Schedule 1 | Property and savings rates of income tax: consequential amendments

Part 1Amendments of ITA 2007

(1)ITA 2007 is amended as follows.

(2)In section 6(3) (other rates of income tax)—

(a)in paragraph (zb), for “Welsh basic, higher and additional rates” substitute “the Welsh rates”,

(b)after paragraph (zc) insert—

(zd)section 6D (property basic, higher and additional rates),

, and

(c)in paragraph (c), after “(trust rate” insert “, property trust rate, savings trust rate”.

(3)In section 6B (the Welsh basic, higher and additional amounts)—

(a)after subsection (1) insert—

(1A)The Welsh property basic rate, the Welsh property higher rate and the Welsh property additional rate for a tax year are calculated as follows.

Step 1Take the property basic rate, property higher rate or property additional rate.

Step 2Deduct 10 percentage points.

Step 3Add the Welsh rate (if any) set by Senedd Cymru for that year for the purpose of calculating the Welsh basic rate, the Welsh higher rate or the Welsh additional rate (as the case may be).

, and

(b)for the heading substitute “The Welsh rates”.

(4)In section 9 (the trust and dividend trust rate)—

(a)after subsection (1) insert—

(1A)The property trust rate is 47%.

(1B)The savings trust rate is 47%.

, and

(b)in the heading, after “The trust rate” insert “, property trust rate, savings trust rate”.

(5)In section 9A (overview of sections 10 to 15), in the table—

(a)after the second column, insert the following column—

, and

(b)in the second column, in the final row, for “Default basic rate” substitute “Savings basic rate”.

(6)In section 10 (income charged at the basic, higher and additional rates: individuals), in subsection (4), after the entry relating to section 11C insert—.

(7)In section 11 (income charged at the default basic rate: non-individuals), in subsection (2)—

(a)at the beginning insert—, and

(b)in the entry relating to Chapters 3 to 5 of Part 9, after “charged at” insert “the property trust rate, the savings trust rate or”.

(8)In section 11B (income charged at the Welsh basic, higher and additional rates)—

(a)in subsections (1)(a), (2)(a) and (3)(a), for “non-savings income” substitute “neither property income nor savings income”,

(b)omit subsection (4), and

(c)in subsection (6) —

(i)for “Section 16 has” substitute “Sections 16 and 16A have”, and

(ii)for “non-savings income of a Welsh taxpayer” substitute “income of a Welsh taxpayer which is neither property income nor savings income”.

(9)In section 11C (income charged at the default basic, higher and additional rates: non-UK resident individuals), in subsection (4), before the entry relating to section 11D insert—.

(10)After section 11CA, as inserted by section 6(3) of this Act, insert—

11CBIncome charged at the Welsh property basic, higher and additional rates: individuals

(1)Income tax is charged at the Welsh property basic rate on the income of a Welsh taxpayer which—

(a)is property income, and

(b)would otherwise be charged at the Welsh basic rate.

(2)Income tax is charged at the Welsh property higher rate on the income of a Welsh taxpayer which—

(a)is property income, and

(b)would otherwise be charged at the Welsh higher rate.

(3)Income tax is charged at the Welsh property additional rate on the income of a Welsh taxpayer which—

(a)is property income, and

(b)would otherwise be charged at the Welsh additional rate.

(4)This section is subject to any provisions of the Income Tax Acts which provide for income to be charged at different rates of income tax in some circumstances.

(5)Sections 16 and 16A have effect for determining the extent to which the property income of a Welsh taxpayer would otherwise be charged at the Welsh basic, higher or additional rate.

11CCIncome charged at the property basic rate: non-individuals

(1)Income tax is charged at the property basic rate on the income of persons other than individuals which—

(a)is property income,

(b)would otherwise be charged at the default basic rate, and

(c)is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

(2)This is subject to—

Chapters 3 to 5 of Part 9 (which provide for some income of trustees to be charged at special trust rates), and

any other provisions of the Income Tax Acts (apart from section 11) which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.

(11)In section 11D (income charged at the savings basic, higher and additional rates), in the heading, at the end insert “: individuals”.

(12)After that section insert—

11DAIncome charged at the savings basic rate: non-individuals

(1)Income tax is charged at the savings basic rate on the income of persons other than individuals which—

(a)is savings income,

(b)would otherwise be charged at the default basic rate, and

(c)is not relevant foreign income charged in accordance with section 832 of ITTOIA 2005 (relevant foreign income charged on the remittance basis).

(2)This is subject to—

Chapters 3 to 5 of Part 9 (which provide for some income of trustees to be charged at special trust rates), and

any other provisions of the Income Tax Acts (apart from section 11) which provide for income of persons other than individuals to be charged at different rates of income tax in some circumstances.

(13)In section 12B (individual’s entitlement to a savings allowance), in subsection (8)—

(a)in paragraph (a)(i) and (iv) (which sets out what counts as additional-rate income), after “the additional rate” insert “, property additional rate”, and

(b)in paragraph (b)(i) and (iv) (which sets out what counts as higher-rate income), after “the higher rate” insert “, property higher rate”.

(14)In section 14 (income charged at the dividend ordinary rate: other persons)—

(a)in subsection (1)(b), for “the basic rate” substitute “the default basic rate”, and

(b)in the heading, for “other persons” substitute “non-individuals”.

(15)In section 15 (income charged at the trust rate and the dividend trust rate)—

(a)after “charged at the trust rate” insert “, the property trust rate, the savings trust rate”, and

(b)in the heading, after “charged at the trust rate” insert “, the property trust rate, the savings trust rate”.

(16)In section 16 (savings and dividend income to be treated as highest part of total income), for subsection (1)(zb) substitute—.

(zb)the rate at which income tax would be charged on the income of a Welsh taxpayer which is neither property income nor savings income apart from section 11B but taking into account the effect of section 16A,

(17)In section 18 (meaning of “savings income”), in subsection (4)(b)—

(a)after “personal representatives” insert “or trustees”, and

(b)for “or 466” substitute “, 466 or 467”.

(18)In section 31 (total income: supplementary), in subsection (2), after “the basic rate,” insert “the property basic rate, the savings basic rate,”.

(19)In section 55B (transferable tax allowance for married couples and civil partners: entitlement to tax reduction), in subsection (2)(b)—

(a)after “other than the basic rate,” insert “the property basic rate,” and

(b)after “the Welsh basic rate,” insert “the Welsh property basic rate,”.

(20)In section 55C (transferable tax allowance for married couples and civil partners: election to reduce personal allowance), in subsection (1)(c)—

(a)after “other than the basic rate,” insert “the property basic rate,” and

(b)after “the Welsh basic rate,” insert “the Welsh property basic rate,”.

(21)In section 399B(3) (which provides for relief for finance costs relating to residential property to be given at the basic rate for property partnerships)—

(a)for “BR”, in both places, substitute “PBR”, and

(b)for “basic rate” substitute “property basic rate”.

(22)In section 462 (overview of Part 9), in subsection (3) (which explains the provision made by Chapter 3), after “charged at” insert “the property trust rate, the savings trust rate or”.

(23)In section 463 (general provision about settlements etc)—

(a)in subsection (1), in the definition of “other income” for the words from “neither” to “nor” substitute “not property income, dividends income or”, and

(b)in subsection (2), after “charged at” insert “the property trust rate, the savings trust rate or”.

(24)In section 479 (trustees’ accumulated or discretionary income to be charged at special rates), after subsection (2) insert—

(2A)Income tax is charged on the income at the property trust rate so far as the income is property income.

(2B)Income tax is charged on the income at the savings trust rate so far as the income is savings income.

(25)In section 481 (other amounts to be charged at special rates for trustees), after subsection (3) insert—

(3A)If the amount is within Type 2, 6 or 7 as set out in section 482, income tax is charged on the amount at the savings trust rate.

(3B)If the amount is within Type 5 as set out in section 482, income tax is charged on the amount at the property trust rate.

(26)In section 483 (sums paid by personal representatives to trustees), in subsection (1)(b), after “that income at” insert “the property trust rate, the savings trust rate or”.

(27)In section 486 (how allowable expenses are to be set against trust rate income)—

(a)in subsection (1), in step 2, after “savings income” insert “, property income”,

(b)in that subsection, in step 5, in paragraph (a), for “the basic rate” substitute “the savings basic rate”,

(c)in that subsection, after that step insert—, and

(d)in that subsection, in step 6, in the final sentence, for “or 5” substitute “, 5 or 5A”.

(28)In section 503 (how beneficiary’s income is reduced), in subsection (2), omit the “and” before “fourth” and for the entry relating to “fourth” substitute—

(29)In section 874 (duty to deduct from certain payments of yearly interest), in subsection (2), for “the basic rate” substitute “the savings basic rate”.

(30)In section 889 (payments in respect of building society securities), in subsection (4), for “the basic rate” substitute “the savings basic rate”.

(31)In section 919 (manufactured interest on UK securities: payments by UK residents etc), in subsection (2), for “the basic rate” substitute “the savings basic rate”.

(32)In section 939 (duty to retain bonds where issue treated as payment of interest), in subsection (2), for “the basic rate” substitute “the savings basic rate”.

(33)In section 974 (Real Estate Investment Trusts: regulations under section 973), in subsection (1)(a), for “the basic rate” substitute “the property basic rate”.

(34)In section 975A (statements about certain payments of interest), in subsection (4)(b), for “the basic rate” substitute “the savings basic rate”.

(35)In section 989 (definitions), at the appropriate places insert—;;;;;;;;.

(36)In Schedule 4 (index of defined expressions), at the appropriate places insert—;;;;;;;;.

Part 2Amendments of other tax legislation

(37)In section 7 of TMA 1970 (notice of liability to income tax and capital gains tax), in subsection (6)—

(a)in subsection (6)—

(i)after “other than the basic rate,” insert “the property basic rate, the savings basic rate,” and

(ii)after “the Welsh basic rate,” insert “the Welsh property basic rate,”, and

(b)after that subsection insert—

(6ZA)A source of income falls within this subsection in relation to any person and any year of assessment if for that year—

(a)all income from the source is savings income (see section 18 of ITA 2007), and

(b)the person—

(i)is UK resident,

(ii)is not liable to tax at the savings basic rate,

(iii)is not liable to tax at the savings higher rate,

(iv)is not liable to tax at the savings additional rate, and

(v)is not charged to tax under section 832 of ITTOIA 2005 (relevant foreign income charged on remittance basis) on any savings income.

(38)In section 1J of TCGA 1992 (section 1I: definitions and other supplementary provision)—

(a)in subsection (1), after paragraph (a) insert—

(ab)the property higher rate,

, and

(b)in subsection (5), in the words after paragraph (c), after “the default higher rate” insert “, the property higher rate, the savings higher rate”.

(39)ITTOIA 2005 is amended as follows.

(40)In sections 274AA(5) and 274C(2) (which provide for relief for finance costs relating to residential property to be given at the basic rate)—

(a)for “BR”, in both places, substitute “PBR”, and

(b)for “basic rate” substitute “property basic rate”.

(41)In section 465A (gains from life insurance contracts: amounts for which individuals liable to be treated as highest part of total income), in subsection (1)(b), for “the basic rate” substitute “the savings basic rate”.

(42)In section 466 (gains from life insurance contracts: personal representatives as person liable), in subsection (2), in the opening words, for “the basic rate” substitute “the savings basic rate”.

(43)In section 467 (gains from life insurance contracts: trustees as person liable), in subsection (7), for “the basic rate” substitute “the savings basic rate”.

(44)In section 530 (gains from life insurance contracts: income tax treated as paid etc), in subsection (1), for “the basic rate” substitute “the savings basic rate”.

(45)In section 533 (meaning of “comparable EEA tax charge”), in subsection (4), for “20%” substitute “22%”.

(46)In section 535 (gains from life insurance contracts: top slicing relief), in subsection (3)—

(a)for “BRL”, in both places, substitute “SBRL”, and

(b)for “the basic rate” substitute “the savings basic rate”.

(47)In section 536 (gains from life insurance contracts: top slicing relief where one chargeable event), in subsection (1), in paragraph (b) of Step 2, for “the basic rate” substitute “the savings basic rate”.

(48)In section 537 (gains from life insurance contracts: top slicing relief where two or more chargeable events), in paragraph (b) of Step 2, for “the basic rate” substitute “the savings basic rate”.

(49)In section 539 (gains from life insurance contracts: relief for deficiencies), in subsection (8)—

(a)after the entry relating to the default higher and default basic rate insert—

, and

(b)at the end insert—

.

(50)In section 669 (reduction in residuary income: inheritance tax on accrued income), in subsection (3), omit the “and” before paragraph (b) and after that paragraph insert—

(c)income charged at the property additional rate or the property higher rate were charged at the property basic rate, and

(d)income charged at the savings additional rate or the savings higher rate were charged at the savings basic rate.

(51)In section 680 (beneficiaries’ income etc: income treated as bearing income tax), in subsection (4), for “the basic rate” substitute “the savings basic rate”.

(52)After section 680B insert—

680CIncome treated as property income

(1)This section applies to estate income relating to a person’s interest in the residue of an estate so far as that interest relates to income that—

(a)falls within section 664(2)(a) (income of personal representatives charged to UK income tax), and

(b)is property income (see section 17A of ITA 2007).

(2)The income is treated as being property income.

(53)In section 552 of CTA 2010 (distributions by Real Estate Investment Trusts)—

(a)in subsection (2)—

(i)for “BRT”, in both places, substitute “PBRT”, and

(ii)in the definition of “BRT”, for “the basic rate” substitute “the property basic rate”, and

(b)in subsection (3), for “BRT”, in both places, substitute “PBRT”.

(54)In section 102 of FA 2012 (I - E profit: policyholders’ rate of tax), in subsection (3), for “the basic rate” substitute “the savings basic rate”.

Part 3Amendment of Scotland Act 1998

(55)In section 80C of the Scotland Act 1998 (power to set Scottish rates for Scottish taxpayers), for subsection (2B) (which prevents a Scottish rate resolution from applying different rates in relation to different types of income) substitute—

(2B)If income tax is charged at Scottish rates on the non-savings income of a Scottish taxpayer for a tax year (within the meaning of section 11A of the Income Tax Act 2007), those rates are treated for income tax purposes as if they were—

(a)Scottish rates for all non-savings income other than property income which are set for the tax year at the same rates as the Scottish rates, and

(b)separate Scottish rates for property income which are set for the tax year at the same rates as the Scottish rates,

but, subject to that, a Scottish rate resolution may not provide for different rates to apply in relation to different types of income.