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Amendment of Schedule 24 to Principal Act (relief from income tax and corporation tax by means of credit in respect of foreign tax)
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28. (1) Schedule 24 to the Principal Act is amended—
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(a) in paragraph 5 by inserting the following after subparagraph (3):
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“(4) Where Chapter 2A of Part 15 applies to a person for a tax year, the specified rate shall be ascertained by dividing the income tax payable by that person for that year in accordance with section 485E by the amount of the individual’s adjusted income, within the meaning of section 485C, for that year.”,
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(b) in paragraph 7—
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(i) in subparagraph (3) by substituting the following for clause (c):
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“(c) notwithstanding anything in clauses (a) and (b), where any part of the foreign tax in respect of the income (including any foreign tax which under clause (b) is to be treated as increasing the amount of the income) cannot be allowed as a credit against either income tax or corporation tax, the amount of the income shall be treated as reduced by that part of that foreign tax, but, for the purposes of corporation tax, the amount by which the income is treated as reduced by that part of the foreign tax shall not exceed the amount of income which would be the amount referred to in paragraph 4 as ‘the relevant income’, taking account of the provisions of subparagraphs (2) and (2A) of that paragraph.”,
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and
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(ii) in subparagraph (4) by substituting “total income or the adjusted income, as the case may be,” for “total income”,
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and
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(c) in paragraph 9DC by inserting the following subparagraphs after subparagraph (2):
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“(3) For the purposes of subparagraph (4)—
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(a) as respects any leasing income included in trading income for an accounting period of a trade carried on by a company, and
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(b) taking account of payments for the use of, or the right to use, specific equipment as a separate leasing income,
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an amount shall be treated as unrelieved foreign tax, or unrelieved relevant foreign tax, of that accounting period in respect of that leasing income, being—
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(i) in the case of foreign tax, which is deducted, or treated as so deducted by subparagraph (4), from that leasing income, the sum of—
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(I) so much of that tax as is neither allowed as a credit against corporation tax nor treated as reducing income under paragraph 7(3)(c), and
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(II) 87.5 per cent of the amount of foreign tax by which income is treated as reduced by virtue of paragraph 7(3)(c),
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and
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(ii) in the case of relevant foreign tax, the amount by which 87.5 per cent of that relevant foreign tax, which is deducted, or treated as so deducted by subparagraph (4), from that leasing income, exceeds the amount of corporation tax which is treated as attributable to that leasing income for the purposes of this paragraph.
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(4) Where, taking account of payments for the use of, or the right to use, specific equipment as a separate leasing income, a company is in receipt of a leasing income for an accounting period (in this subparagraph referred to as ‘the first-mentioned accounting period’) from which foreign tax or relevant foreign tax has been deducted, then for the purposes of the Corporation Tax Acts any unrelieved foreign tax, or unrelieved relevant foreign tax, of the accounting period immediately preceding the first-mentioned accounting period in respect of the same leasing income shall be treated as foreign tax or relevant foreign tax, as the case may be, deducted from such leasing income of the first-mentioned accounting period.”.
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(2) Paragraphs (a) and (b)(ii) of subsection (1) apply as respects any relief, deduction, credit in relation to tax or, as the case may be, a reduction in the amount of tax payable, details of which fall to be included in particulars on a return, required to be delivered under section 951 of the Principal Act, which was delivered on or after 31 January 2008.
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(3) Paragraphs (b)(i) and (c) of subsection (1) apply as respects accounting periods beginning on or after 1 January 2014.
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