OpenLegislation

Finance (No. 2) Act 2005

2005 c. 22 · Enacted 20 July 2005 · Extends to United Kingdom

Not fully up to date. 2 changes made by later legislation have not yet been written into this text, which is revised to 20 March 2025.

See the changes not yet applied
ProvisionChangeMade by
s. 50(1)(b)words cease to have effectFinance (No. 2) Act 2005 s. 50(5)
s. 23omittedFinance Act 2008 s. 41(7)(i)

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.

[20th July 2005]

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:—

Contents

  1. Part 1: Value added tax
  2. 1Goods subject to warehousing regime: place of acquisition or supply
  3. 2Cars: determination of consideration for fuel supplied for private use
  4. 3Credit for, or repayment of, overstated or overpaid VAT
  5. 4Section 3: consequential and supplementary provision
  6. 5Reverse charge: gas and electricity valuation
  7. 6Disclosure of value added tax avoidance schemes
  8. Part 2: Income tax, corporation tax and capital gains tax
  9. Chapter 1: Personal taxation
  10. Social security pension lump sums
  11. 7Charge to income tax on lump sum
  12. 8Meaning of “applicable year of assessment” in section 7
  13. 9Interpretation and commencement
  14. 10Consequential amendments
  15. Gift aid
  16. 11Donations to charity by individuals Repealed
  17. Employee securities
  18. 12Employee securities: anti-avoidance
  19. Chapter 2: Scientific research organisations
  20. 13Corporation tax exemption for organisations Repealed
  21. 14Income tax deduction for payments to organisations
  22. 15Corporation tax deduction for payments to organisations
  23. Chapter 3: Authorised investment funds etc
  24. 16Open-ended investment companies Repealed
  25. 17Authorised unit trusts and open-ended investment companies
  26. 18Section 17(3): specific powers
  27. 19Section 17: commencement and procedure
  28. 20Unauthorised unit trusts: chargeable gains
  29. 21Unit trusts: treatment of accumulation units
  30. 22Section 349B ICTA: exemption for distributions to PEP/ISA managers
  31. 23Offshore funds Repealed
  32. Chapter 4: Avoidance involving tax arbitrage
  33. 24Deduction cases Repealed
  34. 25Rules relating to deductions Repealed
  35. 26Receipts cases Repealed
  36. 27Rule as to qualifying payment Repealed
  37. 28Notices under sections 24 and 26 Repealed
  38. 29Amendments relating to company tax returns Repealed
  39. 30Interpretation Repealed
  40. 31Commencement Repealed
  41. Chapter 5: Chargeable gains
  42. Residence, location of assets etc
  43. 32Temporary non-residents
  44. 33Trustees both resident and non-resident in a year of assessment
  45. 34Location of assets etc
  46. Miscellaneous
  47. 35Exercise of options etc
  48. 36Notional transfers within a group Repealed
  49. Chapter 6: Miscellaneous
  50. Accounting practice and related matters
  51. 37Accounting practice and related matters
  52. Financial avoidance etc
  53. 38Charges on income for the purposes of corporation tax
  54. 39Avoidance involving financial arrangements
  55. Financing of companies etc
  56. 40Transfer pricing and loan relationships
  57. Intangible fixed assets
  58. 41Intangible fixed assets Repealed
  59. Insurance companies etc
  60. 42Insurance companies etc
  61. International matters
  62. 43Implementation of the amended Parent/Subsidiary Directive Repealed
  63. 44Territories with a lower level of taxation: reduction of amount of local tax
  64. Miscellaneous
  65. 45Lloyd's underwriters: assessment and collection of tax
  66. 46Energy Act 2004 and Health Protection Agency Act 2004
  67. Part 3: Stamp taxes
  68. Stamp duty land tax
  69. 47E-conveyancing
  70. 48Disclosure of information contained in land transaction returns
  71. 49Miscellaneous amendments
  72. Stamp duty and stamp duty reserve tax
  73. 50Power to extend exceptions relating to recognised exchanges Repealed
  74. Part 4: European company statute
  75. 51Chargeable gains
  76. 52Intangible fixed assets
  77. 53Intangible fixed assets: permanent establishment in another member State
  78. 54Loan relationships
  79. 55Derivative contracts Repealed
  80. 56Capital allowances
  81. 57Stamp duty reserve tax
  82. 58Bearer instruments: stamp duty and stamp duty reserve tax
  83. 59Consequential amendments
  84. 60Residence Repealed
  85. 61Continuity for transitional purposes Repealed
  86. 62Groups
  87. 63Groups: intangible fixed assets Repealed
  88. 64Held-over gains
  89. 65Restrictions on set-off of pre-entry losses
  90. Part 5: Miscellaneous matters
  91. 66Vehicle excise duty: late renewal supplements
  92. 67Reorganisation of water and sewerage services in Northern Ireland
  93. 68EU Mutual Assistance Directive: notifications Repealed
  94. 69Abolition of statutory adjudicator for National Savings and Investments
  95. Part 6: Supplementary provisions
  96. 70Repeals
  97. 71Interpretation
  98. 72Short title
  99. Schedule 1: Disclosure of value added tax avoidance schemes
  100. Introduction
  101. 1Paragraph 1
  102. Interpretative provisions
  103. 2Paragraph 2
  104. 3Paragraph 3
  105. 4Paragraph 4
  106. Duty to notify Commissioners
  107. 5Paragraph 5
  108. 6Paragraph 6
  109. Amount of penalty
  110. 7Paragraph 7
  111. Penalty assessments
  112. 8Paragraph 8
  113. Schedule 2: Employee securities: anti-avoidance
  114. Introductory
  115. 1Paragraph 1
  116. Rights under certain insurance contracts to be securities
  117. 2Paragraph 2
  118. Restricted securities
  119. 3Paragraph 3
  120. 4Paragraph 4
  121. 5Paragraph 5
  122. 6Paragraph 6
  123. 7Paragraph 7
  124. Convertible securities
  125. 8Paragraph 8
  126. 9Paragraph 9
  127. 10Paragraph 10
  128. 11Paragraph 11
  129. Securities acquired for less than market value
  130. 12Paragraph 12
  131. 13Paragraph 13
  132. 14Paragraph 14
  133. 15Paragraph 15
  134. 16Paragraph 16
  135. Post-acquisition benefits from securities
  136. 17Paragraph 17
  137. 18Paragraph 18
  138. 19Paragraph 19
  139. Corporation tax relief: minor and consequential amendments
  140. 20Paragraph 20 Repealed
  141. Schedule 3: Qualifying scheme
  142. Part 1: Introductory Repealed
  143. 1Paragraph 1 Repealed
  144. Part 2: Schemes involving hybrid entities Repealed
  145. 2Paragraph 2 Repealed
  146. 3Paragraph 3 Repealed
  147. Part 3: Schemes involving hybrid effect Repealed
  148. Schemes involving hybrid effect Repealed
  149. 4Paragraph 4 Repealed
  150. Instruments of alterable character Repealed
  151. 5Paragraph 5 Repealed
  152. Shares subject to conversion Repealed
  153. 6Paragraph 6 Repealed
  154. Securities subject to conversion Repealed
  155. 7Paragraph 7 Repealed
  156. Debt instruments treated as equity Repealed
  157. 8Paragraph 8 Repealed
  158. Part 4: Schemes involving hybrid effect and connected persons Repealed
  159. Schemes involving hybrid effect and connected persons Repealed
  160. 9Paragraph 9 Repealed
  161. Scheme including issue of shares not conferring a qualifying beneficial entitlement Repealed
  162. 10Paragraph 10 Repealed
  163. Scheme including transfer of rights under a security Repealed
  164. 11Paragraph 11 Repealed
  165. Interpretation Repealed
  166. 12Paragraph 12 Repealed
  167. Schedule 4: Chargeable gains: location of assets etc
  168. Part 1: Location of assets
  169. Exceptions from sections 713 and 714 of ICTA
  170. 1Paragraph 1 Repealed
  171. Foreign securities: delayed remittances
  172. 2Paragraph 2 Repealed
  173. Designated international organisations
  174. 3Paragraph 3
  175. Location of assets: general
  176. 4Paragraph 4
  177. Location of certain intangible assets
  178. 5Paragraph 5
  179. Location of assets: interests of co-owners
  180. 6Paragraph 6
  181. Part 2: Minor amendments: non-resident company with UK permanent establishment
  182. Computation of losses
  183. 7Paragraph 7
  184. Reallocation within group of gain or loss accruing under section 179
  185. 8Paragraph 8 Repealed
  186. Exemptions for disposals by companies with substantial shareholding
  187. 9Paragraph 9
  188. Part 3: Commencement
  189. Commencement
  190. 10Paragraph 10
  191. Schedule 5: Chargeable gains: options
  192. Part 1: Application of market value rule in case of exercise of option
  193. Application of market value rule in case of exercise of option
  194. 1Paragraph 1
  195. Application of market value rule in case of exercise of option: exception
  196. 2Paragraph 2
  197. Part 2: Miscellaneous amendments relating to share options etc
  198. Shares acquired on same day: election for alternative treatment
  199. 3Paragraph 3
  200. Employment-related securities options
  201. 4Paragraph 4
  202. Interpretation of TCGA 1992
  203. 5Paragraph 5
  204. Part 3: Commencement
  205. Commencement
  206. 6Paragraph 6
  207. Schedule 6: Accounting practice and related matters
  208. Adjustment on change of accounting basis
  209. 1Paragraph 1 Repealed
  210. 2Paragraph 2 Repealed
  211. Meaning of “statutory insolvency arrangement”
  212. 3Paragraph 3
  213. Minor corrections
  214. 4Paragraph 4 Repealed
  215. Deemed release of liability on impaired debt becoming held by connected company
  216. 5Paragraph 5 Repealed
  217. Adjustment on change to international accounting standards: bad debt debits formerly disallowed
  218. 6Paragraph 6 Repealed
  219. Loan relationships with embedded derivatives
  220. 7Paragraph 7 Repealed
  221. 8Paragraph 8
  222. Exchange gains and losses
  223. 9Paragraph 9 Repealed
  224. 10Paragraph 10 Repealed
  225. 11Paragraph 11 Repealed
  226. Schedule 7: Avoidance involving financial arrangements
  227. Rent factoring
  228. 1Paragraph 1 Repealed
  229. Section 730: restriction to income consisting of distributions in respect of company shares etc
  230. 2Paragraph 2 Repealed
  231. Change in ownership of company with investment business
  232. 3Paragraph 3 Repealed
  233. Transfers of rights to receive annual payments
  234. 4Paragraph 4 Repealed
  235. Disposals and acquisitions of company loan relationships with or without interest
  236. 5Paragraph 5 Repealed
  237. Manufactured interest and the accrued income scheme
  238. 6Paragraph 6 Repealed
  239. Consideration due after time of disposal: creditor relationships etc
  240. 7Paragraph 7
  241. Corporate strips: manipulation of price: associated payment giving rise to loss
  242. 8Paragraph 8
  243. Transactions within a group: shares subject to third party obligations
  244. 9Paragraph 9 Repealed
  245. Shares treated as loan relationships
  246. 10Paragraph 10 Repealed
  247. Related transactions in relation to right to receive manufactured interest
  248. 11Paragraph 11 Repealed
  249. Money debts etc not arising from lending of money: discounts and profits from transactions
  250. 12Paragraph 12
  251. Meaning of “commercial rate of interest”
  252. 13Paragraph 13 Repealed
  253. Capital redemption policies: removal of exclusion from loan relationships computations
  254. 14Paragraph 14
  255. Deemed disposal of assets and liabilities on company ceasing to be resident in UK etc
  256. 15Paragraph 15 Repealed
  257. Transactions not at arm's length: exceptions relating to groups of companies
  258. 16Paragraph 16 Repealed
  259. Continuity of treatment of groups etc: treatment of transferee company
  260. 17Paragraph 17 Repealed
  261. Transferee leaving group after replacing transferor as party to loan relationship
  262. 18Paragraph 18 Repealed
  263. Avoidance involving repos or stock lending
  264. 19Paragraph 19 Repealed
  265. Capital redemption policies: computations on the I minus E basis
  266. 20Paragraph 20 Repealed
  267. Relevant discounted securities: corporate strips
  268. 21Paragraph 21
  269. Transactions within groups: treatment of transferee company
  270. 22Paragraph 22 Repealed
  271. Transactions within groups: fair value accounting
  272. 23Paragraph 23 Repealed
  273. Transferee leaving group after replacing transferor as party to derivative contract
  274. 24Paragraph 24 Repealed
  275. Deeply discounted securities: corporate strips
  276. 25Paragraph 25
  277. Schedule 8: Financing of companies etc: transfer pricing and loan relationships
  278. Amendments of Schedule 28AA to ICTA
  279. 1Paragraph 1 Repealed
  280. Amendments of Schedule 9 to FA 1996
  281. 2Paragraph 2 Repealed
  282. 3Paragraph 3 Repealed
  283. Commencement and transitional provisions
  284. 4Paragraph 4 Repealed
  285. Schedule 9: Insurance companies etc
  286. Expenses of insurance companies
  287. 1Paragraph 1 Repealed
  288. Interpretative provisions relating to insurance companies
  289. 2Paragraph 2 Repealed
  290. Amendment of Chapter 1 of Part 12 of ICTA etc
  291. 3Paragraph 3 Repealed
  292. Apportionment of income and gains
  293. 4Paragraph 4 Repealed
  294. Section 432B apportionment: participating funds
  295. 5Paragraph 5 Repealed
  296. Transfers of business: deemed periodical return
  297. 6Paragraph 6 Repealed
  298. Transfers of business: modification of section 444AC of ICTA
  299. 7Paragraph 7 Repealed
  300. Transfers of business: transferor shares are assets of transferee's long-term insurance fund etc
  301. 8Paragraph 8 Repealed
  302. Equalisation reserves for general business
  303. 9Paragraph 9
  304. Unappropriated surplus on valuation
  305. 10Paragraph 10 Repealed
  306. Relevant financial reinsurance contracts
  307. 11Paragraph 11 Repealed
  308. Receipts to be taken into account
  309. 12Paragraph 12 Repealed
  310. Meaning of “brought into account”
  311. 13Paragraph 13 Repealed
  312. Changes in recognised accounts: attribution of amounts carried forward under s.432F of ICTA
  313. 14Paragraph 14 Repealed
  314. Charge of certain receipts of basic life assurance business
  315. 15Paragraph 15 Repealed
  316. Corporation tax: policy holders' fraction of profits
  317. 16Paragraph 16 Repealed
  318. Overseas life insurance companies
  319. 17Paragraph 17 Repealed
  320. Meaning of “pension business”
  321. 18Paragraph 18 Repealed
  322. Miscellaneous references to “class” of business
  323. 19Paragraph 19
  324. Transfers of business: references to accounting period ending with day of transfer
  325. 20Paragraph 20
  326. Schedule 10: Stamp duty land tax: miscellaneous amendments
  327. Part 1: Amendments coming into force in accordance with paragraph 16
  328. Introduction
  329. 1Paragraph 1
  330. Transfer of rights: exclusion of transaction to which alternative finance provisions apply
  331. 2Paragraph 2
  332. Group relief
  333. 3Paragraph 3
  334. 4Paragraph 4
  335. 5Paragraph 5
  336. 6Paragraph 6
  337. 7Paragraph 7
  338. Reconstruction and acquisition reliefs
  339. 8Paragraph 8
  340. 9Paragraph 9
  341. Withdrawal of money etc from partnership after transfer of chargeable interest
  342. 10Paragraph 10
  343. Grant of lease to bare trustee
  344. 11Paragraph 11
  345. 12Paragraph 12
  346. Variation of lease
  347. 13Paragraph 13
  348. Loan or deposit in connection with grant or assignment of lease
  349. 14Paragraph 14
  350. 15Paragraph 15
  351. Commencement
  352. 16Paragraph 16
  353. Part 2: Amendments coming into force in accordance with paragraph 22
  354. Introduction
  355. 17Paragraph 17
  356. Transfers involving public bodies
  357. 18Paragraph 18
  358. Group relief: avoidance arrangements
  359. 19Paragraph 19
  360. Acquisition relief: avoidance arrangements
  361. 20Paragraph 20
  362. Stamp duty on transfers of partnership interests
  363. 21Paragraph 21
  364. Commencement
  365. 22Paragraph 22
  366. Schedule 11: Repeals
  367. 1Value added tax
  368. 2Income tax, corporation tax and capital gains tax
  369. 3Stamp taxes
  370. 4European company statute
  371. 5Miscellaneous matters