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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 1 — Income and Corporation Taxes Act 1988

    474

 

              “(1A)                This subsection applies to—

                    (a)                   the charge under Schedule D,

                    (b)                   the charge under Part 9 of ITEPA 2003 (pension income) in

respect of—

                           (i)                          income to which section 573, 605, 609, 610, 611, 623 or

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629 of that Act applies,

                           (ii)                         any annual payment to which section 633 of that Act

applies which is made by or on behalf of a person who

is outside the United Kingdom, or

                           (iii)                        income to which section 583 of that Act applies if the

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paying scheme (see subsection (3) of that section) is a

pilots’ benefit fund (see section 587 of that Act), and

                    (c)                   the charge under Part 10 of ITEPA 2003 (social security

income) in respect of benefits to which section 678 of that Act

applies (foreign benefits).”

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  49       In section 347A(5) (annual payments: general rule) for “, 68(1)(b) or 192(3)”

substitute “or 68(1)(b) of this Act or section 355 of ITEPA 2003 (deductions

for certain payments by non-domiciled employees with foreign

employers)”.

  50      (1)      Amend section 348 (payments out of profits or gains brought into charge to

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income tax: deduction of tax) as follows.

          (2)      In subsection (1) for “charged with tax under Case III of Schedule D, not

being interest,” substitute “to which this subsection applies”.

          (3)      After subsection (1) insert—

              “(1A)                Subsection (1) applies to any annuity or other annual payment, not

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being interest—

                    (a)                   which is charged with tax under Case III of Schedule D,

                    (b)                   which is charged with tax under Part 9 of ITEPA 2003

(pension income) because section 605 of that Act applies to it

(retirement annuity contracts: annuities), or

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                    (c)                   which arises from a source in the United Kingdom and is

charged with tax under Part 9 of ITEPA 2003 because section

609, 610 or 611 of that Act applies to it (certain employment-

related annuities).”

  51      (1)      Amend section 349 (payments not out of profits or gains brought into charge

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to income tax, and annual interest) as follows.

          (2)      In subsection (1)(a) for “charged with tax under Case III of Schedule D, not

being interest” substitute “to which this paragraph applies”.

          (3)      After the first sentence of subsection (1) insert—

              “(1A)                Paragraph (a) of subsection (1) applies to any annuity or other

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annual payment, not being interest—

                    (a)                   which is charged with tax under Case III of Schedule D,

                    (b)                   which is charged with tax under Part 9 of ITEPA 2003

(pension income) because section 605 of that Act applies to it,

or

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                    (c)                   which arises from a source in the United Kingdom and is

charged with tax under Part 9 of ITEPA 2003 because section

609, 610 or 611 of that Act applies to it.”

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 1 — Income and Corporation Taxes Act 1988

    475

 

          (4)      Number the second sentence of subsection (1) as subsection (1B).

          (5)      In the new subsection (1B) for “This subsection” substitute “Subsection (1)”.

  52       In section 376(2) (qualifying borrowers and qualifying lenders) for the

words from “an office or employment” to “Schedule E” substitute “an office

or employment which would, but for some special exemption or immunity

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from tax, be a taxable employment under Part 2 of ITEPA 2003 (as defined

by section 66(3) of that Act)”.

  53       In section 391(2) (losses from trade etc. carried on abroad) for “, 192(2), (3) or

(4) or 196” substitute “of this Act or section 23, 355 or 615 of ITEPA 2003”.

  54      (1)      Amend section 392 (Case VI losses) as follows.

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          (2)      For subsection (1)(a) and (b) substitute—

                    “(a)                      that the amount of the loss sustained by him shall, as far as

may be, be deducted from or set off against the total of—

                           (i)                          the amount of any profits or gains arising from any

transaction in respect of which he is assessed for that

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year under that Case, and

                           (ii)                         the amount of any qualifying income on which tax is

charged under Part 9 of ITEPA 2003 (pension income)

for that year, and

                    (b)                      that any portion of the loss for which relief is not so given

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shall, as far may be, be carried forward and deducted from or

set off against the total of—

                           (i)                          the amount of any profits or gains arising from any

transaction in respect of which he is assessed under

that Case for any subsequent year of assessment, and

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                           (ii)                         the amount of any qualifying income on which tax is

charged under Part 9 of ITEPA 2003 for the

subsequent year of assessment.”

          (3)      For subsection (3) substitute—

              “(3)                Any relief under this section by way of the carrying forward of the

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loss shall be given as far as possible from the first subsequent

assessment in respect of—

                    (a)                   any profits or gains arising from any transaction in respect of

which he is assessed under Case VI of Schedule D for any

year, or

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                    (b)                   any qualifying income on which tax is charged under Part 9

of ITEPA 2003 for any year, and

                              so far as it cannot be so given, then from the next such assessment,

and so on.”

          (4)      After subsection (5) insert—

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              “(6)                For the purposes of subsection (1)(a)(ii) and (b)(ii) and subsection

(3)(b) income is “qualifying income” if—

                    (a)                   section 583 of ITEPA 2003 applies to it and the paying scheme

(see subsection (3) of that section) is a pilots’ benefit fund (see

section 587 of ITEPA 2003), or

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                    (b)                   section 623 of ITEPA 2003 applies to it.”

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 1 — Income and Corporation Taxes Act 1988

    476

 

  55      (1)      Amend section 418 (“distribution” to include certain expenses of close

companies) as follows.

          (2)      In subsection (3)(a)—

              (a)             for “to which Chapter II of Part V applies” substitute “to which Part

3 of ITEPA 2003 applies (earnings and benefits etc. treated as

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employment income) without the exclusion in section 216 of that Act

(provisions not applicable to lower-paid employment)”; and

              (b)             for “sections 154 to 165” substitute “Chapters 6 to 10 of Part 3 and

section 223 of that Act (cars and vans, loans, shares, other benefits,

and payments on account of director’s tax)”.

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          (3)      In subsection (3)(b) for “section 145” substitute “Chapter 5 of Part 3 of ITEPA

2003”.

          (4)      In subsection (4) for “Chapter II of Part V” substitute “Chapters 6 to 10 of

Part 3 of ITEPA 2003”.

  56       In section 545(1)(a) (capital redemption policies) after “Schedule D” insert

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“or under Part 9 of ITEPA 2003 (pension income) because section 609, 610 or

611 applies to them (certain employment-related annuities)”.

  57       In section 550(7) (relief where gain charged at a higher rate) for “, 36 or 148”

substitute “or 36 of this Act or any amount which counts as employment

income under section 403 of ITEPA 2003 (payments and benefits on

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termination of employment etc.)”.

  58       In section 559(1A) (sub-contractors in the construction industry) for

“chargeable to income tax under Schedule E by virtue of section 134(1)”

substitute “treated as earnings from an employment by virtue of Chapter 7

of Part 2 of ITEPA 2003 (agency workers)”.

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  59       In section 561(6) (exceptions from section 559), for “the same meaning as in

Chapter II of Part V” substitute “the meaning given by section 67 of ITEPA

2003”.

  60       In section 565(2C)(a) (conditions to be satisfied by companies), for “the

meaning of Chapter II of Part V” substitute “the meaning given by section 67

30

of ITEPA 2003”.

  61       In section 566(1) (general powers to make regulations under Chapter IV) for

“regulations may be made under section 203” substitute “PAYE regulations

may be made”.

  62      (1)      Section 577 (business entertaining expenses) is amended as follows.

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          (2)      Omit subsection (1)(b) and the word “and” preceding it.

          (3)      In subsection (3) omit the words from “but where—” to the end of the

subsection.

  63       Omit section 579(1) (statutory redundancy payments).

  64       Omit section 580(3) (provisions supplementary to section 579(1)).

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  65       In section 580A(7)(b) (relief from tax on annual payments under certain

insurance policies) for “Schedule E” substitute “Parts 3 to 7 (employment

income) or Part 9 (pension income) of ITEPA 2003”.

  66      (1)      Amend section 585 (relief from tax on delayed remittances) as follows.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 1 — Income and Corporation Taxes Act 1988

    477

 

          (2)      In subsection (1) omit the words “, or under Case III of Schedule E,”.

          (3)      Omit subsection (9)(b) and the word “and” preceding it.

  67      (1)      Amend section 588 (training courses for employees) as follows.

          (2)      For subsections (1) and (2) substitute—

              “(1)                This section applies where a person (“the employer”) incurs

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retraining course expenses within the meaning of section 311 of

ITEPA 2003 (exemptions: retraining courses).”

          (3)      For paragraphs (a) and (b) of subsection (3) substitute—

                    “(a)                      an employer incurs expenditure in paying or reimbursing

retraining course expenses as mentioned in subsection (1)

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above; and

                    (b)                      by virtue of section 311 of ITEPA 2003, no liability to income

tax arises in respect of the payment or reimbursement,”.

          (4)      Omit subsection (5)(a).

          (5)      In subsection (5)(b) for the words from “such a failure” to the end of the

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paragraph substitute “a failure to meet a condition of the kind mentioned in

section 312(1)(b)(i) or (ii) of ITEPA 2003”.

          (6)      In subsection (6) for “comply with any provision of section 589(3) and (4)”

substitute “meet a condition in section 312(1)(b)(i) or (ii) of ITEPA 2003”.

  68       Omit section 589 (qualifying courses of training etc.).

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  69      (1)      Section 589A (counselling services for employees) is amended as follows.

          (2)      For subsection (1) substitute—

              “(1)                This section applies where expenditure (“relevant expenditure”)—

                    (a)                   is incurred in the provision of services to a person (“the

employee”) in connection with the cessation of the person’s

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office or employment, or

                    (b)                   is incurred in the payment or reimbursement of—

                           (i)                          fees for such provision, or

                           (ii)                         travelling expenses incurred in connection with such

provision,

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                              and (in either case) the relevant conditions are met.

              (1A)                 In subsection (1) above “the relevant conditions” means—

                    (a)                   conditions A to D for the purposes of section 310 of ITEPA

2003 (exemptions: counselling and other outplacement

services), and

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                    (b)                   in the case of travel expenses, condition E for those

purposes.”

          (3)      Omit—

              (a)             subsections (2) to (6), and

              (b)             subsection (10).

40

  70      (1)      Section 589B (qualifying counselling services etc.) is amended as follows.

          (2)      Omit subsections (1) to (4A).

          (3)      In subsection (5) omit “this section or”.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 1 — Income and Corporation Taxes Act 1988

    478

 

  71       In section 591D (provisions supplementary to section 591C) omit subsection

(6).

  72       For section 592(7) (exempt approved schemes) substitute—

              “(7)                Any contribution paid under the scheme shall be allowed to be

deducted from employment income for the year of assessment in

5

which the contribution is paid.

                              A deduction under this subsection may only be made once in respect

of the same contribution.

  73       In section 594(1) (exempt statutory schemes)—

              (a)             for the words “shall, in assessing tax under Schedule E, be allowed to

10

be deducted as an expense incurred in” substitute “shall be allowed

to be deducted from employment income for”;

              (b)             at the end insert—

                                          “A deduction under this section may only be made once in

respect of the same contribution.”

15

  74       Omit sections 595 and 596 (payments by employer to retirement benefits

scheme).

  75       Omit sections 596A to 596C (benefits under non-approved retirement

benefits schemes).

  76       Omit section 597 (charge to tax: pensions).

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  77       In section 599A (charge to tax: payments out of surplus funds) omit

subsections (5), (6) and (8).

  78       Omit section 600 (charge to tax: unauthorised payments to or for

employees).

  79      (1)      Amend section 606 (default of administrator of retirement benefit scheme)

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as follows.

          (2)      In subsection (9) after “this Chapter” insert “or Chapter 2 of Part 6 of ITEPA

2003 (benefits from non-approved pension schemes)”.

          (3)      In subsection (11)(b) after “this Chapter” insert “or Chapter 2 of Part 6 of

ITEPA 2003 (benefits from non-approved pension schemes)”.

30

  80      (1)      Amend section 607 (marine pilots: pilots’ benefit fund) as follows.

          (2)      In subsection (2)(a) for “597 to 600” substitute “598 to 599A”.

          (3)      In subsection (2)(b) for “under section 600” substitute “in accordance with

section 584 of ITEPA 2003 (unauthorised payments)”.

          (4)      For subsection (3)(a) substitute—

35

                    “(a)                      in section 592—

                           (i)                          subsections (4) to (6) shall be omitted; and

                           (ii)                         for subsection (7) there shall be substituted—

                        “(7)                           Any contribution paid under the scheme by a member

of the fund shall, in assessing tax under Schedule D, be

40

allowed to be deducted as an expense.”;”.

          (5)      In subsection (3)(b) for “sections 597 to 606 (except sections 601 to 603)”

substitute “sections 598 to 599A and sections 604 to 606”.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 1 — Income and Corporation Taxes Act 1988

    479

 

          (6)      Omit subsection (3)(b)(iv) and the word “and” preceding it.

  81       In section 608 (charge to tax on annuities paid out of superannuation funds

approved before 6 April 1980) omit subsection (4).

  82       In section 612(1) (interpretation etc. of Chapter) in the definition of

“remuneration”—

5

              (a)             in paragraph (a) for “in respect of which tax is chargeable under

Schedule E and which” substitute “which is chargeable to tax as

employment income and”; and

              (b)             in paragraph (b) for “section 148” substitute “Chapter 3 of Part 6 of

ITEPA 2003 (payments and benefits on termination of employment

10

etc.)”.

  83       In section 613 (Parliamentary pension funds) omit subsections (1) to (3).

  84       In section 614(3) (exemptions and reliefs in respect of income tax from

investments etc. of certain pension schemes) for “paragraph (b), (c), (d) or (f)

of subsection (2) of section 615” substitute “section 648, 649, 650 or 651 of

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ITEPA 2003”

  85       In section 615 (exemption from tax in respect of certain pensions) omit

subsections (1), (2), (4), (5) and (8).

  86       Omit subsection 616 (other overseas pensions).

  87      (1)      Amend section 617 (social security benefits and contributions) as follows.

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          (2)      Omit subsections (1) and (2).

          (3)      For subsection (4)(d) and (e) substitute—

                    “(d)                      as a deduction under section 336 of ITEPA 2003 (deductions

for expenses) from the taxable earnings from an office or

employment; or

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                    (e)                      as a deduction under section 332(3)(a) from the profits or fees

of the profession or vocation of a minister of religion, or a

deduction under section 351(1) of ITEPA 2003 from the

taxable earnings from an employment as such a minister.”.

  88       Omit section 617A (tax credits under Part 1 of Tax Credits Act 2002).

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  89       In section 624(2) (sponsored superannuation schemes and controlling

directors) for “Case I of Schedule E in respect of his emoluments” substitute

“section 15 of ITEPA 2003 in respect of his general earnings”.

  90      (1)      Amend section 638 (other restrictions on approval of a personal pension

scheme) as follows.

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          (2)      In subsection (7) for “emoluments” substitute “general earnings”.

          (3)      In subsection (11)—

              (a)             for “a savings-related share option scheme” substitute “an SAYE

option scheme”, and

              (b)             for “an employee share ownership plan” substitute “a share

40

incentive plan”.

          (4)      In subsection (12)—

              (a)             in paragraph (a), for “a savings-related share option scheme”

substitute “an SAYE option scheme”, and

              (b)             in paragraph (b)—

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Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 1 — Income and Corporation Taxes Act 1988

    480

 

                    (i)                   for “an employee share ownership plan” substitute “a share

incentive plan”, and

                    (ii)                  for “employee share ownership plan”, in the second place in

which it appears, substitute “share incentive plan”.

          (5)      In subsection (13)—

5

              (a)             omit the definition of “employee share ownership plan”, and

              (b)             for the definition of “savings-related share option scheme”

substitute—

                                                   ““SAYE option scheme” has the same meaning as in the

SAYE code (see section 516 of ITEPA 2003 (approved

10

SAYE option schemes)), and

                                                   “share incentive plan” has the same meaning as in the

SIP code (see section 488 of that Act (approved share

incentive plans)).”

  91      (1)      Section 643 (employer’s contributions and personal pension income etc.) is

15

amended as follows.

          (2)      Omit subsection (1).

          (3)      In subsection (5) omit “shall be assessable to tax under Schedule E (and

section 203 shall apply accordingly) and”.

  92      (1)      Amend section 644 (meaning of “relevant earnings”) as follows.

20

          (2)      In subsection (2)(a) for “emoluments chargeable under Schedule E”

substitute “general earnings”.

          (3)      In subsection (2)(b) for “emoluments of” substitute “earnings from”.

          (4)      In subsection (3) for “emoluments”, in both places where it occurs, substitute

“general earnings”.

25

          (5)      In subsection (4)(a) for “Schedule E” substitute “ITEPA 2003”.

          (6)      In subsection (4)(b) for “section 148” substitute “Chapter 3 of Part 6 of ITEPA

2003 (payments and benefits on termination of employment etc.)”.

          (7)      In each of the following provisions for “emoluments” substitute “general

earnings”—

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              (a)             subsection (5);

              (b)             subsection (6A);

              (c)             subsection (6D)(c);

              (d)             subsection (6E)(d).

  93      (1)      Amend section 645 (earnings from pensionable employment) as follows.

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          (2)      In subsection (3)(c) for “section 596(1)(a), (b) or (c)” substitute “section 387(2)

of ITEPA 2003 (meaning of non-approved retirement benefits scheme)”.

          (3)      In subsection (4A)—

              (a)             for “emoluments” substitute “earnings”;

              (b)             for “foreign emoluments within the meaning of section 192”

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substitute “earnings and amounts treated as earnings to which

subsection (4B) applies”;

              (c)             for “section 596(1)(a), (b) or (c)” substitute “section 387(2) of ITEPA

2003 (meaning of non-approved retirement benefits scheme)”.

          (4)      After subsection (4A) insert—

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