Finance (No. 3) Act 2010

2010 c. 33

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.

Enacted[16th December 2010]

Most Gracious Sovereign

WE, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty's public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Part 1 Income tax, corporation tax and capital gains tax¶

Income tax and corporation tax¶

1 Shared lives care¶

Schedule 1 contains provision extending foster-care relief to other forms of care.

2 Payments to special guardians and those in receipt of residence orders¶

1 Part 6 of ITTOIA 2005 (exempt income) is amended as follows.

2 In section 744 (payments to adopters: England and Wales)—

a the existing provision becomes subsection (1),

b in that subsection, omit the “and” before paragraph (e) and after that paragraph insert—

f payments made under regulations under section 14F of the Children Act 1989 (special guardianship support services) to a person appointed as a child's special guardian,

g payments made to a person under section 17 of that Act (provision of services for children in need, their families and others) by reason of that person being a person in whose favour a residence order with respect to a child is in force,

h payments made to a person, in respect of a child, under paragraph 15 of Schedule 1 to that Act (local authority contribution to child's maintenance to recipients in whose favour residence order is in force), and

i payments made in accordance with—

i an order under that Schedule (orders for financial relief against parents etc), or

ii a maintenance agreement,

for the benefit of a child, to a person appointed as the child's special guardian or a person in whose favour a residence order with respect to the child is in force.

c after that subsection insert—

, and

d in the heading, after “adopters” insert “ , etc ”.

3 In section 745 (payments to adopters: Scotland)—

a the existing provision becomes subsection (1),

b in that subsection, omit the “and” before paragraph (d) and after that paragraph insert—

c after that subsection insert—

, and

d in the heading, after “adopters” insert “ , etc ”.

4 In section 746 (payments to adopters: Northern Ireland)—

a the existing provision becomes subsection (1),

b in that subsection, omit the “and” before paragraph (c) and after that paragraph insert—

c after that subsection insert—

, and

d in the heading, after “adopters” insert “ , etc ”.

5 The amendments made by this section have effect in relation to the tax year 2010-11 and subsequent tax years.

3 Qualifying care relief: capital allowances¶

1 Chapter 2 of Part 7 of ITTOIA 2005 (qualifying care relief) is amended as follows.

2 In section 824 (capital allowances: introduction), after subsection (2) insert—

3 For section 825 substitute—

825 Unallocated capital expenditure

1 This section applies if—

a at the beginning of a relevant chargeable period of a relevant individual, there is care business expenditure which has not been allocated to a care business pool,

b the individual is entitled under CAA 2001 to allocate the expenditure, or a part of it, to a care business pool for that period, and

c the previous chargeable period was not a relevant chargeable period.

2 So much of the expenditure as the individual is entitled to allocate to a care business pool for that period is to be treated for the purposes of CAA 2001 as allocated to the appropriate kind of care business pool for that period (whether or not any of it is actually so allocated).

3 For the different kinds of pool, see section 54 of CAA 2001.

825A Deemed disposal event

1 Subsection (2) applies to a care business pool for a relevant chargeable period of a relevant individual if the previous chargeable period was not a relevant chargeable period.

2 CAA 2001 is to apply as if—

a a disposal event occurs immediately after the beginning of the relevant chargeable period in respect of plant or machinery in the pool,

b disposal receipts fall to be brought into account in the pool for the period because of that event, and

c the total of the receipts equals the sum of amount A and amount B (or nil if there are no such amounts).

3 Amount A is the amount of any expenditure treated as allocated to the pool for the period by virtue of section 825 (whether or not any of it is actually so allocated).

4 Amount B is the amount of any unrelieved qualifying expenditure carried forward in the pool from the previous chargeable period.

825B Plant or machinery used for care business

1 This section applies if—

a disposal receipts fall to be brought into account in a pool for a relevant chargeable period by virtue of section 825A, and

b on the re-start date, the relevant individual still owns any of the plant or machinery which was in that pool and is still using any of it for the purposes of the care business.

2 The re-start date is the first day of the first subsequent chargeable period which is not a relevant chargeable period.

3 A reference in this section to the retained plant or machinery is to so much of the plant or machinery in the pool as the relevant individual—

a still owns on the re-start date, and

b is still using on that date for the purposes of the care business.

4 The individual is to be treated under CAA 2001—

a as having brought the retained plant or machinery into use on the re-start date for the purposes of the care business,

b as having incurred capital expenditure on the provision of that plant or machinery for those purposes on that date, and

c as owning that plant and machinery as a result of having incurred that expenditure.

5 The total amount of expenditure which the individual is to be treated as having incurred (for all of the retained plant or machinery) is the smaller of—

a the total market value of the retained plant or machinery on the re-start date, and

b an amount equal to the disposal receipts brought into account in the pool as described in subsection (1)(a).

6 If the individual is treated under section 13 of CAA 2001 as having incurred notional expenditure before the re-start date as a result of bringing plant or machinery in the pool into use for the purposes of another activity, the amount mentioned in subsection (5)(b) must be reduced by the total amount of that expenditure, as determined in accordance with section 825C(2).

7 But subsection (6) does not apply if the plant or machinery which was brought into use for the purposes of another activity is the retained plant or machinery (for example, where it was brought into use only partly for the purposes of that other activity).

8 The question whether the provision of the retained plant or machinery is to be treated as wholly or only partly for the purposes of the care business is to be determined according to whether the use referred to in subsection (3)(b) is wholly or only partly for those purposes.

825C Plant or machinery used for other qualifying activities

1 This section applies if—

a disposal receipts fall to be brought into account in a pool by virtue of section 825A because of a disposal event, and

b after that disposal event, the relevant individual brings any of the plant or machinery in that pool into use for the purposes of another activity.

2 Section 13 of CAA 2001 has effect as if the total amount of the notional expenditure which the individual is treated under that section as having incurred, for all of the plant or machinery in that pool which is brought into use for the purposes of the other activity, were the smaller of—

a the total market value of that plant or machinery on the day on which it is brought into use for the purposes of that other activity, and

b an amount equal to the disposal receipts brought into account in the pool as mentioned in subsection (1)(a).

3 Subsection (2) does not apply to plant or machinery brought into use for the purposes of another activity if—

a the individual is treated by virtue of section 825B as having already brought that plant or machinery into use for the purposes of the care business, or

b this section has already applied to that plant or machinery since the disposal event.

4 The amount mentioned in subsection (2)(b) must be reduced by the appropriate sum if some plant or machinery in the pool is brought into use for the purposes of another activity after —

a the individual is treated by virtue of section 825B as having brought other plant or machinery in that pool into use for the purposes of the care business, or

b this section has applied to other plant or machinery in that pool since the disposal event.

5 The appropriate sum is—

a in a case within paragraph (a) of subsection (4), the total amount of expenditure which the individual is treated by virtue of section 825B as having incurred on the provision of that other plant or machinery, and

b in a case within paragraph (b) of that subsection, the total amount of the notional expenditure (as determined in accordance with subsection (2)) which the individual is treated under section 13 of CAA 2001 as having incurred on the provision of that other plant or machinery since the disposal event.

825D Subsequent disposal events

1 This section applies to an item of plant or machinery which a relevant individual—

a is treated by virtue of section 825B as bringing into use, or

b brings into use in circumstances where section 825C(2) applies.

2 The date (in either case) on which the item is brought or treated as brought into such use is referred to in this section as the applicable date.

3 The first disposal event to occur in respect of the item on or after the applicable date is to be regarded for the purposes of section 60(3) of CAA 2001 as the first such event.

4 That event requires a disposal value to be brought into account regardless of anything to the contrary in section 64(1) of that Act.

5 But a reference in section 62 of that Act to the amount of qualifying expenditure incurred by the individual on the provision of that item is a reference to the amount of qualifying expenditure originally incurred by the individual on its provision (and not to any proportion of the total amount treated by virtue of section 825B or 825C as having been incurred).

4 The amendments made by this section have effect in relation to chargeable periods ending on or after the day on which this Act is passed (“the commencement day”).

5 For anyone who was a relevant individual for the most recent chargeable period ending before the commencement day, sections 825B and 825C of ITTOIA 2005 have effect (on and after that day) as if references in those sections to section 825A were references to section 825 as it was in force immediately before the commencement day.

4 Seafarers' earnings¶

1 Section 378 of ITEPA 2003 (deductions from seafarers' earnings: eligibility) is amended as follows.

2 In subsection (1)(a), after “relevant taxable earnings” insert “ or EEA-resident earnings ”.

3 After subsection (5) insert—

4 The amendments made by this section have effect for the tax year 2011-12 and subsequent tax years but only in relation to eligible periods beginning on or after 6 April 2011.

5 Venture capital schemes¶

Schedule 2 contains provision about venture capital schemes.

6 Enterprise management incentives¶

1 Schedule 5 to ITEPA 2003 (enterprise management incentives) is amended as follows.

2 In paragraph 8 (qualifying companies: introduction), omit the “and” at the end of the entry relating to “number of employees” and after the entry relating to “trading activities” insert

3 After paragraph 14 insert—

4 In paragraph 15(1) (meaning of “qualifying trade”), omit paragraph (a) (requirement that trade be carried on wholly or mainly in United Kingdom).

5 The amendments made by this section have effect in relation to options granted on or after the day on which this Act is passed.

7 Settlor to return excess repayment to trustees etc¶

1 Section 646 of ITTOIA 2005 (adjustments between settlor and trustees etc) is amended as follows.

2 For subsection (4) substitute—

3 In subsection (5), for “excess” substitute “ repayment ”.

4 After subsection (6) insert—

5 In subsection (7), for “Any” substitute “ Subject to subsections (6A) and (6B), any ”.

6 The amendments made by this section have effect in relation to repayments of tax for the tax year 2010-11 or any subsequent tax year.

8 Collection of income tax where sum deducted by payer¶

In Chapter 16 of Part 15 of ITA 2007, after section 963 (collection of income tax on certain payments by other persons) insert—

963A Power to make regulations modifying section 963

1 The Commissioners for Her Majesty's Revenue and Customs may by regulations modify, replace or supplement any provision of section 963(2) to (4).

2 Regulations under this section may only be made for the purpose of regulating the time at and manner in which persons making payments within section 963(1)(a) or (b) are to account for and pay income tax which is to be collected from them in respect of those payments.

3 In particular, regulations under this section may, in relation to income tax for which a person is liable to account—

a modify any provision of Parts 2 to 6 of TMA 1970, or

b apply any such provision with or without modifications.

4 Regulations under this section may—

a make different provision for different kinds of payer,

b make different provision for different circumstances, and

c authorise the Commissioners for Her Majesty's Revenue and Customs, if they think there are special circumstances justifying it, to make special arrangements in relation to income tax for which a person is liable to account.

5 Regulations under this section may contain incidental, supplemental, consequential and transitional provision and savings.

6 The Commissioners for Her Majesty's Revenue and Customs must not make any regulations under this section unless a draft of them has been laid before and approved by a resolution of the House of Commons.

7 References in this Act and in any other enactment to any of the provisions of section 963(2) to (4) are to be read as references to those provisions as modified, replaced or supplemented by provision made by regulations under this section.

9 Company distributions¶

Schedule 3 contains provision about company distributions.

10 REITs: stock dividends¶

Schedule 4 contains provision about the issue of stock dividends by a company UK REIT or the principal company of a group UK REIT.

^F1611 Financing costs and income of group companies¶

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 Consortium claims for group relief¶

Schedule 6 contains provision about claims for group relief from corporation tax made by companies which are members of, or owned by, a consortium.

13 R&D relief for SMEs: removal of intellectual property condition¶

1 Part 13 of CTA 2009 (additional relief for expenditure on research and development) is amended as follows.

2 In section 1052 (qualifying expenditure on in-house direct R&D)—

a in subsection (1), for “conditions A to E” substitute “ conditions A, B, D and E ”, and

b omit subsection (4) (condition C: intellectual property created as result of research and development to which expenditure is attributable to be vested in company).

3 In section 1053 (qualifying expenditure on contracted out R&D)—

a in subsection (1)(b), for “conditions A to D” substitute “ conditions A, C and D ”, and

b omit subsection (3) (condition B: same intellectual property condition).

^F34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

^F35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 Omit section 1139 (meaning of “intellectual property”).

7 In Schedule 4 to CTA 2009 (index of defined expressions), omit the entry relating to “intellectual property (in Part 13)”.

8 The amendments made by this section have effect in relation to expenditure incurred by a company in an accounting period ending on or after 9 December 2009.

14 Film tax credit: unused losses¶

1 Section 1201 of CTA 2009 (film tax credit claimable where company has surrenderable loss) is amended as follows.

2 In subsection (2)—

a for “any period” substitute “ an accounting period ”, and

b in paragraph (a), for “the company's loss” substitute “ the company's available loss ”.

3 After that subsection insert—

4 In subsection (4), in the definition of “S”, for “surrendered in previous periods” substitute “ previously surrendered ”.

5 After that subsection insert—

6 In section 1202(4) of that Act (company's loss reduced by amount surrendered), for “loss in the separate film trade” substitute “ available loss ”.

7 The amendments made by this section have effect in relation to accounting periods ending on or after 9 December 2009.

8 In relation to those accounting periods the amendments, and corresponding amendments of paragraphs 6 and 11 of Schedule 5 to FA 2006, are to be treated as always having had effect.

^F115 Insurance business transfer schemes: non-profit fund transferred assets¶

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chargeable gains¶

16 Capital gains tax private residence relief: adult placement carers¶

1 In section 223(8) of TCGA 1992 (amount of relief), before the “and” at the end of paragraph (a) insert—

2 In section 224 of that Act (amount of relief: further provisions), insert at the end—

3 In that Act, after section 225C insert—

225D Private residence of adult placement carer

1 This section applies where a gain to which section 222 applies accrues to an individual (“A”) and, at any time during A's period of ownership, part of the dwelling-house was occupied by another person (“B”)—

a in England and Wales, pursuant to an adult placement scheme,

b in Scotland, pursuant to arrangements which constitute or form part of an adult placement service involving the provision of accommodation for B, or

c in Northern Ireland, pursuant to arrangements made with an adult placement agency for the provision of accommodation for B.

2 For the purposes of this Part, in determining the periods during which the dwelling-house, or any part of the dwelling-house, was A's only or main residence, B's occupation of part of the dwelling-house pursuant to the scheme or arrangement is to be disregarded.

3 For the purposes of section 224, the occupation of the part of the dwelling-house by B pursuant to the scheme or arrangement does not amount to the use of that part of the dwelling-house by A exclusively for the purpose of a trade, business, profession or vocation.

4 In this section—

“adult placement agency” means an organisation or undertaking—
1. that arranges for the provision of care and support (including accommodation) for persons in need, and
2. in respect of which a requirement to register arises under Article 12 of the Health and Personal Social Services (Quality, Improvement and Regulation) (Northern Ireland) Order 2003,
“adult placement scheme” means a scheme—
1. under which an individual agrees with the person carrying on the scheme to provide care and support (including accommodation) to an adult who is in need of it, and
2. in respect of which a requirement to register arises under section 11 of the Care Standards Act 2000, and
“adult placement service” has the meaning given by paragraph 11 of schedule 12 to the Public Services Reform (Scotland) Act 2010.

4 The amendments made by this section have effect in relation to disposals made on or after 9 December 2009.

5 Until the coming into force of paragraph 11 of schedule 12 to the Public Services Reform (Scotland) Act 2010, the reference to that provision in section 225D(4) of TCGA 1992 is to section 2(16) of the Regulation of Care (Scotland) Act 2001.

17 Reinvestment of ring fence assets: acquisition by member of group¶

1 After section 198G of TCGA 1992 insert—

2 The amendment made by this section has effect in relation to disposals made on or after 22 April 2009 (whether the acquisition takes place before, on or after that date).

Capital allowances¶

18 First-year allowances on zero-emission goods vehicles¶

Schedule 7 contains provision about first-year allowances on zero-emission goods vehicles.

Part 2 Other taxes and duties¶

Value added tax¶

19 Non-business use of business assets etc¶

Schedule 8 contains—

a provision about input tax, and

b provision about supplies under paragraph 5(4) of Schedule 4 to VATA 1994.

20 Supplies of gas, heat or cooling¶

1 In section 9A of VATA 1994 (reverse charge on gas and electricity supplied by persons outside the United Kingdom)—

a for subsection (5) substitute—

, and

b in the heading, for “and electricity” substitute “ , electricity, heat or cooling ”.

2 In Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services), in paragraph 3 after “refrigeration” insert “ or other cooling, ”.

3 The amendments made by this section have effect in relation to supplies made on or after 1 January 2011.

21 Supplies of aircraft etc¶

1 Schedule 8 to VATA 1994 (zero-rating) is amended as follows.

2 In Note (A1) of Group 8 (transport: definition of “qualifying aircraft” etc), for paragraph (b) substitute—

3 After that Note insert—

4 The amendments made by this section have effect in relation to supplies made, and acquisitions and importations taking place, on or after 1 January 2011.

22 Postal services etc¶

1 In Schedule 8 to VATA 1994 (zero-rating), in Group 8—

a in item 4 (transport of passengers), for “the Post Office company” substitute “ a universal service provider ”, and

b after Note (4D) insert—

2 In Schedule 9 to that Act (exemptions), for Group 3 (postal services) substitute—

GROUP 3 — POSTAL SERVICES

1 Item No

The supply of public postal services by a universal service provider.

2

The supply of goods by a universal service provider which is incidental to the supply of public postal services by that provider.

NOTES

1 “Universal service provider” means a person who provides a universal postal service, or part of such a service, in the United Kingdom.

2 Subject to the following Notes, “public postal services”, in relation to a universal service provider, means any postal services which the provider is required to provide in the discharge of a licence duty.

3 Public postal services include postal services which a universal service provider provides to allow a person access to the provider's postal facilities, where such services are provided pursuant to a licence duty.

4 Services are not “public postal services” if—

a the price is not controlled by or under a licence, or

b any of the other terms on which the services are provided are freely negotiated.

5 But Note (4) does not apply if a licence duty requires the universal service provider to make the services available to persons generally—

a where the price is not controlled by or under the licence, at the same price, or

b where terms are freely negotiated as mentioned in Note (4)(b), on those terms.

6 In this Group—

“licence” means a licence under Part 2 of the Postal Services Act 2000;
“licence duty” means a duty imposed as a condition of a licence;
“postal facilities”, in relation to a universal service provider, means the resources and systems deployed by the provider, for the purpose of discharging any licence duty to provide a universal postal service or part of such a service;
“postal services” and “universal postal service” have the same meaning as in the Postal Services Act 2000.

3 The following provisions are omitted—

a in section 96(1) of VATA 1994, the definition of “the Post Office company”, and

b paragraph 22(3) and (4) of Schedule 8 to the Postal Services Act 2000.

4 The amendments made by this section have effect in relation to supplies made on or after 31 January 2011.

Tobacco products duty¶

23 Long cigarettes¶

1 In section 4 of TPDA 1979 (calculation of duty on long cigarettes)—

a for “than 9 cm.” substitute “ than 8 cm. ”, and

b for “each 9 cm. or part thereof” substitute “ the first 8 cm. of it, each 3 cm. portion of the remainder of it (if any) and the remaining portion of it (if any) ”,

and, in the heading, for “9 cm.” substitute “ 8 cm. ”.

2 The amendments made by this section come into force on 1 January 2011.

Landfill tax¶

24 Landfill tax: criteria for determining material to be subject to lower rate¶

1 In section 42 of FA 1996 (amount of landfill tax), for subsection (4) substitute—

2 The amendment made by this section has effect in relation to disposals made, or treated as made, on or after 1 April 2011.

Part 3 Administration¶

25 Interest: corporation tax and petroleum revenue tax¶

1 Schedule 9 contains amendments of FA 2009 relating to late payment interest and repayment interest on amounts of corporation tax and petroleum revenue tax.

2 That Schedule comes into force on such day as the Treasury may by order appoint.

3 An order under subsection (2)—

a may commence a provision generally or only for specified purposes, and

b may appoint different days for different provisions or for different purposes.

4 The Treasury may by order make any incidental, supplemental, consequential, transitional, transitory or saving provision which appears appropriate in consequence of, or otherwise in connection with, that Schedule.

5 An order under subsection (4) may—

a make different provision for different purposes, and

b make provision amending, repealing or revoking any Act or subordinate legislation whenever passed or made (including this Act and any Act amended by it).

6 An order under this section is to be made by statutory instrument.

7 A statutory instrument containing an order under subsection (4) which includes provision amending or repealing any provision of an Act is subject to annulment in pursuance of a resolution of the House of Commons.

26 Penalties for failure to make returns etc¶

1 Schedule 10 contains provision amending Schedule 55 to FA 2009 (penalties in respect of failures to make returns and other documents relating to liabilities for tax).

^P12 Schedule 10 comes into force on such day as the Treasury may by order appoint.

3 An order under subsection (2)—

a may commence a provision generally or only for specified purposes, and

b may appoint different days for different provisions or for different purposes.

5 An order under subsection (4) may—

a make different provision for different purposes, and

b make provision amending, repealing or revoking any Act or subordinate legislation whenever passed or made (including this Act and any Act amended by it).

6 An order under this section is to be made by statutory instrument.

27 Penalties for failure to pay tax¶

1 Schedule 11 contains provision amending Schedule 56 to FA 2009 (penalties in respect of failures to comply with obligations to pay tax).

^P2^P32 Schedule 11 comes into force on such day as the Treasury may by order appoint.

3 An order under subsection (2)—

a may commence a provision generally or only for specified purposes, and

b may appoint different days for different provisions or for different purposes.

5 An order under subsection (4) may—

a make different provision for different purposes, and

b make provision amending, repealing or revoking any Act or subordinate legislation whenever passed or made (including this Act and any Act amended by it).

6 An order under this section is to be made by statutory instrument.

28 Recovery of overpaid stamp duty land tax and petroleum revenue tax etc¶

1 Schedule 12 contains—

a provision amending Part 4 of FA 2003 (stamp duty land tax) in respect of the recovery of overpaid tax etc, and

b provision amending Schedule 2 to OTA 1975 (management and collection of petroleum revenue tax) in respect of the recovery of overpaid tax etc.

2 The amendments made by Schedule 12 have effect in relation to claims made on or after 1 April 2011.

3 The Treasury may by order make any incidental, supplemental, consequential, transitional, transitory or saving provision which appears appropriate in consequence of, or otherwise in connection with, that Schedule.

4 An order under this section may—

a make different provision for different purposes, and

b make provision amending, repealing or revoking any Act or subordinate legislation whenever passed or made (including this Act and any Act amended by it).

5 An order under this section is to be made by statutory instrument.

6 A statutory instrument containing an order under this section which includes provision amending or repealing any provision of an Act is subject to annulment in pursuance of a resolution of the House of Commons.

29 Excise duties: compliance checks¶

1 Schedule 13 contains provision about information and inspection powers, record-keeping and time limits for assessments and claims involving excise duties.

^P42 The amendments made by that Schedule come into force on such day as the Treasury may by order made by statutory instrument appoint.

3 An order under subsection (2)—

a may appoint different days for different provisions or for different purposes, and

b may include transitional provision and savings.

Part 4 Miscellaneous provisions¶

30 Pension scheme under section 67 of Pensions Act 2008¶

^F221 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 In section 67 of the Pensions Act 2008 (duty to establish pension scheme) —

a omit subsection (3), and

b in subsection (4), for “that Chapter” substitute “ Chapter 2 of Part 4 of the Finance Act 2004 ”.

31 Asbestos compensation settlements¶

Schedule 14 contains provision about the taxation of settlements the purpose of which is to make compensation payments to or in respect of individuals affected by an asbestos-related condition.

Part 5 Final provisions¶

32 Interpretation¶

1 In this Act—

“BGDA 1981” means the Betting and Gaming Duties Act 1981;
“CAA 2001” means the Capital Allowances Act 2001;
“CTA 2009” means the Corporation Tax Act 2009;
“CTA 2010” means the Corporation Tax Act 2010;
“HODA 1979” means the Hydrocarbon Oil Duties Act 1979;
“ICTA” means the Income and Corporation Taxes Act 1988;
“IHTA 1984” means the Inheritance Tax Act 1984;
“ITA 2007” means the Income Tax Act 2007;
“ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;
“ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;
“OTA 1975” means the Oil Taxation Act 1975;
“TCGA 1992” means the Taxation of Chargeable Gains Act 1992;
“TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010;
“TMA 1970” means the Taxes Management Act 1970;
“TPDA 1979” means the Tobacco Products Duty Act 1979;
“VATA 1994” means the Value Added Tax Act 1994;
“VERA 1994” means the Vehicle Excise and Registration Act 1994.

2 In this Act—

“FA”, followed by a year, means the Finance Act of that year;
“F(No.2)A”, followed by a year, means the Finance (No.2) Act of that year.

33 Short title¶

This Act may be cited as the Finance (No. 3) Act 2010.

SCHEDULES

SCHEDULE 1 ¶

Shared lives care

Section 1

Extension of foster-care relief¶

1Chapter 2 of Part 7 of ITTOIA 2005 (foster-care relief) is amended as follows.

1 Section 803 (overview of Chapter 2) is amended as follows.

2 For subsection (1) substitute—

3 In subsections (2) and (5), for “foster-care” substitute “ qualifying care ”.

1 Section 804 (person who qualifies for relief) is amended as follows.

2 For subsection (1) substitute—

3 In subsection (3), for “foster-care” substitute “ qualifying care ”.

4 After that subsection insert—

4After section 804 insert—

804A Shared lives care: further condition for relief

1 This section applies if an individual (“N”) has qualifying care receipts for a tax year in respect of the provision of shared lives care.

2 N does not qualify for qualifying care relief in respect of those receipts if the placement cap is exceeded for the residence (or any of the residences) used by N to provide the care from which those receipts are derived.

3 The placement cap is exceeded for a residence if, at any given time during the relevant period, shared lives care is being provided there (whether by N or anyone else) for more than 3 people in total.

4 The relevant period, in relation to a residence, is the period for which the residence is N's only or main residence during the income period for the receipts (see section 805).

5 If the placement cap is so exceeded but N also has qualifying care receipts for the tax year in respect of the provision of foster care, this Chapter is to apply to N for the tax year as if—

a references to qualifying care were to foster care, and

b accordingly, references (other than in this section) to qualifying care receipts did not include receipts in respect of the provision of shared lives care.

6 In determining the number of people for whom shared lives care is being provided at any given time, brothers and sisters (including half-brothers and half-sisters) count as one person.

1 In section 805(1) (meaning of “foster-care receipts”)—

a for “foster-care” substitute “ qualifying care ”, and

b in paragraph (a), for “foster care” substitute “ qualifying care ”.

2 Accordingly, in the heading of section 805, for “foster-care” substitute “ qualifying care ”.

6After section 805 insert—

7After section 806 insert—

806A Meaning of providing shared lives care

1 For the purposes of this Chapter shared lives care is provided by an individual if—

a the individual provides accommodation and care for an adult or child (“X”) who has been placed with the individual, and

b the conditions in subsection (2) are met.

2 The conditions are—

a the accommodation is in the individual's own home,

b the accommodation and care are provided on the basis that X will share the individual's home and daily family life during the placement,

c the placement is made under a specified social care scheme,

d the individual does not provide the accommodation and care as a foster carer, and

e the individual is not excluded within the meaning of section 806(5).

3 Section 806(5) has effect for the purposes of subsection (2)(e) as if references to the child were to X (whatever X's age).

4 “Specified social care scheme” means a social care scheme of a kind specified or described in an order made by the Treasury.

5 An order under subsection (4) may make provision having effect in relation to the tax year current on the day on which the order is made.

6 In this section—

“care” means personal care, including assistance and support;
“home” means an individual's only or main residence;
“social care scheme” means a scheme, service or arrangement for those who, by reason of age, illness, disability or other vulnerability, are in need of care.

806B Meaning of “residence”

1 In this Chapter “residence” means—

a a building, or part of a building, occupied or intended to be occupied as a separate residence, or

b a caravan or houseboat.

2 If a building, or part of a building, designed for permanent use as a single residence is temporarily divided into two or more separate residences, it is still treated as a single residence.

1 In section 807 (calculation of “total foster-care receipts”), for “foster-care” substitute “ qualifying care ”.

2 Accordingly, in the heading of that section, for “foster-care” substitute “ qualifying care ”.

9In section 808(1)(b) (the individual's limit), before “child” insert “ adult or ”.

10For section 809 substitute—

11In section 810(1) (share of fixed income: income period not a year), for “foster-care” substitute “ qualifying care ”.

1 Section 811 (the amount per child) is amended as follows.

2 For subsection (1) substitute—

3 In subsection (3), for “subsection (2)” substitute “ subsection (1A) or (2) ”.

4 In subsection (4), for “foster care for a child” substitute “ qualifying care for an adult or child ”.

5 Accordingly, in the heading, before “child” insert “ adult or ”.

13For section 812 substitute—

1 In section 813(1) (full foster-care relief: trading income), for “foster-care” substitute “ qualifying care ”.

2 Accordingly, in the heading of section 813, for “foster-care” substitute “ qualifying care ”.

1 In section 814(1) (full foster-care relief: income chargeable under Chapter 8 of Part 5), for “foster-care” substitute “ qualifying care ”.

2 Accordingly, in the heading of section 814, for “foster-care” substitute “ qualifying care ”.

16In section 815(a) and (b) (alternative calculation of profits: introduction), for “foster-care” substitute “ qualifying care ”.

17In section 816(1) and (2)(a) (alternative calculation of profits: trading income), for “foster-care” substitute “ qualifying care ”.

18In section 817(1) and (2)(a) (alternative calculation of profits: income chargeable under Chapter 8 of Part 5), for “foster-care” substitute “ qualifying care ”.

19In section 818(1)(a) and (b) (election for alternative method of calculating profits), for “foster-care” substitute “ qualifying care ”.

20In section 819(1)(b) (adjustment of assessment), for “foster care” substitute “ qualifying care ”.

21In section 820(a) and (b) (periods of account not ending on 5th April), for “foster-care” substitute “ qualifying care ”.

1 Section 821 (meaning of “relevant limit”) is amended as follows.

2 In subsection (1)—

a for “foster-care” substitute “ qualifying care ”, and

b in paragraph (b), before “child” insert “ adult or ”.

3 In subsection (2), before “child”, in both places where it occurs, insert “ adult or ”.

23In section 822(1) (full relief), for “foster-care” substitute “ qualifying care ”.

24In section 823(1)(a) and (2)(a) (alternative method of calculating profits), for “foster-care” substitute “ qualifying care ”.

25In section 824(1)(a) and (2)(b) (capital allowances: introduction), for “foster-care” substitute “ qualifying care ”.

26In section 825(2) and (4)(a) (carried forward unrelieved qualifying expenditure), for “foster care” substitute “ qualifying care ”.

27In section 826(b) (excluded capital expenditure), for “foster care” substitute “ qualifying care ”.

28In section 827(a) (excluded capital expenditure: subsequent treatment of asset), for “foster care” substitute “ qualifying care ”.

29Accordingly, for the heading of Chapter 2 of Part 7 of ITTOIA 2005 substitute “ qualifying care relief ”.

Consequential amendments¶

30ITTOIA 2005 is amended as follows.

31In section 1(5) (overview of Act), for “foster-care” substitute “ qualifying care ”.

1 In section 23 (rent-a-room and foster-care relief)—

a in subsection (3), for “foster-care” substitute “ qualifying care ”, and

b in subsection (4), for “foster care” substitute “ qualifying care ”.

2 Accordingly—

a in the heading of that section, for “foster-care” substitute “ qualifying care ”, and

b in the heading immediately preceding that section, for “foster-care” substitute “ qualifying care ”.

33In section 688(2)(b) (income charged), for “foster care” substitute “ qualifying care ”.

34In the heading of Part 7, for “FOSTER-CARE” substitute “ QUALIFYING CARE ”.

35In the table in Part 2 of Schedule 4 (index of expressions defined in this Act etc)—

a omit the entries for “foster-care receipts” and “foster-care relief”,

b after the entry for “provides foster care” insert—

c after the entry for “purchased life annuity” insert—

d after the entry for “residence” insert—

and

e in the entry for “total foster-care receipts”, for “foster-care” substitute “ qualifying care ”.

Commencement¶

1 The amendments made by this Schedule have effect for the tax year 2010-11 and subsequent tax years.

2 But an individual within sub-paragraph (3) may elect to be treated for income tax purposes as if those amendments had effect instead for the tax year 2011-12 and subsequent tax years (and accordingly to remain entitled, for the tax year 2010-11, to the benefit of any relevant concession so far as applicable to the individual).

3 An individual is within this sub-paragraph if the individual has qualifying care receipts for the tax year 2010-11 in respect of the provision of shared lives care (with or without qualifying care receipts in respect of the provision of foster care).

4 A relevant concession is an existing HMRC concession (within the meaning of section 160 of FA 2008)—

a which is in force immediately before the passing of this Act, and

b to which effect is given (in whole or in part) by this Schedule.

5 An election under sub-paragraph (2) must be made on or before the first anniversary of the normal self-assessment filing date for the tax year 2010-11 (or such later date as an officer of Revenue and Customs may, in a particular case, allow).

Transitional provision¶

1 This paragraph applies if—

a an individual had qualifying care receipts in respect of the provision of shared lives care—

i for the pre-commencement tax year, or

ii for a continuous series of tax years up to and including the pre-commencement tax year,

b the receipts were receipts of a trade,

c a relevant concession applied to the individual in respect of those receipts, and

d the individual did not derive any taxable income, other than qualifying care receipts, from the trade.

2 Sections 824 to 827 of ITTOIA 2005 (capital allowances) are to have effect as if the individual had been a relevant individual for—

a the pre-commencement tax year, or

b if sub-paragraph (1)(a)(ii) applies, the pre-commencement tax year and each earlier tax year in the series.

3 “The pre-commencement tax year” means the tax year immediately preceding—

a for an individual who makes an election under paragraph 36, the tax year 2011-12,

b otherwise, the tax year 2010-11.

4 “Relevant concession” has the same meaning as in paragraph 36.

SCHEDULE 2 ¶

Venture capital schemes

Section 5

Enterprise investment scheme¶

1 Part 5 of ITA 2007 (enterprise investment scheme) is amended as follows.

2 In section 179 (meaning of “qualifying business activity”)—

a in subsection (2)(b)(i), omit “wholly or mainly in the United Kingdom”,

b omit subsection (3),

c in subsection (4)(b)(i) and (ii), omit “wholly or mainly in the United Kingdom”, and

d omit subsection (5).

3 In section 180 (overview of Chapter 4), before paragraph (a) insert—

4 Before section 181 insert—

5 After section 191 (and before the italic heading “Excluded activities”) insert—

191A Meaning of “permanent establishment”

1 This section applies for the purposes of this Part.

2 A company has a “permanent establishment” in the United Kingdom if (and only if)—

a it has a fixed place of business there through which the business of the company is wholly or partly carried on, or

b an agent acting on behalf of the company has and habitually exercises there authority to enter into contracts on behalf of the company.

3 For the purposes of this section “fixed place of business” includes (without prejudice to the generality of that expression)—

a a place of management,

b a branch,

c an office,

d a factory,

e a workshop,

f a mine, an oil or gas well, a quarry or any other place of extraction of natural resources, and

g a building site or construction or installation project.

4 If the condition in subsection (5) is met, a company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that—

a a fixed place of business is maintained there for the purpose of carrying on activities for the company, or

b an agent carries on activities there for and on behalf of the company.

5 The condition is that, in relation to the business of the company as a whole, the activities carried on are only of a preparatory or auxiliary character.

6 For this purpose “activities of a preparatory or auxiliary character” include (without prejudice to the generality of that expression)—

a the use of facilities for the purpose of storage, display or delivery of goods or merchandise belonging to the company,

b the maintenance of a stock of goods or merchandise belonging to the company for the purpose of storage, display or delivery,

c the maintenance of a stock of goods or merchandise belonging to the company for the purpose of processing by another person, and

d purchasing goods or merchandise, or collecting information, for the company.

7 A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it carries on business there through an agent of independent status (including a broker or a general commission agent) acting in the ordinary course of the agent's business.

8 A company is not regarded as having a permanent establishment in the United Kingdom by reason of the fact that it controls a company that—

a is resident there, or

b carries on business there (whether through a permanent establishment or otherwise).

9 The Treasury may by regulations amend this section.

Venture capital trusts¶

1 Part 6 of ITA 2007 (venture capital trusts) is amended as follows.

2 In section 274 (requirements for the giving of approval)—

a in the table in subsection (2), in the first entry, in column 2, for “included in the official UK list” substitute “ admitted to trading on a regulated market ”,

b in the last entry in the table, in columns 1 and 2, for “30%” substitute “ 70% ”,

c in paragraphs (c) and (d) of subsection (3), for “30%” substitute “ 70% ”, and

d at the end insert—

3 In section 275(3)(b) (alternative requirements for the giving of approval), for “30%” substitute “ 70% ”.

4 In section 278(1) (conditions relating to value of investments: general), for “30%” substitute “ 70% ”.

5 In section 280(2) (conditions relating to qualifying holdings and eligible shares), for “30%” substitute “ 70% ”.

6 In section 285 (interpretation of Chapter 3 of Part 6), for subsection (3) substitute—

3A For the purposes of this Chapter, shares in a company are “eligible” unless they carry—

a a present or future preferential right to dividends that is within subsection (3B),

b a present or future preferential right to the company's assets on its winding up, or

c a present or future right to be redeemed.

3B A preferential right to dividends carried by a share in a company is within this subsection if—

a the amount of any dividends payable pursuant to the right, or the date or dates on which they are payable, depend to any extent on a decision of the company, the holder of the share or any other person, or

b the amount of any dividends that become payable at any time pursuant to the right includes any amount that became payable at any earlier time pursuant to the right, but has not been paid.

7 In section 286 (qualifying holdings: introduction), in subsection (3), before paragraph (a) insert—

8 Before section 287 insert—

9 In section 289(5) (the proportion of eligible shares requirement), for “285(3)” substitute “ 285(3A) and (3B) ”.

10 In section 291 (carrying on of qualifying activity requirement)—

a in subsection (2), for “A qualifying trade carried on wholly or mainly in the United Kingdom” substitute “ Carrying on a qualifying trade ”,

b in subsection (3), omit “wholly or mainly in the United Kingdom”, and

c in subsection (4)(b), omit “wholly or mainly in the United Kingdom”.

11 In section 300(2) (meaning of “qualifying trade”), for paragraphs (a) and (b) substitute—

12 After section 302 (and before the italic heading “Excluded activities”) insert—

302A Meaning of “permanent establishment”

1 This section applies for the purposes of this Chapter.