Direct Tax Acts, Finance Act 2018

3 Interpretation of Income Tax Acts
ITA67 s1(1) and s2; FA69 s65 and Sch5; FA74 s1; CGTA75 s2(5); FA91 s2(3) and Sch1 PtI par1; FA93 s2(2) and Sch1 PtI; FA94 s2(2); FA96 s132(1) and Sch5 PtI par1(1); FA00 s14 and Sch1; FA01 s2 and Sch1; F(No. 3)A11 s1(2) and Sch1(2)–(4)); F(No. 2)A13 s7(1)(a)

(1) In the Income Tax Acts, except where otherwise provided or the context otherwise requires –

[“chargeable tax”, in relation to an individual for a year of assessment, means the amount of income tax to which that individual is chargeable for that year of assessment under section 15 in respect of his or her total income for that year including, in the case of an individual assessed to tax in accordance with the provisions of section 1017 or 1031C, the total income, if any, of the individual’s spouse or civil partner, as the case may be;]1

general tax credit”, in relation to an individual for a year of assessment, means any relief (other than a credit under section 59) applicable for that year of assessment, not by way of deduction from income, but by way of reduction of or deduction from the chargeable tax or by way of repayment thereof when paid, other than a personal tax credit, and such credit shall be determined by reference to the amount of the reduction, deduction or repayment as the case may be;]2

higher rate”, in relation to tax, means the rate of tax known by that description and provided for in section 15;

incapacitated person” means any minor or person of unsound mind;

[“income tax payable”, in relation to an individual for a year of assessment, means the chargeable tax less the aggregate of the personal tax credits and general tax credits;

personal tax credit”, in relation to an individual for a year of assessment, means a tax credit specified in sections 461, 461A, [462B]4, 463, 464, 465, 466, 466A, 468 and 472;]3

“relative” includes any person of whom the person claiming [relief]5 had the custody and whom he or she maintained at his or her own expense while that person was under the age of 16 years;

standard rate”, in relation to tax, means the rate of tax known by that description and provided for in section 15;

tax” means income tax;

taxable income” has the meaning assigned to it by section 458;

total income” means total income from all sources as estimated in accordance with the Income Tax Acts;

“trade” includes every trade, manufacture, adventure or concern in the nature of trade.

(2) (a) Subject to subsection (3), in the Income Tax Acts, “earned income”, in relation to an individual, means –

[(i) any income arising in respect of any remuneration from any office or employment of profit held by the individual, or in respect of any pension, superannuation or other allowance, deferred pay, or compensation for loss of office, given in respect of the past services of the individual or of the individual’s husband, civil partner, parent or parent’s civil partner in any office or employment of profit, or given to the individual in respect of the past services of any deceased person, whether or not the individual or the individual’s husband, civil partner, parent or parent’s civil partner shall have contributed to such pension, superannuation allowance or deferred pay,]6

(ii) any income from any property which is attached to or forms part of the emoluments of any office or employment of profit held by the individual, and

(iii) any income charged under Schedule D and immediately derived by the individual from the carrying on or exercise by the individual of his or her trade or profession, either as an individual or, in the case of a partnership, as a partner personally acting in the partnership.

[(b) In cases where the profits of a wife are deemed to be profits of the husband, or the profits of a civil partner are deemed to be the profits of his or her civil partner, any reference in this subsection to an individual includes the husband or the wife, or either civil partner.]7

(3) Without prejudice to the generality of subsection (2), in the Income Tax Acts, except where otherwise expressly provided, “earned income” includes –

(a) any annuity made payable to an individual under the terms of an annuity contract or trust scheme for the time being approved by the Revenue Commissioners for the purposes of Chapter 2 [Retirement annuities] of Part 30 to the extent to which such annuity is payable in return for any amount on which relief is given under section 787,

and

(b) any payment or other sum which is or is deemed to be income chargeable to tax under Schedule E for any purpose of the Income Tax Acts.

(4) References to profits or gains in the Income Tax Acts shall not include references to chargeable gains within the meaning of the Capital Gains Tax Acts.

Go to Revenue Guidance Notes on TCA

Amendments

1,6,7 Substituted by F(No. 3)A11 s1(2) and Sch2(2) and [deemed to have come into operation –

(a) in relation to income tax, domicile levy and universal social charge, for the year of assessment (within the meaning of the Income Tax Acts) 2011 and subsequent years of assessment,]

(b) in relation to corporation tax (within the meaning of the Corporation Tax Acts) for accounting periods of companies (within that meaning) ending on or after the passing of Finance (No. 3) Act 2011 – 27 July 2011,

(c) in relation to capital gains tax, for the year of assessment (within the meaning of the Capital Gains Tax Acts) 2011 and subsequent years of assessment.

2,3 Inserted by FA01 s2 and Sch1

4 Substituted by F(No. 2)A13 s7(1)(a) and applying for the year of assessment 2014 and subsequent years of assessment

5 Substituted by FA00 s14 and Sch1, formerly “a deduction”

Case Law

Claim for relief by members of LLPs in respect of trading losses of LLPs as a result of “Icebreaker scheme” and whether trade carried on with view to realising profit. Seven Individuals v Revenue and Customs Commissioners – [2017] UKUT 132 (TCC)

Partnerships acquiring interests in films and entering into ‘lease back’ agreements in return for fixed, increasing and guaranteed rental payments and whether trade being carried on. Samarkand Film Partnership No 3 and others v Revenue and Customs Commissioners – [2017] EWCA Civ 77

Revenue Guidance

Guidance on Revenue Opinions on Classification of Activities as Trading – TB57 October 2004, p10

Sections referred to in text

section 15 [Construction and exercise of statutory powers]

section 59 [Charge to tax on income from which tax has been deducted]

section 458 [Deductions allowed in ascertaining taxable income and provisions relating to reductions in tax]

section 461 [Basic personal tax credit]

section 461A [Additional tax credit for certain widowed persons]

section 462B [Single person child carer credit]

section 463 [Widowed parent tax credit]

section 464 [Age tax credit]

section 465 [Incapacitated child tax credit]

section 466 [Dependent relative tax credit]

section 466A [Home carer tax credit]

section 468 [Blind person’s tax credit]

section 472 [Employee tax credit]

section 787 [Nature and amount of relief for qualifying premiums]

section 1013C [Assessment of nominated civil partner in respect of income of both civil partners]

section 1017 [Assessment of husband in respect of income of both spouses]

Cross references

188 Age exemption and associated marginal relief

434 Distributions to be taken into account and meaning of “distributable income”, “investment income”, “estate income”, etc

477C Help to Buy

485FA Adaptation of provisions relating to taxation of married persons

488 Interpretation

595 Life assurance policy or deferred annuity contract entered into or acquired by company

738 Undertakings for collective investment

739B Interpretation and application