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Income Tax (Earnings and Pensions) Bill


Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 2 — Other enactments

    508

 

                    “(b)                      the relevant employment is both—

                           (i)                          employed earner’s employment, and

                           (ii)                         an employment, other than an excluded employment,

for the purposes of the benefits code (see Chapter 2 of

Part 3 of ITEPA 2003),”.

5

          (4)      In subsection (1)(c) for “emolument” substitute “general earnings”.

          (5)      In subsection (1), in the words after paragraph (c) for “emolument”

substitute “general earnings”.

          (6)      In subsection (2)(b) for “emolument” substitute “general earnings”.

          (7)      In subsection (4)—

10

              (a)             for “emolument” substitute “general earnings”;

              (b)             for “it” substitute “them”.

          (8)      In subsection (6) for “emolument” substitute “general earnings”.

          (9)      For subsection (7) substitute—

              “(7)                In calculating for the purposes of this section the amount of general

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earnings received by an earner from an employment, a deduction

under any of the excluded provisions is to be disregarded.

                              This subsection does not apply in relation to a deduction if

subsection (7A) applies in relation to it.

              (7A)                Where—

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                    (a)                   a deduction in respect of a matter is allowed under an

excluded provision, and

                    (b)                   the amount deductible is at least equal to the whole of any

corresponding amount which would (but for this section) fall

by reference to that matter to be included in the general

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earnings mentioned in subsection (7),

                              the whole of the corresponding amount shall be treated as not

included.

              (7B)                For the purposes of subsections (7) and (7A) “excluded provision”

means—

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                    (a)                   any provision of Chapter 2 of Part 5 of ITEPA 2003

(deductions for employee’s expenses) other than section 352

(limited deduction for agency fees paid by entertainers), and

                    (b)                   any provision of Chapter 5 of Part 5 of ITEPA 2003

(deductions for earnings representing benefits or reimbursed

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expenses).”

          (10)     For subsection (8)(a) substitute—

                    “(a)                      modify the effect of subsections (7) and (7A) above by

amending subsection (7B) so as to include any enactment

contained in the Income Tax Acts within the meaning of

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“excluded provision”; or”.

          (11)     In subsection (8)(b)—

              (a)             for “subsection (7)” substitute “subsections (7) to (7B)”;

              (b)             for “under Schedule E” substitute “on employment income”.

          (12)     In subsection (9)(a) for “emoluments” substitute “general earnings”.

45

          (13)     Omit subsection (10).

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 2 — Other enactments

    509

 

  196     (1)      Amend section 10ZA (liability of third party provider of benefits in kind) as

follows.

          (2)      In subsection (1)(a) for “an emolument” substitute “general earnings”.

          (3)      Amend subsection (1)(b) as follows—

              (a)             for “the emolument, in so far as it is one in respect of which”

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substitute “the general earnings, in so far as they are ones in respect

of which”;

              (b)             for “consists” substitute “consist”.

          (4)      In subsection (2), in the words after paragraph (b) for “an emolument”

substitute “general earnings”.

10

          (5)      In subsection (6) for “section 168(4) of the Income and Corporation Taxes Act

1988” substitute “section 721(5) of ITEPA 2003”.

  197     (1)      Amend section 10ZB (non-cash vouchers provided by third parties) as

follows.

          (2)      In subsection (2)(a) for the words from “employment” to the end of the

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paragraph substitute “employment which is an excluded employment for

the purposes of the benefits code, and”.

          (3)      In subsection (2)(b) for “if that Chapter did apply to that employment”

substitute “if that employment were not an excluded employment”.

          (4)      In subsection (2), in the words following paragraph (b) for “as if that

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employment were employment to which that Chapter applied” substitute

“as if that employment were not an excluded employment”.

          (5)      In subsection (3) for “section 141 of the Income and Corporation Taxes Act

1988” substitute “section 84 of ITEPA 2003”.

  198     (1)      Amend section 10A (Class 1B National Insurance contributions) as follows.

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          (2)      In subsection (1) for “emoluments” substitute “general earnings”.

          (3)      In subsection (2)(a) for “the emoluments included” substitute “the general

earnings included”.

          (4)      In subsection (4) for “Emoluments are chargeable emoluments” substitute

“General earnings are chargeable emoluments”.

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          (5)      In subsection (5) for “emoluments” in both places where it occurs substitute

“general earnings”.

  199     (1)      Amend section 121(1) (interpretation of Parts 1 to 6 and supplementary

provisions) as follows.

          (2)      Insert the following definitions in the appropriate places—

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                                      “‘the benefits code’ has the meaning given by section 63(1) of

ITEPA 2003;”.

                                      “‘the employment income Parts of ITEPA 2003’ means Parts 2 to

7 of that Act;”.

                                      “‘excluded employment’ has the meaning given by section

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63(4) of ITEPA 2003;”.

                                      “‘general earnings’ has the meaning given by section 7 of ITEPA

2003 and accordingly sections 3 and 112 of this Act do not

apply in relation to the word ‘earnings’ when used in the

expression ‘general earnings’;”.

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Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 2 — Other enactments

    510

 

                                      “‘ITEPA 2003’ means the Income Tax (Earnings and Pensions)

Act 2003;”.

          (3)      In the definition of “PAYE settlement agreement” for “section 206A of the

Income and Corporation Taxes Act 1988” substitute “Chapter 5 of Part 11 of

ITEPA 2003”.

5

  200      In section 125(5)(a)(ii) (trade disputes) for “emoluments in pursuance of

section 203 of the Income and Corporation Taxes Act 1988 (PAYE)”

substitute “taxable earnings (as defined by section 10 of the Income Tax

(Earnings and Pensions) Act 2003) under PAYE regulations”.

  201     (1)      Amend section 146(2) (interpretation of Part 10) as follows.

10

          (2)      In paragraph (b) of the definition of “unemployability supplement or

allowance”—

              (a)             in sub-paragraph (ii) for “section 315(1) of the Income and

Corporation Taxes Act 1988” substitute “section 641 of the Income

Tax (Earnings and Pensions) Act 2003”;

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              (b)             omit sub-paragraph (v).

          (3)      In paragraph (b) of the definition of “war disablement pension”, for

“subsection (1) of section 315 of the Income and Corporation Taxes Act 1988”

substitute “any of paragraphs (a) to (f) of section 641(1) of the Income Tax

(Earnings and Pensions) Act 2003”.

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          (4)      In the definition of “war widow’s pension” for “subsection (2)(e) of the said

section 315” substitute “section 641(1)(e) or (f) of the Income Tax (Earnings

and Pensions) Act 2003”.

  202      In section 159(1) (interpretation of Part 11), in paragraph (a) of the definition

of “employee” for “emoluments chargeable to income tax under Schedule E”

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substitute “general earnings (as defined by section 7 of the Income Tax

(Earnings and Pensions) Act 2003)”.

  203      In section 167(1) (interpretation of Part 12), in paragraph (a) of the definition

of “employee” for ““emoluments chargeable to income tax under Schedule

E” substitute “general earnings (as defined by section 7 of the Income Tax

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(Earnings and Pensions) Act 2003)”.

  204      In Schedule 1 (supplementary provisions relating to contributions of Classes

1, 1A, 1B, 2 and 3)—

              (a)             in paragraph 6(1)(a) for “regulations under section 203 of the Income

and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE

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regulations”;

              (b)             in paragraph 6(1)(b) for “regulations under that section” substitute

“PAYE regulations”;

              (c)             in paragraph 6(7) for “regulations made under section 203 of the

Income and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE

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regulations”.

              (d)             in paragraph 7(1)(a) for “regulations made by the Inland Revenue

under section 203(2) or” substitute “PAYE regulations or regulations

made under section”; and

              (e)             in paragraph 7B(1) for “regulations under section 203 of the Income

45

and Corporation Taxes Act 1988 (PAYE)” substitute “PAYE

regulations”.

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 2 — Other enactments

    511

 

Social Security Administration (Northern Ireland) Act 1992 (c. 8)

  205     (1)      Section 139B(6) of the Social Security Administration (Northern Ireland) Act

1992 (effect of alterations affecting state pension credit) is amended as

follows.

          (2)      In paragraph (b) of the definition of “war disablement pension” for

5

“subsection (1) of section 315 of the Income and Corporation Taxes Act 1988

(c. 1)” substitute “any of paragraphs (a) to (f) of section 641(1) of the Income

Tax (Earnings and Pensions) Act 2003”.

          (3)      In paragraph (b) of the definition of “war widow’s or widower’s pension”

for “section 315(2)(e) of the Income and Corporation Taxes Act 1988”

10

substitute “section 641(1)(e) or (f) of the Income Tax (Earnings and Pensions)

Act 2003”.

  206      In section 142(5) of that Act (destination of national insurance

contributions)—

              (a)             in paragraph (c) for “emoluments” substitute “general earnings”;

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              (b)             in paragraph (ca) for “emoluments” substitute “general earnings”.

Taxation of Chargeable Gains Act 1992 (c. 12)

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

  208      In section 9(2) (residence, including temporary residence)—

              (a)             for “Section 207 of the Taxes Act” substitute “Sections 42 and 43 of

20

ITEPA 2003”;

              (b)             for “it applies” substitute “they apply”; and

              (c)             for “that section” substitute “section 42 of that Act”.

  209      In section 11(1) (visiting forces, agents-general etc.)—

              (a)             for “section 323(1) of the Taxes Act” substitute “section 303(1) of

25

ITEPA 2003”; and

              (b)             for “subsection (2) of section 323 and subsections (4) to (8) of that

section shall apply accordingly” substitute “section 303(2) to (6) of

that Act and section 323(2) of the Taxes Act”.

  210     (1)      Amend section 120 (increased expenditure by reference to tax charged in

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relation to shares etc.) as follows.

          (2)      For subsection (1) substitute—

              “(1)                Subsection (1A) applies where—

                    (a)                   a person (“the employee”) has acquired shares or an interest

in shares as mentioned in section 447(1) of ITEPA 2003, and

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                    (b)                   an amount counts as employment income of the employee

under Chapter 4 of Part 7 of that Act in respect of the shares.

              (1A)                On the first disposal of the shares after the acquisition occurs, the

employment income amount shall be treated for the purposes of

section 38(1)(a) as consideration given by the person making the

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disposal for the acquisition of the shares.

              (1B)                For the purposes of subsections (1) and (1A)—

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 2 — Other enactments

    512

 

                    (a)                   the “employment income amount” means the amount

counting as employment income of the employee under that

Chapter in respect of the shares, and

                    (b)                   it is immaterial whether the disposal of the shares mentioned

in subsection (1A) is made by the employee or another

5

person.”

          (3)      In subsection (3)—

              (a)             for “is chargeable to tax by virtue of section 162(5) of the Taxes Act

substitute “is treated as earnings under section 195(2) of ITEPA

2003”, and

10

              (b)             for “so chargeable” substitute “so treated as earnings”.

          (4)      In subsection (4)—

              (a)             for “chargeable to tax under section 135(1) or (6) of the Taxes Act”

substitute “counting as employment income under section 476 or 477

of ITEPA 2003”, and

15

              (b)             for “so chargeable to tax” substitute “so counting as employment

income”.

          (5)      In subsection (5A)—

              (a)             for “is chargeable to tax under section 140A of the Taxes Act”

substitute “counts as employment income under Chapter 2 of Part 7

20

of ITEPA 2003”, and

              (b)             for “so chargeable” substitute “so counting as employment income”.

          (6)      In subsection (5B)—

              (a)             for “is chargeable to tax under section 140D of the Taxes Act”

substitute “counts as employment income under Chapter 3 of Part 7

25

of ITEPA 2003”, and

              (b)             for “so chargeable” substitute “so counting as employment income”.

          (7)      Omit subsection (6).

          (8)      For subsection (7) substitute—

              “(7)                 Each of the provisions of this section mentioned in the first column

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of the following table is to be construed as if it were contained in the

Chapter of ITEPA 2003 specified in the corresponding entry in the

second column—

 

Provision of this section

Chapter of ITEPA 2003

 
 

subsections (1), (1A) and

Chapter 4 of Part 7

 

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(1B)

  
 

subsection (3)

Chapter 8 of Part 3

 
 

subsection (4)

Chapter 5 of Part 7

 
 

subsection (5A)

Chapter 2 of Part 7

 
 

subsection (5B)

Chapter 3 of Part 7;

 

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                              and subsection (5) of this section is to be construed as one with

section 138 of the Taxes Act.”

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 2 — Other enactments

    513

 

          (9)      After subsection (7) insert—

              “(7A)                In relation to events that gave rise to amounts chargeable to income

tax before 6th April 2003, this section is to be read as if any reference

to an amount mentioned in the first column of the following table

included a reference to an amount mentioned in the corresponding

5

entry in the second column—

 

Amount mentioned in this section

Amount chargeable before

 
  

6th April 2003

 
 

an amount counting as employment

an amount chargeable to

 
 

income under Chapter 4 of Part 7 of

tax under Chapter 2 of Part

 

10

 

ITEPA 2003

3 of the Finance Act 1988

 
 

an amount treated as earnings

an amount chargeable to

 
 

under section 195(2) of ITEPA 2003

tax under section 162(5) of

 
  

the Taxes Act

 
 

an amount counting as employment

an amount chargeable to

 

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income under section 476 or 477 of

tax under section 135(1) or

 
 

ITEPA 2003

(6) of the Taxes Act

 
 

an amount which counts as

an amount chargeable to

 
 

employment income under Chapter

tax under section 140A of

 
 

2 of Part 7 of ITEPA 2003

the Taxes Act

 

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an amount which counts as

an amount chargeable to

 
 

employment income under Chapter

tax under section 140D of

 
 

3 of Part 7 of ITEPA 2003

the Taxes Act.”

 

          (10)     In subsection (8) for “section 140A of the Taxes Act” substitute “Chapter 2 of

Part 7 of ITEPA 2003”.

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  211     (1)      Amend section 149B (employee incentive schemes: conditional interests in

shares) as follows.

          (2)      In subsection (1) for “section 140A of the Taxes Act” substitute “Chapter 2 of

Part 7 of ITEPA 2003 (conditional interests in shares)”.

          (3)      In subsection (2) for “section 140B of the Taxes Act” substitute “section 429

30

of ITEPA 2003”.

          (4)      In subsection (4)—

              (a)             for “section 140A of the Taxes Act” substitute “Chapter 2 of Part 7 of

ITEPA 2003”, and

              (b)             for “that section” substitute “that Chapter”.

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  212      After section 149B insert—

       “149C  Priority share allocations

Section 17(1) shall not apply to an acquisition of shares if section 542

or 544 of ITEPA 2003 applies in relation to it.”

 

 

Income Tax (Earnings and Pensions) Bill
Schedule 6 — Consequential Amendments
Part 2 — Other enactments

    514

 

  213      In section 222(8D)(b) (relief on disposal of private residence), for “the same

meanings as they have for the purposes of Chapter II of Part V of the Taxes

Act” substitute “the meanings given by Chapter 2 of Part 3 of ITEPA 2003”.

  214      In section 236A (employee share ownership plans), and in the sidenote and

in the italic heading immediately before the section, for “employee share

5

ownership” wherever it occurs substitute “share incentive”.

  215      In section 238(2)(a) (approved profit sharing and share option schemes), for

“is chargeable to income tax” substitute “counts as employment income (or

was chargeable to income tax for 2002-03 or an earlier year of assessment)”.

  216      After section 238 insert—

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       “238A              Approved share schemes and share incentives

              (1)             Schedule 7D (approved share schemes and share incentives) shall

have effect.

              (2)             Schedule 7D relates—

                    (a)                   in Part 1, to approved share incentive plans (SIPs) (see section

15

488 of ITEPA 2003),

                    (b)                   in Part 2, to approved SAYE option schemes (see section 516

of that Act),

                    (c)                   in Part 3, to approved CSOP schemes (CSOPs) (see section

521 of that Act), and

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                    (d)                   in Part 4, to enterprise management incentives (see section

527 of that Act).”

  217      After section 263 insert—

       “263ZA  Former employees: employment-related liabilities

              (1)             This section applies if—

25

                    (a)                   a deduction of the amount of one or more deductible

payments may be made under section 555 of ITEPA 2003

(former employee entitled to deduction from total income in

respect of liabilities related to the former employment) when

computing a former employee’s total income for a tax year,

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and

                    (b)                   the total amount which may be deducted exceeds the total

income for that year.

              (2)             In this section “excess relief” means the amount of the difference

between—

35

                    (a)                   the total amount which may be deducted, and

                    (b)                   the total income.

              (3)             The amount of the excess relief may be treated as an allowable loss

accruing to the former employee for that tax year.

                              This subsection applies only if the former employee makes a claim

40

for the purpose.

              (4)             But no relief is available under subsection (3) in respect of any

amount of the excess relief that exceeds the maximum amount.

 

 

 
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