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Finance Act 2006

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CONTENTS

Finance Act 2006

2006 CHAPTER 25

PART 1

EXCISE DUTIES

Tobacco products duty

1. Rates of tobacco products duty

2. Tobacco products duty: evasion

Alcoholic liquor duties

3. Rate of duty on beer

4. Rates of duty on wine and made-wine

5. Repeal of provisions of ALDA 1979 of no practical utility etc

Hydrocarbon oil duties

6. Rates until 1st September 2006

7. Rates from 1st September 2006

8. Road vehicles

Betting and gaming duties

9. General betting duty: gaming machines

10. Rates of gaming duty

Amusement machine licence duty

11. Definition of “gaming machine”

12. Classes of machine and rates of duty

Vehicle excise duty

13. Rates

14. Reduced pollution certificates

15. Late renewal supplement

PART 2

VALUE ADDED TAX

Gaming machines

16. Gaming machines

Land

17. Buildings and land

Imported works of art etc

18. Value of imported works of art etc: auctioneer’s commission

Avoidance and fraud

19. Missing trader intra-community fraud

20. Power to inspect goods

21. Directions to keep records where belief VAT might not be paid

22. Treatment of credit vouchers

PART 3

INCOME TAX, CORPORATION TAX AND CAPITAL GAINS TAX

CHAPTER 1

INCOME TAX, CORPORATION TAX: CHARGE AND RATE BANDS

Income tax

23. Charge and rates for 2006-07

Corporation tax

24. Charge and main rate for financial year 2007

25. Small companies' rate and fraction for financial year 2006

26. Abolition of corporation tax starting rate and non-corporate distribution rate

CHAPTER 2

RELIEFS FOR BUSINESS

Group relief

27. Group relief where surrendering company not resident in UK

Research and development

28. Relief for research and development: subjects of clinical trials

29. Claims for relief for research and development

Capital allowances

30. Temporary increase in amount of first-year allowances for small enterprises

CHAPTER 3

FILMS AND SOUND RECORDINGS

Introductory

31. Meaning of “film” and related expressions

32. Meaning of “film production company”

33. Meaning of “film-making activities” etc

34. Meaning of “production expenditure” and related expressions

35. Meaning of “UK expenditure”

36. Meaning of “qualifying co-production” and “co-producer”

Taxation of activities of film production company

37. Taxation of activities of film production company

Film tax relief

38. Films qualifying for film tax relief

39. Conditions of relief: intended theatrical release

40. Conditions of relief: British film

41. Conditions of relief: UK expenditure

42. Film tax relief: further provisions

Film losses

43. Films: restriction on use of losses while film in production

44. Films: use of losses in later periods

45. Films: terminal losses

Films: withdrawal of existing reliefs

46. Films: withdrawal of existing reliefs (corporation tax)

47. Films: withdrawal of existing reliefs (income tax)

Corporation tax treatment of sound recordings

48. Sound recordings: revenue nature of expenditure

49. Sound recordings: allocation of expenditure

50. Sound recordings: interpretation

Supplementary provisions

51. Corporation tax: films and sound recordings as intangible fixed assets

52. Films: application of provisions to certain films already in production

53. Films and sound recordings: commencement and power to alter dates

CHAPTER 4

CHARITIES

54. Transactions with substantial donors

55. Non-charitable expenditure

56. Trade profits

57. Gift aid relief for companies wholly owned by one or more charities

58. Extension of restrictions on gift aid payments by close companies

CHAPTER 5

PERSONAL TAXATION

Cars

59. Cars with a CO2 emissions figure

Mobile telephones and computers

60. Mobile telephones

61. Computer equipment

Eye care

62. Exemption for employees' eye tests and special glasses

Vouchers and tokens

63. Power to exempt use of vouchers or tokens to obtain exempt benefits

Holocaust victims

64. Payments to or in respect of victims of National-Socialist persecution

CHAPTER 6

THE LONDON OLYMPIC GAMES AND PARALYMPIC GAMES

65. London Organising Committee

66. Section 65: supplementary

67. International Olympic Committee

68. Competitors and staff

CHAPTER 7

CHARGEABLE GAINS

Capital losses

69. Restriction on a company’s allowable losses

70. Restrictions on companies buying losses or gains

71. Other avoidance involving losses accruing to companies

72. Repeal of s.106 of TCGA 1992

Insurance policies and annuities

73. Policies of insurance and non-deferred annuities

Capital gains tax

74. Exception to “bed and breakfasting” rules etc

CHAPTER 8

AVOIDANCE: MISCELLANEOUS

Film partnerships

75. Interest relief: film partnership

Financial instruments

76. Avoidance involving financial arrangements

Intangible fixed assets

77. Treating assets as “existing assets” etc

International matters

78. Controlled foreign companies and treaty non-resident companies

79. Transfer of assets abroad

Pre-owned assets

80. Restriction of exemption from charge to income tax

CHAPTER 9

MISCELLANEOUS PROVISIONS

Leasing of plant or machinery

81. Leases of plant or machinery

Sale of lessors

82. Sale etc of lessor companies etc

83. Restrictions on use of losses etc: leasing partnerships

84. Disposal of plant or machinery subject to lease where income retained

85. Restrictions on effect of elections under section 266 of CAA 2001

Insurance companies and policyholders

86. Insurance companies

87. Qualifying policies: altering method for calculating benefits

Settlements

88. Settlements, etc: chargeable gains

89. Settlements, etc: income

90. Special trusts tax rates not to apply to social landlords' service charge income

Investment reliefs

91. Venture capital schemes

Employment-related securities

92. Avoidance using options etc

93. Corporation tax relief for shares acquired under EMI option

PAYE

94. PAYE: retrospective notional payments

Alternative finance arrangements

95. Profit share agency

96. Diminishing shared ownership

97. Beneficial loans to employees

98. Regulations

Nuclear decommissioning

99. Amendment of section 29 of the Energy Act 2004

100. Amendment of section 30 of the Energy Act 2004

Accounting practice

101. Securitisation companies

102. Accountancy change: spreading of adjustment

PART 4

REAL ESTATE INVESTMENT TRUSTS

Introduction

103. Real Estate Investment Trusts

104. Property rental business

105. Other key concepts

106. Conditions for company

107. Conditions for tax-exempt business

108. Conditions for balance of business

Entering Real Estate Investment Trust Regime

109. Notice

110. Duration

111. Effects of entry

112. Entry charge

Assets etc

113. Ring-fencing of tax-exempt business

114. Maximum shareholding

115. Profit: financing-cost ratio

116. Minor or inadvertent breach

117. Cancellation of tax advantage

118. Funds awaiting re-investment

Profits

119. Corporation tax

120. Calculation of profits

121. Distributions: liability to tax

122. Distributions: deduction of tax

123. Attribution of distributions

Capital gains

124. Corporation tax

125. Movement of assets out of ring-fence

126. Movement of assets into ring-fence

127. Interpretation

Leaving Real Estate Investment Trust Regime

128. Termination by notice: company

129. Termination by notice: Commissioners

130. Automatic termination for breach of requirement

131. Effects of cessation

132. Early exit by notice

133. Early exit

Groups

134. Group Real Estate Investment Trusts

135. Transfer within group

136. Availability of group reliefs

Miscellaneous

137. Insurance companies

138. Joint ventures

139. Manufactured dividends

140. Penalties for failure to give notice, etc

141. Effect of deemed disposal and re-acquisition

142. Interpretation

143. Housing investment trusts: repeal

General

144. Regulations

145. Commencement

PART 5

OIL

New basis for determining market value

146. New basis for determining the market value of oil

147. Section 146: commencement and transitional provisions

Attribution of blended crude oil

148. Crude oil: power to make regulations

Nomination scheme

149. Nomination scheme

150. Amendment of Schedule 10 to FA 1987

151. Nomination excesses and corporation tax

Ring fence trades

152. Increase in rate of supplementary charge

153. Election to defer capital allowances

154. Ring fence expenditure supplement

PART 6

INHERITANCE TAX

Future rates and bands

155. Rates and rate bands for 2008-09 and 2009-10

Trusts

156. Rules for trusts etc

157. Purchase of interests in foreign trusts

PART 7

PENSIONS

158. Taxable property held by investment-regulated pension schemes

159. Recycling of lump sums

160. Inheritance tax

161. Miscellaneous

PART 8

STAMP TAXES

Stamp duty and stamp duty land tax: thresholds

162. Raising of thresholds

Stamp duty land tax

163. Partnerships

164. Leases

165. Reallocation of trust property as between beneficiaries

166. Unit trust schemes

167. Demutualisation of insurance companies

168. Alternative finance

Stamp duty

169. Reliefs for certain company acquisitions

PART 9

MISCELLANEOUS PROVISIONS

Landfill tax

170. Rate of landfill tax

Climate change levy

171. Climate change levy: rates

172. Abolition of half-rate supplies etc

International tax arrangements

173. International tax enforcement arrangements

174. Arrangements under section 173: information powers

175. Arrangements under section 173: recovery of debts

176. Double taxation agreements: procedure

Disclosure of information

177. Disclosure of information

PART 10

SUPPLEMENTARY PROVISIONS

178. Repeals

179. Interpretation

180. Short title

Schedule 1: Group relief where surrendering company not resident in UK

Part 1: Amendments of Chapter 4 of Part 10 of ICTA

Part 2: Amendments of other enactments

Part 3: Commencement

Schedule 2: Relief for research and development: subjects of clinical trials

Schedule 3: Claims for relief for research and development

Schedule 4: Taxation of activities of film production company

Schedule 5: Film tax relief: further provisions

Part 1: Entitlement to film tax relief

Part 2: Certification of British films for purposes of film tax relief

Part 3: Consequential amendments

Part 4: Provisional entitlement to relief

Schedule 6: Avoidance involving financial arrangements

Schedule 7: Transfer of assets abroad

Schedule 8: Long funding leases of plant or machinery

Part 1: Capital allowances

Part 2: Corporation tax

Part 3: Income tax

Part 4: Commencement and transitional provisions

Schedule 9: Leases of plant or machinery: miscellaneous amendments

Schedule 10: Sale etc of lessor companies etc

Part 1: Introduction

Part 2: Leasing business carried on by a company alone

Part 3: Leasing business carried on by a company in partnership

Part 4: Miscellaneous

Schedule 11: Insurance companies

Schedule 12: Settlements: amendment of TCGA 1992 etc

Part 1: Settlors, trustees and settlements

Part 2: Sub-fund settlements

Part 3: Consequential and minor amendments

Schedule 13: Settlements: amendments to ICTA and ITTOIA 2005 etc

Part 1: Principal amendments

Part 2: Minor and consequential amendments

Schedule 14: Investment reliefs: venture capital schemes

Part 1: Limits on gross assets of issuers of shares or securities

Part 2: Rate of relief for investments in venture capital trusts

Part 3: Enterprise investment scheme: maximum subscriptions and carry-back of relief

Part 4: Lengthening of periods applicable to venture capital trusts

Part 5: Venture capital trusts: meaning of “investments”

Schedule 15: Accountancy change: spreading of adjustment

Part 1: Income tax

Part 2: Corporation tax

Schedule 16: Real Estate Investment Trusts: excluded business and income

Part 1: Classes of business

Part 2: Classes of income or profit

Part 3: Power to amend

Schedule 17: Group Real Estate Investment Trusts: modifications

Schedule 18: Oil taxation: market value of oil

Part 1: Amendments of the Oil Taxation Act 1975

Part 2: Amendments of other enactments

Schedule 19: Schedule to be inserted as Schedule 19C to ICTA

Schedule 20: Inheritance tax: rules for trusts etc

Part 1: “Trusts for bereaved minors”, “age 18-to-25 trusts” and “accumulation and maintenance” trusts

Part 2: Interests in possession: when settled property is part of beneficiary’s estate

Part 3: Related amendments in IHTA 1984

Part 4: Related amendments in TCGA 1992

Part 5: Property subject to a reservation

Part 6: Conditional exemption: relief from charges

Schedule 21: Taxable property held by investment-regulated pension schemes

Schedule 22: Pension schemes: inheritance tax

Schedule 23: Pension schemes etc: miscellaneous

Schedule 24: Stamp duty land tax: amendments of Schedule 15 to FA 2003

Schedule 25: Stamp duty land tax: amendments of Schedule 17A to FA 2003

Schedule 26: Repeals

Part 1: Excise duties

Part 2: Value added tax

Part 3: Income tax, corporation tax and capital gains tax

Part 4: Real Estate Investment Trusts

Part 5: Oil

Part 6: Inheritance tax

Part 7: Stamp taxes

Part 8: Miscellaneous provisions

 

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.

[19th July 2006]

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

Excise duties

Tobacco products duty

1 Rates of tobacco products duty

(1) For the Table of rates of duty in Schedule 1 to the Tobacco Products Duty Act 1979 (c. 7) substitute—

Table

1. Cigarettes An amount equal to 22 per cent of the retail price plus £105.10 per thousand cigarettes.
2. Cigars £153.07 per kilogram.
Hand-rolling tobacco £110.02 per kilogram.
Other smoking tobacco and chewing tobacco £67.30 per kilogram.

(2) This section shall be deemed to have come into force at 6 o'clock in the evening of 22nd March 2006.

2 Tobacco products duty: evasion

(1) After section 7 of the Tobacco Products Duty Act 1979 (c. 7) (regulations for management of duty) insert—

“7A Duty not to facilitate smuggling

(1) A manufacturer of cigarettes or hand-rolling tobacco shall so far as is reasonably practicable avoid—

(a) supplying cigarettes or hand-rolling tobacco to persons who are likely to smuggle them into the United Kingdom,

(b) supplying cigarettes or hand-rolling tobacco where the nature or circumstances of the supply makes it likely that they will be resupplied to persons who are likely to smuggle them into the United Kingdom, or

(c) otherwise facilitating the smuggling into the United Kingdom of cigarettes or hand-rolling tobacco.

(2) In particular, a manufacturer—

(a) in supplying cigarettes or hand-rolling tobacco to persons carrying on business in or in relation to a country other than the United Kingdom, shall consider whether the size or nature of the supply suggests that the products may be required for smuggling into the United Kingdom,

(b) shall maintain a written policy about steps to be taken for the purpose of complying with the duty under subsection (1), and

(c) shall provide a copy of the policy to the Commissioners on request.

(3) In this section a reference to smuggling products into the United Kingdom is a reference to importing them into the United Kingdom without payment of duty which is—

(a) chargeable under section 2, and

(b) payable by virtue of section 1(1) of the Finance (No. 2) Act 1992 (c. 48) (power to fix excise duty point).

(4) The Commissioners may notify a manufacturer in writing that they think the risk of smuggling into the United Kingdom is particularly great in relation to—

(a) products marketed under a specified brand name;

(b) products supplied to persons carrying on business in or in relation to a specified country or place.

(5) The Commissioners may by notice in writing require a manufacturer of cigarettes or hand-rolling tobacco to provide, within a specified period of time, specified information about—

(a) supply of products marketed under a brand name specified under subsection (4)(a);

(b) supply to persons carrying on business in or in relation to a country or place specified under subsection (4)(b);

(c) demand for cigarettes or hand-rolling tobacco in a country or place specified under subsection (4)(b).

(6) The Commissioners may issue guidance about the content of policies under subsection (2)(b).

(7) The Commissioners may make regulations—

(a) under which they are required to notify manufacturers of cigarettes or hand-rolling tobacco where products of a kind specified in the regulations are seized under section 139 of the Customs and Excise Management Act 1979 (c. 2) in circumstances specified in the regulations,

(b) specifying the procedure for notification,

(c) including provision about access to seized products for the purpose of determining who manufactured them, and

(d) requiring manufacturers to provide the Commissioners with information or documents, of a kind specified in the regulations or determined by the Commissioners, in relation to notified seizures.

7B Penalty for facilitating smuggling: initial notice

(1) Where the Commissioners think that a manufacturer has without reasonable excuse failed to comply with the duty under section 7A(1) they may give him written notice that they are considering requiring him to pay a penalty.

(2) In determining whether to give notice to a manufacturer under subsection (1) the Commissioners shall have regard to—

(a) the content of the manufacturer’s policy under section 7A(2)(b),

(b) compliance with that policy,

(c) action taken pursuant to any notice under section 7A(4),

(d) compliance by the manufacturer with any notice under section 7A(5),

(e) the number, size and nature of seizures of which the manufacturer has been given notice by virtue of section 7A(7)(a),

(f) compliance by the manufacturer with any requirement by virtue of section 7A(7)(d),

(g) evidence about the level of demand for the manufacturer’s products for consumption outside the United Kingdom, and

(h) any other matter that they think relevant.

(3) A notice must specify the matters to which the Commissioners have had regard in determining to give it.

(4) After the end of the period of six months beginning with the date on which a notice is given to a manufacturer, the Commissioners shall give him notice in writing either—

(a) that they require payment of a penalty, or

(b) that they do not require payment of a penalty.

(5) The Commissioners shall comply with subsection (4) during the period of 45 days beginning with the end of the period specified in that subsection; and for that purpose they shall consider—

(a) any representations made by the manufacturer during that period in such form and manner as the Commissioners may direct, and

(b) action taken by the manufacturer during that period.

7C Penalty for facilitating evasion: penalty notice

(1) A notice under section 7B(4)(a) (a “penalty notice”) must—

(a) specify the amount of the penalty which the manufacturer is required to pay, and

(b) state the grounds on which the Commissioners think that the manufacturer has failed to comply with the duty under section 7A(1).

(2) The amount specified under subsection (1)(a) must not exceed £5 million; and in determining the amount to specify the Commissioners shall have regard to—

(a) the nature or extent of the manufacturer’s failure to comply with the duty under section 7A(1),

(b) action taken by the manufacturer to secure compliance with that duty,

(c) the content of the manufacturer’s policy under section 7A(2)(b),

(d) compliance with that policy,

(e) action taken pursuant to any notice under section 7A(4),

(f) compliance by the manufacturer with any notice under section 7A(5),

(g) the number, size and nature of seizures of which the manufacturer has been given notice by virtue of section 7A(7)(a),

(h) the loss of revenue by way of duty under section 2, or VAT, in respect of the products seized, and

(i) any other matter that they think relevant.

(3) A manufacturer who is given a penalty notice may require the Commissioners to review the decision to issue the notice; and—

(a) a requirement must be imposed by notice in writing given to the Commissioners before the end of the period of 45 days beginning with the date of the penalty notice,

(b) the Commissioners shall comply with a requirement given in accordance with paragraph (a),

(c) the Commissioners shall confirm, vary or withdraw the penalty notice, and

(d) the Commissioners shall be taken to have confirmed the penalty notice unless, within the period of 45 days beginning with the date of the requirement to conduct the review, they have varied or withdrawn it by notice in writing to the manufacturer.

(4) If following a requirement under subsection (3) the Commissioners confirm or vary the notice (or are taken to have confirmed it) the manufacturer may appeal to a VAT and duties tribunal.

(5) The tribunal may—

(a) cancel the penalty notice,

(b) reduce the penalty, or

(c) confirm the penalty notice.

7D Sections 7A to 7C: supplemental

(1) Payment of a penalty imposed under section 7B(4)(a) shall not be allowed as a deduction in computing income, profits or losses for purposes of income tax or corporation tax.

(2) A penalty may be enforced as a debt due to the Commissioners.

(3) In sections 7A to 7C and this section a reference to a manufacturer of cigarettes or hand-rolling tobacco includes a reference to a person who, in the opinion of the Commissioners—

(a) arranges to have cigarettes or hand-rolling tobacco manufactured, and

(b) is wholly or partly responsible for the initial supply of the products after manufacture.

(4) Where a manufacturer is a parent undertaking or a subsidiary undertaking (within the meaning of section 258 of the Companies Act 1985 (c. 6)) the Commissioners may—

(a) treat the parent and its subsidiaries as a single undertaking for the purpose of sections 7A to 7C and this section, and

(b) in particular, enforce a penalty imposed on the single undertaking as a debt owed by—

(i) the single undertaking,

(ii) the parent, or

(iii) any of the subsidiaries.

(5) A notice or guidance under section 7A(4) to (6)—

(a) may be issued to manufacturers generally or to one or more manufacturers or classes of manufacturer,

(b) may be expressed to apply to or in respect of manufacturers generally or only to or in respect of one or more specified manufacturers or classes of manufacturer,

(c) may make provision generally or only in relation to specified cases or circumstances,

(d) may make different provision in relation to different cases or circumstances, and

(e) may be varied, replaced or revoked.

(6) The Treasury may by order—

(a) amend the list in section 7B(2) or 7C(2) so as to—

(i) add an entry,

(ii) remove an entry, or

(iii) amend an entry;

(b) amend sections 7A to 7C and this section so as to alter the class of tobacco products in relation to which they apply.

(7) An order under subsection (6)—

(a) may include transitional, consequential or incidental provision,

(b) shall be made by statutory instrument,

(c) shall be laid before the House of Commons, and

(d) shall cease to have effect unless approved by resolution of the House of Commons within the period of 28 days beginning with the date on which it is laid (disregarding any period of dissolution or prorogation or of adjournment for more than four days).”

(2) At the end of section 9 of the Tobacco Products Duty Act 1979 (c. 7) (regulations) (which becomes subsection (1)) add—

“(2) Regulations under this Act—

(a) may enable the Commissioners to dispense with compliance with a provision of the regulations (whether absolutely or conditionally),

(b) may make provision generally or only in relation to specified cases or circumstances,

(c) may make different provision in relation to different cases or circumstances, and

(d) may include transitional, consequential or incidental provision.”

(3) This section shall come into force in accordance with provision made by the Treasury by order.

(4) An order under subsection (3)—

(a) may include transitional, consequential or incidental provision, and

(b) shall be made by statutory instrument.

Alcoholic liquor duties

3 Rate of duty on beer

(1) In section 36(1AA)(a) of ALDA 1979 (rate of duty on beer) for “£12.92” substitute “£13.26”.

(2) This section shall be deemed to have come into force at midnight on 26th March 2006.

4 Rates of duty on wine and made-wine

(1) For Part 1 of the Table of rates of duty in Schedule 1 to ALDA 1979 (rates of duty on wine and made-wine) substitute—

“Part 1

Wine and made-wine of a strength not exceeding 22 per cent

Description of wine or made-wine Rates of duty per hectolitre

£

Wine or made-wine of a strength not exceeding 4 per cent 53.06
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent 72.95
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not sparkling 172.17
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent 166.70
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent 220.54
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent 229.55”

(2) This section shall be deemed to have come into force at midnight on 26th March 2006.

5 Repeal of provisions of ALDA 1979 of no practical utility etc

(1) The following provisions of ALDA 1979 shall cease to have effect—

(a) section 12(4) (power to refuse or revoke distiller’s licence where premises near to premises of a rectifier, registered brewer or vinegar-maker);

(b) section 14 (duty on spirits – attenuation charge);

(c) section 15(4) (provision of accommodation in distiller’s warehouse);

(d) section 18(5) (power to refuse licence as a rectifier where premises near to premises of a distillery);

(e) section 21 (restrictions relating to rectifiers);

(f) section 24 (restriction on carrying on of other trades by distiller or rectifier);

(g) section 26 (importation and exportation of spirits);

(h) section 32 (restriction on transfer of British spirits in warehouses);

(i) section 35 (returns as to importation, manufacture, sale or use of alcohols);

(j) section 55A (wine and made-wine of a strength not exceeding 5.5%);

(k) section 67 (power to regulate keeping of dutiable alcoholic liquors by wholesalers and retailers);

(l) section 69 (miscellaneous provisions as to wholesalers and retailers of spirits);

(m) section 71 (penalty for mis-describing liquor as spirits);

(n) section 74 (liquor to be deemed wine or spirits); and

(o) section 82 (power to make regulations with respect to stills).

(2) In consequence of the repeal of section 55A of ALDA 1979, that Act is amended as follows.

(3) In section 54 (wine: charge of excise duty), in subsection (4A), for “wine to which section 55A below applies” substitute “wine of a strength not exceeding 5.5 per cent”.

(4) In section 55 (made-wine: charge of excise duty), in subsections (4A) and (5)(d), for “made-wine to which section 55A below applies” substitute “made-wine of a strength not exceeding 5.5 per cent”.

Hydrocarbon oil duties

6 Rates until 1st September 2006

(1) HODA 1979 is amended as follows.

(2) In section 6(1A) (hydrocarbon oil: rates of duty)—

(a) in paragraph (a) (ultra low sulphur petrol) for “£0.4832” substitute “£0.4710”,

(b) in paragraph (aa) (sulphur-free petrol) for “£0.4832” substitute “£0.4710”,

(c) in paragraph (b) (light oil other than ultra low sulphur petrol and sulphur-free petrol) for “£0.5766” substitute “£0.5620”,

(d) in paragraph (c) (ultra low sulphur diesel) for “£0.4832” substitute “£0.4710”,

(e) in paragraph (ca) (sulphur-free diesel) for “£0.4832” substitute “£0.4710”, and

(f) in paragraph (d) (heavy oil other than ultra low sulphur diesel and sulphur-free diesel) for “£0.5465” substitute “£0.5327”.

(3) In section 6AA(3) (biodiesel) for “£0.2832” substitute “£0.2710”.

(4) In section 6AD(3) (bioethanol) for “£0.2832” substitute “£0.2710”.

(5) In section 8(3) (road fuel gas)—

(a) in paragraph (a) for “£0.1080” substitute “£0.0900”, and

(b) in paragraph (b) for “£0.1270” substitute “£0.0900”.

(6) In section 13A(1) (rebate on unleaded petrol) for “£0.0617” substitute “£0.0601”.

(7) The following statutory instruments shall cease to have effect—

(a) the Excise Duties (Surcharges or Rebates) (Hydrocarbon Oils etc.) Order 2005 (S.I. 2005/1978),

(b) the Excise Duties (Road Fuel Gases) (Reliefs) Regulations 2005 (S.I. 2005/1979), and

(c) the Excise Duties (Surcharges or Rebates) (Hydrocarbon Oils etc.) (Amendment) Order 2005 (S.I. 2005/3330).

7 Rates from 1st September 2006

(1) HODA 1979 is amended as follows.

(2) In section 6(1A) (hydrocarbon oil: rates of duty)—

(a) in paragraph (a) (ultra low sulphur petrol) for “£0.4710” substitute “£0.4835”,

(b) in paragraph (aa) (sulphur-free petrol) for “£0.4710” substitute “£0.4835”,

(c) in paragraph (b) (light oil other than ultra low sulphur petrol and sulphur-free petrol) for “£0.5620” substitute “£0.5768”,

(d) in paragraph (c) (ultra low sulphur diesel) for “£0.4710” substitute “£0.4835”,

(e) in paragraph (ca) (sulphur-free diesel) for “£0.4710” substitute “£0.4835 and

(f) in paragraph (d) (heavy oil other than ultra low sulphur diesel and sulphur-free diesel) for “£0.5327” substitute “£0.5468”.

(3) In section 6AA(3) (biodiesel) for “£0.2710” substitute “£0.2835”.

(4) In section 6AD(3) (bioethanol) for “£0.2710” substitute “£0.2835”.

(5) In section 8(3) (road fuel gas)—

(a) in paragraph (a) for “£0.0900” substitute “£0.1081”, and

(b) in paragraph (b) for “£0.0900” substitute “£0.1221”.

(6) In section 11(1) (rebate on heavy oil)—

(a) in paragraph (a) for “£0.0604” substitute“£0.0729”,

(b) in paragraph (b) for “£0.0644” substitute “£0.0769”, and

(c) in paragraph (ba) for “£0.0644” substitute “£0.0769”.

(7) In section 13A(1) (rebate on unleaded petrol) for “£0.0601”substitute “£0.0617”.

(8) In section 14(1) (rebate on light oil for use as furnace oil) for “£0.0604” substitute “£0.0729”.

(9) This section comes into force on 1st September 2006.

8 Road vehicles

After section 27(1A) of HODA 1979 (interpretation) insert—

“(1B) The Treasury may by order made by statutory instrument amend Schedule 1 to this Act so as to—

(a) add a class of excepted vehicle,

(b) remove a class of excepted vehicle, or

(c) redefine a class of excepted vehicle.

(1C) Section 2A(2) and (3) above shall apply to an order under subsection (1B).”

Betting and gaming duties

9 General betting duty: gaming machines

(1) In section 2(2) of the Betting and Gaming Duties Act 1981 (c. 63) (general betting duty: exemptions) after paragraph (c) add— “, or

(d) a bet made using a gaming machine, within the meaning of section 23 of the Value Added Tax Act 1994.”

(2) This section shall have effect in respect of anything done on or after 6th December 2005 (with the reference to section 23 of the Value Added Tax Act 1994 being a reference to that definition as it is treated as having effect in relation to things done on or after that date by virtue of section 16(6) and (7) below).

10 Rates of gaming duty

(1) For the Table in section 11(2) of FA 1997 (rates of gaming duty) substitute—

Table

Part of gross gaming yield Rate
The first £546,500 2.5 per cent.
The next £1,212,500 12.5 per cent.
The next £1,212,500 20 per cent.
The next £2,124,000 30 per cent.
The remainder 40 per cent.

(2) This section has effect in relation to accounting periods beginning on or after 1st April 2006.

Amusement machine licence duty

11 Definition of “gaming machine”

(1) For section 25(1) to (1B) of the Betting and Gaming Duties Act 1981 (c. 63) (amusement machine licence duty: definition of “amusement machine”) substitute—

“(1) A machine is an amusement machine for the purposes of this Act if it is—

(a) a gaming machine, and

(b) a prize machine.

(1A) In this Act “gaming machine” means a machine that is a gaming machine for the purposes of section 23 of the Value Added Tax Act 1994 (c. 23).”

(2) In section 25(1C) of the Betting and Gaming Duties Act 1981 (“prize machine”) for “an amusement machine is a prize machine” substitute “a machine is a prize machine”.

(3) In Schedule 3 to the Betting and Gaming Duties Act 1981 (bingo duty) omit paragraph 6 (machine bingo).

(4) Subsections (1) and (2) shall have effect in relation to the provision of a machine on or after 1st August 2006.

(5) Subsection (3) shall have effect in relation to accounting periods beginning on or after 1st August 2006.

12 Classes of machine and rates of duty

(1) For section 21(3AA) to (3E) of the Betting and Gaming Duties Act 1981 (c. 63) (special licences and excepted machines) substitute—

“(4) A special amusement machine licence shall be granted only—

(a) for a small prize machine,

(b) if conditions prescribed by the Commissioners by regulations are satisfied in relation to the application for the licence, the applicant and the machine, and

(c) for a period of twelve months.

(5) The following are excepted machines—

(a) machines that are not gaming machines,

(b) a gaming machine in respect of which—

(i) the cost of a single game does not exceed 30p,

(ii) the maximum value of the prize for winning a single game does not exceed £8, and

(iii) the maximum cash component of the prize for winning a single game does not exceed £5,

(c) a gaming machine in respect of which—

(i) the cost of a single game does not exceed 10p, and

(ii) the maximum value of the prize for winning a single game does not exceed £5, and

(d) two-penny machines.”

(2) In section 22(2) of that Act (gaming machines) paragraph (b) shall cease to have effect.

(3) For section 23(2) and (3) of that Act (rates) substitute—

“(2) The appropriate amount for each machine shall be determined in accordance with the following Table by reference to—

(a) the period for which the licence is granted, and

(b) the machine’s category determined in accordance with subsection (3).

 
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