Schedule 12
Finance Bill
11:15 am
Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)
As this is the first time that I have taken the floor this morning, it may be appropriate for me to respond to the point of order raised by the hon. Member for Fareham at the start of the sitting, if that would be in order, Mr. Hood. He rightly pointed out that the numbers of the amendments to schedule 17 used in the explanatory notes were different from those on the amendment paper. I am grateful to him for pointing that out. I am advised that a complete set of explanatory notes for all the Government amendments to schedule 17 is on its way to the room forthwith. Since we are a little time away from discussing schedule 17, I trust that that will be sufficient for the hon. Gentleman. I assure him that there was no intention to mystify any further what is a rather technical schedule.
By way of background to Government amendments Nos. 123, 124 and 125, I should explain that schedule 12 will introduce changes to the system of taxing individuals who receive dividend income from shareholdings in foreign companies. The changes have effect for the tax year 2008-09 and subsequent years.
Since the Bill was published, it has become clear that some collective investment schemes are seeking to exploit the extension of the non-payable dividend tax credit by locating their cash or bond fund ranges offshore, primarily to secure tax advantages for their UK investors. That behaviour could carry a significant Exchequer cost and was not the intention behind our policy. In order to prevent that tax leakage, the Government amendments will exclude distributions from all offshore funds from the extension of the non-payable dividend tax credit. An offshore fund is already defined in legislation. The amendments mean that the position for UK investors in offshore collective investment schemes will remain exactly as it was before 6 April 2008.