its profits for that accounting period consist of both ring fence profits and other profits,

that subsection applies with the following modification.

(4) The corporation tax charged on its basic profits for that period is reduced by the aggregate of--

(a) the sum equal to the ring fence fraction of the ring fence amount, and

(b) the sum equal to the standard fraction of the remaining amount.

(5) For the purposes of subsection (4)(a) "the ring fence amount" is the amount given by the formula--

---

where--

  • MR is the sum equal to the appropriate fraction of the upper relevant maximum amount,

  • PR is so much of the profits for the accounting period as consist of ring fence profits, and

  • IR is so much of the basic profits for that period as consist of ring fence profits,

and the appropriate fraction is the fraction of the profits for the accounting period that consist of ring fence profits.

(6) For the purposes of subsection (4)(b) "the remaining amount" is the amount given by the formula--

---

where--

  • MNR is the sum equal to the appropriate fraction of the upper relevant maximum amount,

  • PNR is so much of the profits for the accounting period as do not consist of ring fence profits, and

  • INR is so much of the basic profits for that period as do not consist of ring fence profits,

and the appropriate fraction is the fraction of the profits for the accounting period that do not consist of ring fence profits.

(7) In this section "ring fence profits" has the same meaning as in Chapter 5 of Part 12 of ICTA (see section 502(1) and (1A)).



Inheritance tax

4 Rates and rate bands for 2010-11

(1) For the Table in Schedule 1 to IHTA 1984 substitute--

" Table
Portion of valueRate of tax
Lower limit (£)Upper limit (£)Per cent.
0350,000Nil
350,000--40 "

(2) The amendment made by subsection (1) has effect in relation to chargeable transfers made on or after 6th April 2010.

(3) That amendment does not affect the application of section 8 of IHTA 1984 (indexation) by virtue of the difference between the retail prices index for September 2009, or September in any later year, and that for September in the following year.

(4) But that section does not have effect by virtue of the difference between the retail prices index for September 2008 and that for September 2009.



Alcohol and tobacco

5 Rates of duty on alcoholic liquor

(1) The Alcoholic Liquor Duties Act 1979 (c. 4) is amended as follows.

(2) In section 36(1AA)(a) (standard rate of duty on beer), for "£13.26" substitute "£13.71".

(3) In section 62(1A) (rates of duty on cider)--

(a) in paragraph (a) (rate of duty per hectolitre in the case of sparkling cider of a strength exceeding 5.5 per cent), for "£166.70" substitute "£172.33",

(b) in paragraph (b) (rate of duty per hectolitre in the case of cider of a strength exceeding 7.5 per cent which is not sparkling cider), for "£38.43" substitute "£39.73", and

(c) in paragraph (c) (rate of duty per hectolitre in any other case), for "£25.61" substitute "£26.48".

(4) For Part 1 of the Table in Schedule 1 substitute--



" Part 1 Wine and made-wine of a strength not exceeding 22 per cent
Description of wine or made-wineRates of duty per hectolitre
£
Wine or made-wine of a strength not exceeding 4 per cent54.85
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent75.42
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not sparkling177.99
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent172.33
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent227.99
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent237.31 " .

(5) The amendments made by this section are deemed to have come into force on 26th March 2007.

6 Rates of tobacco products duty

(1) For the Table in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute--

" Table
1. CigarettesAn amount equal to 22 per cent of the retail price plus £108.65 per thousand cigarettes.
2. Cigars£158.24 per kilogram.
3. Hand-rolling tobacco£113.74 per kilogram.
4. Other smoking tobacco and chewing tobacco£69.57 per kilogram. "

(2) The amendment made by subsection (1) is deemed to have come into force at 6 p.m. on 21st March 2007.



Gambling

7 Rates of gaming duty

(1) For the Table in section 11(2) of FA 1997 substitute--

" Table
Part of gross gaming yieldRate
The first £1,836,50015 per cent.
The next £1,266,00020 per cent.
The next £2,217,50030 per cent.
The next £4,680,00040 per cent.
The remainder50 per cent. "

(2) In section 11(3) of that Act, for "40 per cent" substitute "50 per cent".

(3) The amendments made by this section have effect in relation to accounting periods beginning on or after 1st April 2007.

8 Remote gaming duty

(1) Schedule 1 contains amendments of and relating to Part 2 of BGDA 1981 (gaming duties) imposing a remote gaming duty.

(2) The amendments made by Schedule 1 have effect in respect of the provision of facilities on or after a date appointed by the Commissioners for Her Majesty's Revenue and Customs by order made by statutory instrument.

9 Amusement machine licence duty

(1) Section 23 of BGDA 1981 (amount of duty payable on amusement machine licence) is amended as follows.

(2) In subsection (3), in the definition of "Category C", in paragraph (ii)(b) for "£25" substitute "£35".

(3) After subsection (6) insert--

" (7) The Commissioners may by order substitute for a sum for the time being specified in subsection (3) such higher sum as they consider appropriate. "

(4) Subsection (2) is deemed to have come into force on 22nd March 2007.



Environment

<<<< >>>>

10 Fuel duty rates and rebates

(1) The Hydrocarbon Oil Duties Act 1979 (c. 5) is amended as follows.

(2) In section 6(1A) (hydrocarbon oil: rates of duty)--

(a) in paragraph (a) (ultra low sulphur petrol), for "£0.4835" substitute "£0.5035",

(b) in paragraph (aa) (sulphur-free petrol), for "£0.4835" substitute "£0.5035",

(c) in paragraph (b) (light oil other than ultra low sulphur petrol and sulphur-free petrol), for "£0.5768" substitute "£0.6007",

(d) in paragraph (c) (ultra low sulphur diesel), for "£0.4835" substitute "£0.5035",

(e) in paragraph (ca) (sulphur-free diesel), for "£0.4835" substitute "£0.5035", and

(f) in paragraph (d) (heavy oil other than ultra low sulphur diesel and sulphur-free diesel), for "£0.5468" substitute "£0.5694".

(3) In section 6AA(3) (biodiesel), for "£0.2835" substitute "£0.3035".

(4) In section 6AD(3) (bioethanol), for "£0.2835" substitute "£0.3035".

(5) In section 8(3) (road fuel gas)--

(a) in paragraph (a) (natural road fuel gas), for "£0.1081" substitute "£0.1370", and

(b) in paragraph (b) (other road fuel gas), for "£0.1221" substitute "£0.1649".

(6) In section 11(1) (rebate on heavy oil)--

(a) in paragraph (a) (fuel oil), for "£0.0729" substitute"£0.0929",

(b) in paragraph (b) (gas oil which is not ultra low sulphur diesel), for "£0.0769" substitute "£0.0969", and

(c) in paragraph (ba) (ultra low sulphur diesel), for "£0.0769" substitute "£0.0969".

(7) In section 13A(1) (rebate on unleaded petrol), for "£0.0617" substitute "£0.0642".

(8) In section 14(1) (rebate on light oil for use as furnace oil), for "£0.0729" substitute "£0.0929".

(9) The amendments made by this section come into force on 1st October 2007.

11 Rates of vehicle excise duty

(1) Schedule 1 to VERA 1994 (annual rates of duty) is amended as follows.

(2) In paragraph 1 (general)--

(a) in sub-paragraph (2) (vehicle not covered elsewhere in Schedule otherwise than with engine cylinder capacity not exceeding 1,549cc), for "£175" substitute "£180", and

(b) in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with engine cylinder capacity not exceeding 1,549cc), for "£110" substitute "£115".

(3) Paragraph 1B (graduated rates for light passenger vehicles) is amended as follows.

(4) For the words from "Table A" to "date," substitute "the following table".

(5) For ", or is liable to the standard rate or the premium" substitute "or is liable to the standard".

(6) For Tables A and B substitute--

" Table
CO2 emissions figureRate
(1)(2)(3)(4)
ExceedingNot exceedingReduced rateStandard rate
g/kmg/km££
1001201535
12015095115
150165120140
165185145165
185225190205
225--285300

The table has effect in relation to vehicles first registered before 23rd March 2006 as if--

(a)

in column (3), in the last row, "190" were substituted for "285", and

(b)

in column (4), in the last row, "205" were substituted for "300". "

(7) For paragraphs 1D and 1E substitute--

" The standard rate

1D A vehicle is liable to the standard rate of duty if it does not qualify for the reduced rate of duty. "

(8) In paragraph 1J (light goods vehicles)--

(a) in sub-paragraph (a) (vehicle which is not lower-emission van), for "£170" substitute "£175", and

(b) in sub-paragraph (b) (lower-emission van), for "£110" substitute "£115".

(9) In paragraph 2(1) (motorcycles)--

(a) in paragraph (b) (motorbicycle and engine's cylinder capacity more than 150cc but not more than 400cc), for "£31" substitute "£32",

(b) in paragraph (c) (motorbicycle and engine's cylinder capacity more than 400cc but not more than 600cc), for "£46" substitute "£47", and

(c) in paragraph (d) (any other case), for "£62" substitute "£64".

(10) The amendments made by this section have effect in relation to licences taken out on or after 22nd March 2007.

12 Rates of air passenger duty

(1) Section 30 of FA 1994 (rates of air passenger duty) is amended as follows.

(2) In subsection (3A) (destinations in EEA States and qualifying territories etc)--

(a) in paragraph (a) (standard class travel), for "£5" substitute "£10", and

(b) in paragraph (b) (any other case), for "£10" substitute "£20".

(3) In subsection (4) (other destinations)--

(a) in paragraph (a) (standard class travel), for "£20" substitute "£40", and

(b) in paragraph (b) (any other case), for "£40" substitute "£80".

(4) The amendments made by this section have effect in relation to any carriage of a passenger on an aircraft which begins on or after 1st February 2007.

(5) But if the amount of duty due from any operator in the accounting period ending before 21st March 2007 increased as a result of those amendments, the operator is to pay the amount of that increase as if it became due in the first accounting period ending after that day.

(6) Expressions which are used in subsection (5) and in the Air Passenger Duty Regulations 1994 (S.I. 1994/1738) have the same meaning in that subsection as in those regulations.

13 Rates of climate change levy

(1) For the Table in paragraph 42(1) of Schedule 6 to FA 2000 substitute--

" Table
Taxable commodity suppliedRate at which levy payable if supply is not a reduced-rate supply
Electricity£0.00456 per kilowatt hour
Gas supplied by a gas utility or any gas supplied in a gaseous state that is of a kind supplied by a gas utility£0.00159 per kilowatt hour
Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state£0.01018 per kilogram
Any other taxable commodity£0.01242 per kilogram " .

(2) The amendment made by subsection (1) has effect in relation to supplies treated as taking place on or after 1st April 2008.

14 Rate of aggregates levy

(1) In section 16(4) of FA 2001 (rate of aggregates levy), for "£1.60" substitute "£1.95".

(2) The amendment made by subsection (1) has effect in relation to aggregate subjected to commercial exploitation on or after 1st April 2008.

15 Rates of landfill tax

(1) Section 42 of FA 1996 (amount of landfill tax) is amended as follows.

(2) In--

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