Finance Act 2016

Further amendments in CTA 2010 U.K.

28 U.K. CTA 2010 is further amended as follows.

29 (1) Section 279F (ring fence profits: related 51% group company) is amended as follows. U.K.

(2) In subsection (7)(c) (conditions to be met by a company's dividend income in order for company to be a passive company), in sub-paragraph (ii) (dividends must be franked investment income) for “franked investment income” substitute “ exempt ABGH distributions ”.

(3) After subsection (9) insert—

“(10) In subsection (7)(c) “exempt ABGH distribution” means a distribution which—

(a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

30 (1) Section 279G (ring fence profits: meaning of “augmented profits”) is amended as follows. U.K.

(2) In subsection (1)(b) (franked investment income is part of augmented profits unless excluded)—

(a) for “franked investment income” substitute “ exempt ABGH distributions ”, and

(b) for “is” substitute “ are ”.

(3) In subsection (3) (exclusion of franked investment income received from certain subsidiaries etc), for “franked investment income” substitute “ exempt ABGH distribution ”.

(4) After subsection (4) insert—

“(5) In this section “exempt ABGH distribution” means a distribution which—

(a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

31 U.K. For section 463(7) (loan to trustees of settlement which has ended: amount on which debtor taxed when all or part of loan released or written off) substitute—

“(7) The amount which Y is treated as receiving is equal to the amount released or written off.”

32 (1) Section 549 (distributions: supplementary) is amended as follows. U.K.

(2) Omit subsection (2) (which excludes entitlement to tax credits).

(3) In subsection (2A) (which disapplies sections 409 to 414 of ITTOIA 2005), for “414” substitute “ 413A ”.

33 (1) Section 751 (interpretation of Part 15 (transactions in securities)) is amended as follows. U.K.

(2) The existing text becomes subsection (1).

(3) In that subsection, in the definition of “dividends”, omit “qualifying”.

(4) After that subsection insert—

“(2) In the definition of “dividends” given by subsection (1), “other distributions” does not include a distribution which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).”

34 U.K. Omit section 814D(8) (which excludes entitlement to tax credits).

35 U.K. Omit section 997(5) (which introduces sections 1109 to 1111).

36 U.K. In sections 1026(1)(b) and 1027(2)(b) (cases where amount paid up in respect of bonus shares does not fall to be treated as a qualifying distribution) omit “qualifying”.

37 (1) Section 1070 (distributions by company carrying on mutual business) is amended as follows. U.K.

(2) In subsection (2) (provisions about distributions apply to company's distributions only where made out of taxed profits or franked investment income), for paragraph (b) (franked investment income) substitute—

“(b) income of the company consisting of exempt ABGH distributions.”

(3) After subsection (5) insert—

“(5A) In subsection (2) “exempt ABGH distribution” means a distribution which—

(a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

38 (1) Section 1071 (company not carrying on business) is amended as follows. U.K.

(2) In subsection (5) (provisions about distributions apply to company's distributions only where made out of taxed profits or franked investment income), for paragraph (b) (franked investment income) substitute—

“(b) income of the company consisting of exempt ABGH distributions.”

(3) After subsection (5) insert—

“(5A) In subsection (5) “exempt ABGH distribution” means a distribution which—

(a) is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph A, B, G or H in section 1000(1), and

(b) is exempt for the purposes of Part 9A of CTA 2009 (company distributions).”

39 (1) Section 1100 (qualifying distribution: right to request a statement) is amended as follows. U.K.

(2) In subsection (1) (requests for statement)—

(a) for “qualifying distribution” substitute “ distribution to which this section applies ”, and

(b) omit paragraph (b) (amount of any tax credit), and the “and” preceding it.

(3) After subsection (4) insert—

“(4A) This section applies to any distribution other than one which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).”

(4) Omit subsections (2) and (5) (interpretation of subsection (1)(b)).

(5) In subsection (7) (section to be read with section 396A(2) of ITTOIA 2005)—

(a) for “needs” substitute “ , and sections 1101 to 1103, need ”, and

(b) for “as “qualifying distributions” for the purposes of this section” substitute “ as distributions to which this section applies ”.

(6) In the heading, for “Qualifying” substitute “ Certain ”.

40 (1) Section 1101 (non-qualifying distributions etc: returns and information) is amended as follows. U.K.

(2) In subsection (1) (duty to make return), for “which is not a qualifying distribution” substitute “ to which section 1100 does not apply ”.

(3) In subsection (4) (duty to make return where not clear whether distribution is non-qualifying), for “which is not a qualifying distribution” substitute “ to which section 1100 does not apply ”.

(4) In the heading, and in the heading of section 1102, for “Non-qualifying” substitute “ Other ”.

41 U.K. In section 1103 (regulations about information about non-qualifying distributions)—

(a) in subsection (2) (purpose for which sections 1101 and 1102 may be rewritten), for “which are not qualifying distributions” substitute “ to which section 1100 does not apply ”,

(b) in subsection (4) (special arrangements about matters specified in subsection (5)), for “matters” substitute “ matter ”, and

(c) in subsection (5)—

(i) for “Those matters are” substitute “ That matter is ”, and

(ii) omit paragraph (b) (tax credits), and the “and” preceding it.

42 (1) Section 1106 (interpretation of sections 1104 and 1105) is amended as follows. U.K.

(2) In subsection (4) (meaning of “tax certificate”)—

(a) after paragraph (a) insert “ and ”, and

(b) omit paragraph (c) (tax credits), and the “and” preceding it.

(3) Omit subsections (5) and (6) (interpretation of subsection (4)(c)).

43 U.K. Omit sections 1110 and 1111 (recovery of overpaid tax credits etc).

44 (1) Section 1115 (meaning of “new consideration” in Part 23) is amended as follows. U.K.

(2) In subsections (5)(a) and (6)(b) for “qualifying” substitute “ non-CD ”.

(3) After subsection (6) insert—

“(7) In this section “non-CD distribution” means any distribution other than one which is a distribution for the purposes of the Corporation Tax Acts only because it falls within paragraph C or D in section 1000(1) (redeemable share capital or security issued as bonus in respect of shares in, or securities of, the company).”

45 U.K. In section 1119 (definitions for the purposes of the Corporation Tax Acts) omit the entries for “franked investment income”, “qualifying distribution” and “tax credit”.

46 U.K. Omit section 1126 (meaning of “franked investment income”).

47 U.K. Omit section 1136 (meaning of “qualifying distribution”).

48 U.K. Omit section 1139(4) (“relief” includes tax credit).

49 U.K. In Schedule 2 (transitionals and savings etc) omit paragraph 106(1) (operation of sections 1026 and 1027 in relation to share capital issued before 7 April 1973).

50 U.K. In Schedule 4 (index of defined expressions) omit the entries for “franked investment income”, “qualifying distribution” and “tax credit”.