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Royal arms

Income Tax Act 2007

2007 CHAPTER 3

CONTENTS

Go to Preamble

  1. Part 1

    Overview

    1. 1. Overview of Income Tax Acts

    2. 2. Overview of Act

  2. Part 2

    Basic provisions

    1. Chapter 1

      Charges to income tax

      1. 3. Overview of charges to income tax

      2. 4. Income tax an annual tax

      3. 5. Income tax and companies

    2. Chapter 2

      Rates at which income tax is charged

      1. The rates

        1. 6. The starting rate, basic rate and higher rate

        2. 7. The savings rate

        3. 8. The dividend ordinary rate and dividend upper rate

        4. 9. The trust rate and dividend trust rate

      2. Income charged at particular rates

        1. 10. Income charged at the starting, basic and higher rates: individuals

        2. 11. Income charged at the basic rate: other persons

        3. 12. Income charged at the savings rate

        4. 13. Income charged at the dividend ordinary and dividend upper rates: individuals

        5. 14. Income charged at the dividend ordinary rate: other persons

        6. 15. Income charged at the trust rate and the dividend trust rate

        7. 16. Savings and dividend income to be treated as highest part of total income

        8. 17. Repayment: tax paid at basic rate instead of starting or savings rate

        9. 18. Meaning of “savings income”

        10. 19. Meaning of “dividend income”

      3. Starting rate limit and basic rate limit

        1. 20. The starting rate limit and the basic rate limit

        2. 21. Indexation of the starting rate limit and the basic rate limit

    3. Chapter 3

      Calculation of income tax liability

      1. 22. Overview of Chapter

      2. 23. The calculation of income tax liability

      3. 24. Reliefs deductible at Step 2

      4. 25. Reliefs and allowances deductible at Steps 2 and 3: supplementary

      5. 26. Tax reductions

      6. 27. Order of deducting tax reductions: individuals

      7. 28. Order of deducting tax reductions: other persons

      8. 29. Tax reductions: supplementary

      9. 30. Additional tax

      10. 31. Total income: supplementary

      11. 32. Liability not dealt with in the calculation

  3. Part 3

    Personal reliefs

    1. Chapter 1

      Introduction

      1. 33. Overview of Part

    2. Chapter 2

      Personal allowance and blind person’s allowance

      1. Introduction

        1. 34. Allowances under Chapter

      2. Personal allowances

        1. 35. Personal allowance for those aged under 65

        2. 36. Personal allowance for those aged 65 to 74

        3. 37. Personal allowance for those aged 75 and over

      3. Blind person’s allowance

        1. 38. Blind person’s allowance

        2. 39. Transfer of part of blind person’s allowance to a spouse or civil partner

        3. 40. Election for transfer of allowance under section 39

      4. Supplementary

        1. 41. Allowances in year of death

    3. Chapter 3

      Tax reductions for married couples and civil partners

      1. Introduction

        1. 42. Tax reductions under Chapter

        2. 43. Meaning of “the minimum amount”

        3. 44. Election for new rules to apply

      2. Married couple’s allowance

        1. 45. Marriages before 5 December 2005

        2. 46. Marriages and civil partnerships on or after 5 December 2005

      3. Elections to transfer relief

        1. 47. Election by individual to transfer relief under section 45 or 46

        2. 48. Joint election to transfer relief under section 45 or 46

        3. 49. Election for partial transfer back of relief

        4. 50. Procedure for making and withdrawing elections under sections 47 to 49

      4. Transfer of unused relief

        1. 51. Transfer of unused relief

        2. 52. Transfer back of unused relief

        3. 53. Transfer of unused relief: general

      5. Supplementary

        1. 54. Tax reductions in the year of marriage or entry into civil partnership

        2. 55. Sections 45 to 53: supplementary

    4. Chapter 4

      General

      1. 56. Residence etc of claimants

      2. 57. Indexation of allowances

      3. 58. Meaning of “adjusted net income”

  4. Part 4

    Loss relief

    1. Chapter 1

      Introduction

      1. 59. Overview of Part

    2. Chapter 2

      Trade losses

      1. Introduction

        1. 60. Overview of Chapter

        2. 61. Non-partners: losses of a tax year

        3. 62. Partners: losses of a tax year etc

        4. 63. Prohibition against double counting

      2. Trade loss relief against general income

        1. 64. Deduction of losses from general income

        2. 65. How relief works

      3. Restriction on relief for uncommercial trades

        1. 66. Restriction on relief unless trade is commercial

      4. Restriction on relief for “hobby” farming or market gardening

        1. 67. Restriction on relief in case of farming or market gardening

        2. 68. Reasonable expectation of profit

        3. 69. Whether trade is the same trade

        4. 70. Determining losses in previous tax years

      5. Use of trading loss as CGT loss

        1. 71. Treating trade losses as CGT losses

      6. Early trade losses relief

        1. 72. Relief for individuals for losses in first 4 years of trade

        2. 73. How relief works

        3. 74. Restrictions on relief unless trade is commercial etc

      7. Restrictions on sideways relief for certain capital allowances

        1. 75. Trade leasing allowances given to individuals

        2. 76. First-year allowances: introduction

        3. 77. First-year allowances: partnerships with companies

        4. 78. First-year allowances: arrangements to reduce tax liabilities

        5. 79. Capital allowances restrictions: supplementary

      8. Restriction on sideways relief for specific trades

        1. 80. Ring fence income

        2. 81. Dealings in commodity futures

        3. 82. Exploitation of films

      9. Carry-forward trade loss relief

        1. 83. Carry forward against subsequent trade profits

        2. 84. How relief works

        3. 85. Use of trade-related interest and dividends if trade profits insufficient

        4. 86. Trade transferred to a company

        5. 87. Ring fence trades

        6. 88. Carry forward of certain interest as loss

      10. Terminal trade loss relief

        1. 89. Carry back of losses on a permanent cessation of a trade

        2. 90. Losses that are “terminal losses”

        3. 91. How relief works

        4. 92. Use of trade-related interest and dividends if trade profits insufficient

        5. 93. Mineral extraction trade and carry back of balancing allowances

        6. 94. Carry back of certain interest as loss

      11. Wholly foreign trades

        1. 95. Foreign trades etc: reliefs only against foreign income

      12. Post-cessation trade relief

        1. 96. Post-cessation trade relief

        2. 97. Meaning of “qualifying payment”

        3. 98. Meaning of “qualifying event” etc

        4. 99. Reduction of relief for unpaid trade expenses

        5. 100. Prohibition against double counting

        6. 101. Treating excess post-cessation trade relief as CGT loss

    3. Chapter 3

      Restrictions on trade loss relief for certain partners

      1. Introduction

        1. 102. Overview of Chapter

        2. 103. Meaning of “sideways relief”, “capital gains relief” and “firm”

      2. Limited partners

        1. 104. Restriction on reliefs for limited partners

        2. 105. Meaning of “contribution to the firm”

        3. 106. Meaning of “limited partner”

      3. Members of LLPs

        1. 107. Restriction on reliefs for members of LLPs

        2. 108. Meaning of “contribution to the LLP”

        3. 109. Unrelieved losses brought forward

      4. Non-active members of LLPs or other partnerships (apart from limited partnerships)

        1. 110. Restriction on reliefs for non-active partners in early tax years

        2. 111. Meaning of “contribution to the firm”

        3. 112. Meaning of “non-active partner” and “early tax year” etc

        4. 113. Unrelieved losses brought forward

      5. Regulations

        1. 114. Exclusion of amounts in calculating contribution to the firm or LLP

      6. Restrictions for film trades carried on in partnership

        1. 115. Restrictions on reliefs for firms exploiting films

        2. 116. Exclusion from restrictions under section 115: certain film expenditure

    4. Chapter 4

      Losses from property businesses

      1. Introduction

        1. 117. Overview of Chapter

      2. Carry-forward property loss relief

        1. 118. Carry forward against subsequent property business profits

        2. 119. How relief works

      3. Property loss relief against general income

        1. 120. Deduction of property losses from general income

        2. 121. How relief works

        3. 122. Meaning of “the applicable amount of the loss”

        4. 123. Meaning of “the loss has a capital allowances connection” and “the business has a relevant agricultural connection”

        5. 124. Supplementary

      4. Post-cessation property relief

        1. 125. Post-cessation property relief

        2. 126. Treating excess post-cessation property relief as CGT loss

      5. Furnished holiday accommodation

        1. 127. UK furnished holiday lettings business treated as trade

    5. Chapter 5

      Losses in an employment or office

      1. 128. Employment loss relief against general income

      2. 129. How relief works

      3. 130. Treating loss in employment or office as CGT loss

    6. Chapter 6

      Losses on disposal of shares

      1. Share loss relief against general income

        1. 131. Share loss relief

        2. 132. Entitlement to claim

        3. 133. How relief works

      2. Shares to which EIS relief is not attributable

        1. 134. Qualifying trading companies

        2. 135. Subscriptions for shares

        3. 136. Disposals of new shares

      3. Qualifying trading companies: the requirements

        1. 137. The trading requirement

        2. 138. Ceasing to meet trading requirement because of administration or receivership

        3. 139. The control and independence requirement

        4. 140. The qualifying subsidiaries requirement

        5. 141. The property managing subsidiaries requirement

        6. 142. The gross assets requirement

        7. 143. The unquoted status requirement

        8. 144. Power to amend requirements by Treasury order

      4. Qualifying trading companies: supplementary

        1. 145. Relief after an exchange of shares for shares in another company

        2. 146. Substitution of new shares for old shares

      5. Limits on share loss relief and mixed holdings

        1. 147. Limits on share loss relief

        2. 148. Disposal of shares forming part of mixed holding

        3. 149. Section 148: supplementary

      6. Miscellaneous and supplementary

        1. 150. Deemed time of issue for certain shares

        2. 151. Interpretation of Chapter

    7. Chapter 7

      Losses from miscellaneous transactions

      1. Loss relief against miscellaneous income

        1. 152. Losses from miscellaneous transactions

        2. 153. How relief works

      2. Deposit rights

        1. 154. Transactions in deposit rights

      3. Supplementary

        1. 155. Time limit for claiming relief

  5. Part 5

    Enterprise investment scheme

    1. Chapter 1

      Introduction

      1. EIS relief

        1. 156. Meaning of “EIS relief” and commencement

        2. 157. Eligibility for EIS relief

        3. 158. Form and amount of EIS relief

      2. Miscellaneous

        1. 159. Periods A, B and C

        2. 160. Overview of other Chapters of Part

        3. 161. Other tax reliefs relating to EIS

    2. Chapter 2

      The investor

      1. Introduction

        1. 162. Overview of Chapter

      2. The requirements

        1. 163. The no connection with the issuing company requirement

        2. 164. The no linked loans requirement

        3. 165. The no tax avoidance requirement

      3. Meaning of connection with issuing company

        1. 166. Connection with issuing company

        2. 167. Employees, directors and partners

        3. 168. Directors excluded from connection

        4. 169. Directors qualifying for relief despite connection

        5. 170. Persons interested in capital etc of company

        6. 171. Persons subscribing for shares under certain arrangements

    3. Chapter 3

      General requirements

      1. Introduction

        1. 172. Overview of Chapter

      2. The requirements

        1. 173. The shares requirement

        2. 174. The purpose of the issue requirement

        3. 175. The use of the money raised requirement

        4. 176. The minimum period requirement

        5. 177. The no pre-arranged exits requirement

        6. 178. The no tax avoidance requirement

      3. Meaning of “qualifying business activity”

        1. 179. Meaning of “qualifying business activity”

    4. Chapter 4

      The issuing company

      1. Introduction

        1. 180. Overview of Chapter

      2. The requirements

        1. 181. The trading requirement

        2. 182. Ceasing to meet trading requirement because of administration or receivership

        3. 183. The issuing company to carry on the qualifying business activity requirement

        4. 184. The unquoted status requirement

        5. 185. The control and independence requirement

        6. 186. The gross assets requirement

        7. 187. The qualifying subsidiaries requirement

        8. 188. The property managing subsidiaries requirement

      3. Definitions

        1. 189. Meaning of “qualifying trade”

        2. 190. Meaning of “qualifying 90% subsidiary”

        3. 191. Meaning of “qualifying subsidiary”

      4. Excluded activities

        1. 192. Meaning of “excluded activities”

        2. 193. Excluded activities: wholesale and retail distribution

        3. 194. Excluded activities: leasing of ships

        4. 195. Excluded activities: receipt of royalties and licence fees

        5. 196. Excluded activities: property development

        6. 197. Excluded activities: hotels and comparable establishments

        7. 198. Excluded activities: nursing homes and residential care homes

        8. 199. Excluded activities: provision of services or facilities for another business

      5. Supplementary

        1. 200. Power to amend by Treasury order

    5. Chapter 5

      Attribution of and claims for EIS relief

      1. Attribution

        1. 201. Attribution of EIS relief to shares

      2. Claims: general

        1. 202. Time for making claims for EIS relief

        2. 203. Entitlement to claim

      3. Claims: supporting documents

        1. 204. Compliance certificates

        2. 205. Compliance statements

        3. 206. Appeal against refusal to authorise compliance certificate

        4. 207. Penalties for fraudulent certificate or statement etc

    6. Chapter 6

      Withdrawal or reduction of EIS relief

      1. Introduction

        1. 208. Overview of Chapter

      2. Disposals

        1. 209. Disposal of shares

        2. 210. Cases where maximum EIS relief not obtained

        3. 211. Call options

        4. 212. Put options

      3. Value received by investor

        1. 213. Value received by the investor

        2. 214. Value received: receipts of insignificant value

        3. 215. Meaning of “receipts of insignificant value”

        4. 216. When value is received

        5. 217. The amount of value received

        6. 218. Value received where there is more than one issue of shares

        7. 219. Value received where part of share issue treated as made in previous tax year

        8. 220. Cases where maximum EIS relief not obtained

        9. 221. Receipts of value by and from connected persons etc

        10. 222. Receipt of replacement value

        11. 223. Section 222: supplementary

      4. Repayments etc of share capital to other persons

        1. 224. Repayments etc of share capital to other persons

        2. 225. Insignificant repayments ignored for purposes of section 224

        3. 226. Amount of repayments etc where there is more than one issue of shares

        4. 227. Single issue affecting more than one individual

        5. 228. Single issue treated as made partly in previous tax year

        6. 229. Maximum relief not obtained for share issue

        7. 230. Repayment of authorised minimum within 12 months

        8. 231. Restriction on withdrawal of relief under section 224

      5. Miscellaneous

        1. 232. Acquisition of a trade or trading assets

        2. 233. Acquisition of share capital

        3. 234. Relief subsequently found not to have been due

    7. Chapter 7

      Withdrawal or reduction of EIS relief: procedure

      1. Assessments and appeals

        1. 235. Assessments for the withdrawal or reduction of EIS relief

        2. 236. Appeals against section 234(3)(b) notices

        3. 237. Time limits for assessments

        4. 238. Cases where assessment not to be made

      2. Interest

        1. 239. Date from which interest is chargeable

      3. Information

        1. 240. Information to be provided by the investor

        2. 241. Information to be provided by the issuing company etc

        3. 242. Power to require information where section 240 or 241 applies or could have applied

        4. 243. Power to require information in other cases