SCHEDULES

SCHEDULE 6U.K.Consequential Amendments

Part 1U.K.Income and Corporation Taxes Act 1988

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

F12U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3U.K.In section 4(1) (construction of references in Income Tax Acts to deduction of tax) for “in pursuance of section 203” substitute “ under PAYE regulations ”.

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6U.K.Omit section 19 (Schedule E).

7U.K.In section 21A(2) (computation of amount chargeable)—

(a)for “sections 588 and 589” substitute “ section 588 ”;

(b)for “sections 589A and 589B” substitute “ section 589A ”;

(c)for “1989 (deductions in respect of certain emoluments)” substitute “ 1989 (Schedule D: computation) ”.

8U.K.Omit section 58 (foreign pensions).

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11(1)Amend section 84A (costs of establishing share option or profit sharing schemes: relief from corporation tax) as follows.U.K.

(2)After subsection (3) insert—

“(3A)In this section, “share option scheme” means—

(a)an SAYE option scheme within the meaning of the SAYE code (see section 516(4) of ITEPA 2003 (approved SAYE option schemes)), or

(b)a CSOP scheme within the meaning of the CSOP code (see section 521(4) of that Act (approved CSOP schemes)).”

(3)In subsection (4), at the end add “to this Act or under Schedule 3 or 4 to ITEPA 2003 (approved SAYE option schemes and approved CSOP schemes)”.

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14U.K.Omit sections 131 to 134 (miscellaneous provisions relating to the Schedule E charge).

15U.K.Omit sections 135 to 137 (provisions relating to gains by directors and employees from share options).

16(1)Amend section 138 (share acquisitions by directors and employees) as follows.U.K.

(2)In subsection (1)(b) for “Schedule E” substitute “ the employment income Parts of ITEPA 2003 ”.

(3)In subsection (4)(b) for “Case I of Schedule E” substitute “ section 15 or 21 of ITEPA 2003 (earnings of employee resident and ordinarily resident in the UK) ”.

17U.K.Omit section 140 (further interpretation of sections 135 to 139).

18U.K.Omit sections 140A to 140H (further provisions relating to share acquisitions by directors and employees).

19U.K.Omit sections 141 to 144 (vouchers and credit-tokens).

20U.K.Omit section 144A (payments received free of tax).

21U.K.Omit sections 145 to 147 (living accommodation).

22U.K.Omit sections 148 to 151A (payments on retirement, sick pay and certain social security benefits).

23U.K.For the sidenote to section 152 (notification of amount taxable under section 151) substitute “Notification of taxable amount of certain benefits”.

24U.K.Omit sections 153 to 159AC and sections 160 to 168G (employees earning £8,500 or more and directors: expenses and benefits in kind).

25U.K.Omit section 185 (approved share option schemes).

26(1)Amend section 186 (approved profit sharing schemes) as follows.U.K.

(2)In subsection (3)—

(a)omit “the participant shall be chargeable to income tax under Schedule E for the year of assessment in which the entitlement arises on”, and

(b)at the end add “ counts as employment income of the participant for the year of assessment in which the entitlement arises ”.

(3)In subsection (4)—

(a)omit “the participant shall be chargeable to income tax under Schedule E for the year of assessment in which the disposal takes place on”, and

(b)at the end add “ counts as employment income of the participant for the year of assessment in which the disposal takes place ”.

(4)In subsection (5)(a), for the words from “chargeable to income tax” to “those shares” substitute “entitled to a capital receipt (within the meaning of subsection (3) above) which is referable to those shares and—

(i)an amount calculated by reference to that capital receipt counts as his employment income by virtue of subsection (3) above, or

(ii)if the entitlement to the capital receipt arose before 6th April 2003, he was chargeable to income tax by virtue of that subsection (as it had effect before that date) in respect of that capital receipt,”.

27U.K.In section 187 (interpretation of sections 185 and 186 and Schedules 9 and 10) omit subsections (1) to (4), (6) and (7), except so far as relating to profit sharing schemes.

28U.K.Omit the following provisions (which give relief from income tax on various kinds of income)—

(a)section 187A;

(b)sections 189 to 198;

(c)sections 199 to 202.

29U.K.Omit sections 202A and 202B (assessment on receipts basis).

30U.K.Omit sections 203 to 204 (pay as you earn).

31U.K.Omit sections 205 and 206 (assessments).

32U.K.Omit section 206A (PAYE settlement agreements).

33U.K.Omit section 207 (disputes as to domicile or ordinary residence).

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35U.K.In section 257C(2A) (indexation of amounts in sections 257 and 257A) for “section 203” substitute “ PAYE regulations ”.

36U.K.After section 266 insert—

“266ALife assurance premiums paid by employer

(1)This section applies if—

(a)pursuant to a non-approved retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for or in respect of any employee of that employer, and

(b)the payment is made under such an insurance or contract as is mentioned in section 266.

This section applies whether or not the accrual of the relevant benefits is dependent on any contingency.

(2)Relief, if not otherwise allowable, shall be given to that employee under section 266 in respect of the payment to the extent, if any, to which such relief would have been allowable to him if—

(a)the payment had been made by him, and

(b)the insurance or contract under which the payment is made had been made with him.

(3)For the purposes of subsection (1)(a)—

(a)a retirement benefits scheme is “non-approved” unless it is—

(i)an approved scheme,

(ii)a relevant statutory scheme, or

(iii)a scheme set up by a government outside the United Kingdom for the benefit of its employees or primarily for their benefit, and

(b)benefits are provided in respect of an employee if they are provided for the employee’s spouse, widow or widower, children, dependants or personal representatives.

(4)Sections 611, 611A and 612 apply for the purposes of this section as they apply for the purposes of Chapter 1 of Part 14.

(5)Section 388 of ITEPA 2003 (apportionment of payments in respect of more than one employee) applies in relation to a sum within subsection (1) as it applies in relation to a sum within section 386 of that Act (charge on payments to non-approved retirement benefits schemes).

(6)This section does not apply in any case where either of the following provisions of ITEPA 2003 provides for section 386 of that Act not to apply—

(a)section 389 (employments where earnings charged on remittance basis), and

(b)section 390 (non-domiciled employees with foreign employers).”

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39U.K.Omit section 313 (taxation of consideration for certain restrictive undertakings).

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41U.K.Omit sections 315 to 318 (pensions etc. paid in respect of military or war service etc.).

42U.K.Omit section 319 (crown servants: foreign service allowance).

43U.K.Omit section 321 (consuls and other official agents).

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46U.K.Omit section 330 (compensation for National-Socialist persecution).

47(1)Amend section 332 (expenditure and houses of ministers of religion) as follows.U.K.

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

F14(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Omit subsections (3A), (3B) and (4).

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52U.K.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 from tax, be a taxable employment under Part 2 of ITEPA 2003 (as defined by section 66(3) of that Act) ”.

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55(1)Amend section 418 (“distribution” to include certain expenses of close companies) as follows.U.K.

(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 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) ”.

(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 ”.

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

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71U.K.In section 591D (provisions supplementary to section 591C) omit subsection (6).

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74U.K.Omit sections 595 and 596 (payments by employer to retirement benefits scheme).

75U.K.Omit sections 596A to 596C (benefits under non-approved retirement benefits schemes).

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

77U.K.In section 599A (charge to tax: payments out of surplus funds) omit subsections (5), (6) and (8).

78U.K.Omit section 600 (charge to tax: unauthorised payments to or for employees).

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80F36(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .U.K.

F36(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F36(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F36(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F36(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

81U.K.In section 608 (charge to tax on annuities paid out of superannuation funds approved before 6th April 1980) omit subsection (4).

F3782U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

84U.K.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 ITEPA 2003 ”.

85U.K.In section 615 (exemption from tax in respect of certain pensions) omit subsections (1), (2), (4), (5) and (8).

86U.K.Omit section 616 (other overseas pensions).

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88U.K.Omit section 617A (tax credits under Part 1 of Tax Credits Act 2002 (c. 21)).

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91(1)Section 643 (employer’s contributions and personal pension income etc.) is amended as follows.U.K.

(2)Omit subsection (1).

(3)In subsection (5) omit “shall be assessable to tax under Schedule E (and section 203 shall apply accordingly) and”.

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96U.K.Omit sections 647 to 648A (personal pensions: unauthorised payments, contributions under unapproved arrangements and annuities).

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101U.K.In section 779(13)(e) (sale and lease-back: limitation on tax reliefs), for “a deduction from emoluments to be assessed under Schedule E made in pursuance of section 198(1)” substitute “ a deduction from earnings allowed under section 336 of ITEPA 2003 (expenses) ”.

102U.K.In section 781(4)(d) (assets leased to traders and others), for “a deduction from emoluments to be assessed under Schedule E made in pursuance of section 198(1)” substitute “ a deduction from earnings allowed under section 336 of ITEPA 2003 (expenses) ”.

103U.K.In section 794(2)(b) (requirements as to residence) for “income tax chargeable under Schedule E” substitute “ income tax on employment income ”.

104U.K.In section 824(4A) (repayment supplement: individuals and others) for “section 203” substitute “ PAYE regulations ”.

105(1)Amend section 828 (orders and regulations made by the Treasury or the Board) as follows.U.K.

(2)In subsection (1), for “subsection (2)” substitute “ subsections (2) and (5) ”.

(3)In subsection (3), for “subsection (4)” substitute “ subsections (4) and (5) ”.

(4)At the end add—

“(5)Nothing in this section applies in relation to any of the following (in relation to which section 717 of ITEPA 2003 applies)—

(a)any power of the Treasury or the Board to make any order or regulations under ITEPA 2003;

(b)any statutory instrument containing any order or regulations made by the Treasury or the Board under that Act.”

106U.K.In section 830 (territorial sea and designated areas) omit subsection (5).

107U.K.In section 831(3) (interpretation of ICTA) before the entry relating to “the Management Act” insert—

““ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;”.

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F47109U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

110U.K.Omit Schedules 6 and 6A (taxation of directors and others: cars and vans).

111U.K.Omit Schedules 7 and 7A (taxation of benefit of loans).

112(1)Amend Schedule 9 (approved share option schemes and profit sharing schemes) as follows.U.K.

(2)Omit Parts 1, 2 and 6 except so far as relating to profit sharing schemes.

(3)Omit Parts 3 and 4.

113(1)Amend Schedule 10 (further provisions relating to profit sharing schemes) as follows.U.K.

(2)In paragraphs 3(1) and 6(4) for “charging an individual to income tax under Schedule E” substitute “ under which an amount counts as employment income of an individual ”.

(3)In paragraph 7—

(a)in sub-paragraph (1), for “a participant in the scheme is chargeable to income tax under Schedule E” substitute “ an amount counts as employment income of the participant ”,

(b)in sub-paragraph (6), for the words from “section 203” to “Schedule E” substitute “ section 684 of ITEPA 2003 (PAYE regulations) and PAYE regulations as PAYE income payable to the recipient ”, and

(c)in sub-paragraph (7)(b)—

(i)omit second “to”, and

(ii)for “the participant is chargeable” substitute “ is charged on the participant ”.

114U.K.Omit Schedule 11 (payments and other benefits in connection with termination of employment etc.).

115U.K.Omit Schedule 11A (removal benefits and expenses).

116U.K.Omit Schedule 12 (foreign earnings).

117U.K.Omit Schedule 12AA (mileage allowances).

118U.K.Omit Schedule 12A (ordinary commuting and private travel).

119U.K.In Schedule 14 (modification of section 266 in certain cases), in paragraph 5 for “section 595” substitute “ section 386 of ITEPA 2003 (payments to non-approved retirement benefits schemes) ”.

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121(1)Amend paragraph 5B of Schedule 18 (group relief: equity holders and profits available for distribution) as follows.U.K.

(2)In sub-paragraph (4)(d) for “approved under Schedule 9” substitute “ which was approved ”.

(3)After sub-paragraph (4) insert—

“(4A)In sub-paragraph (4)(d) above—

“share option scheme” means—

(a)an SAYE option scheme within the meaning of the SAYE code (see section 516(4) of ITEPA 2003 (approved SAYE option schemes)), or

(b)a CSOP scheme within the meaning of the CSOP code (see section 521(4) of that Act (approved CSOP schemes)); and

“approved” means—

(a)in relation to an SAYE option scheme, approved under Schedule 3 to that Act (approved SAYE option schemes), and

(b)in relation to a CSOP scheme, approved under Schedule 4 to that Act (approved CSOP schemes).”