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Taxation of Chargeable Gains Act 1992 (c. 12)

(The document as of February, 2008)

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Taxation of Chargeable Gains Act 1992

1992 CHAPTER 12

ARRANGEMENT OF SECTIONS

Content
  1. Part I

    Capital Gains Tax and Corporation Tax on Chargeable Gains

    1. General

      1. 1. The charge to tax.

    2. Capital gains tax

      1. 2. Persons and gains chargeable to capital gains tax, and allowable losses.

      2. 3. Annual exempt amount.

      3. 4. Rates of capital gains tax.

      4. 5. Accumulation and discretionary settlements.

      5. 6. Other special cases.

      6. 7. Time for payment of tax.

    3. Corporation tax

      1. 8. Company's total profits to include chargeable gains.

    4. Residence etc.

      1. 9. Residence, including temporary residence.

      2. 10. Non-resident with United Kingdom branch or agency.

      3. 11. Visiting forces, agents-general etc.

      4. 12. Foreign assets of person with foreign domicile.

      5. 13. Attribution of gains to members of non-resident companies.

      6. 14. Non-resident groups of companies.

  2. Part II

    General Provisions Relating to Computation of Gains and Acquisitions and Disposals of Assets

    1. I

      Introductory

      1. 15. Computation of gains.

      2. 16. Computation of losses.

      3. 17. Disposals and acquisitions treated as made at market value.

      4. 18. Transactions between connected persons.

      5. 19. Deemed consideration in certain cases where assets disposed of in a series of transactions.

      6. 20. Original market value and aggregate market value for purposes of section 19.

    2. II

      Assets and Disposals of Assets

      1. General provisions

        1. 21. Assets and disposals.

        2. 22. Disposal where capital sums derived from assets.

        3. 23. Receipt of compensation and insurance money not treated as a disposal.

        4. 24. Disposals where assets lost or destroyed, or become of negligible value.

        5. 25. Non-residents: deemed disposals.

        6. 26. Mortgages and charges not to be treated as disposals.

        7. 27. Disposals in cases of hire-purchase and similar transactions.

        8. 28. Time of disposal and acquisition where asset disposed of under contract.

      2. Value shifting

        1. 29. General provisions.

        2. 30. Tax-free benefits.

        3. 31. Distributions within a group followed by a disposal of shares.

        4. 32. Disposals within a group followed by a disposal of shares.

        5. 33. Provisions supplementary to sections 30 to 32.

        6. 34. Transactions treated as a reorganisation of share capital.

    3. III

      Computation of Gains: General Provisions

      1. Re-basing to 1982, and assets held on 6th April 1965

        1. 35. Assets held on 31st March 1982 (including assets held on 6th April 1965).

        2. 36. Deferred charges on gains before 31st March 1982.

      2. Allowable deductions

        1. 37. Consideration chargeable to tax on income.

        2. 38. Acquisition and disposal costs etc.

        3. 39. Exclusion of expenditure by reference to tax on income.

        4. 40. Interest charged to capital.

        5. 41. Restriction of losses by reference to capital allowances and renewals allowances.

        6. 42. Part disposals.

        7. 43. Assets derived from other assets.

      3. Wasting assets

        1. 44. Meaning of "wasting asset".

        2. 45. Exemption for certain wasting assets.

        3. 46. Straightline restriction of allowable expenditure.

        4. 47. Wasting assets qualifying for capital allowances.

      4. Miscellaneous provisions

        1. 48. Consideration due after time of disposal.

        2. 49. Contingent liabilities.

        3. 50. Expenditure reimbursed out of public money.

        4. 51. Exemption for winnings and damages etc.

        5. 52. Supplemental.

    4. IV

      Computation of Gains: The Indexation Allowance

      1. 53. The indexation allowance and interpretative provisions.

      2. 54. Calculation of indexation allowance.

      3. 55. Assets owned on 31st March 1982 or acquired on a no gain/no loss disposal.

      4. 56. Part disposals and disposals on a no-gain/no-loss basis.

      5. 57. Receipts etc. which are not treated as disposals but affect relevant allowable expenditure.

  3. Part III

    Individuals, Partnerships, Trusts and Collective Investment Schemes

    1. I

      Miscellaneous Provisions

      1. 58. Husband and wife.

      2. 59. Partnerships.

      3. 60. Nominees and bare trustees.

      4. 61. Funds in court.

      5. 62. Death: general provisions.

      6. 63. Death: application of law in Scotland.

      7. 64. Expenses in administration of estates and trusts.

      8. 65. Liability for tax of trustees or personal representatives.

      9. 66. Insolvents' assets.

      10. 67. Provisions applicable where section 79 of the Finance Act 1980 has applied.

    2. II

      Settlements

      1. General provisions

        1. 68. Meaning of "settled property".

        2. 69. Trustees of settlements.

        3. 70. Transfers into settlement.

        4. 71. Person becoming absolutely entitled to settled property.

        5. 72. Termination of life interest on death of person entitled.

        6. 73. Death of life tenant: exclusion of chargeable gain.

        7. 74. Effect on sections 72 and 73 of relief under section 165 or 260.

        8. 75. Death of annuitant.

        9. 76. Disposal of interests in settled property.

        10. 77. Charge on settlor with interest in settlement.

        11. 78. Right of recovery.

        12. 79. Provisions supplemental to sections 77 and 78.

      2. Migration of settlements, non-resident settlements and dual resident settlements

        1. 80. Trustees ceasing to be resident in U.K.

        2. 81. Death of trustee: special rules.

        3. 82. Past trustees: liability for tax.

        4. 83. Trustees ceasing to be liable to U.K. tax.

        5. 84. Acquisition by dual resident trustees.

        6. 85. Disposal of interests in non-resident settlements.

        7. 86. Attribution of gains to settlors with interest in non-resident or dual resident settlements.

        8. 87. Attribution of gains to beneficiaries.

        9. 88. Gains of dual resident settlements.

        10. 89. Migrant settlements etc.

        11. 90. Transfers between settlements.

        12. 91. Increase in tax payable under section 87 or 89(2).

        13. 92. Qualifying amounts and matching.

        14. 93. Matching: special cases.

        15. 94. Transfers of settled property where qualifying amounts not wholly matched.

        16. 95. Matching after transfer.

        17. 96. Payments by and to companies.

        18. 97. Supplementary provisions.

        19. 98. Power to obtain information for purposes of sections 87 to 90.

    3. III

      Collective Investment Schemes and Investment Trusts

      1. 99. Application of Act to unit trust schemes.

      2. 100. Exemption for authorised unit trusts etc.

      3. 101. Transfer of company's assets to investment trust.

      4. 102. Collective investment schemes with property divided into separate parts.

      5. 103. Restriction on availability of indexation allowance.

  4. Part IV

    Shares, Securities, Options etc.

    1. I

      General

      1. Share pooling, identification of securities, and indexation

        1. 104. Share pooling: general interpretative provisions.

        2. 105. Disposal on or before day of acquisition of shares and other unidentified assets.

        3. 106. Disposal of shares and securities by company within prescribed period of acquisition.

        4. 107. Identification of securities etc: general rules.

        5. 108. Identification of relevant securities.

        6. 109. Pre-April 1982 share pools.

        7. 110. New holdings: indexation allowance.

        8. 111. Indexation: building society etc. shares.

        9. 112. Parallel pooling regulations.

        10. 113. Calls on shares.

        11. 114. Consideration for options.

      2. Gilt-edged securities and qualifying corporate bonds

        1. 115. Exemptions for gilt-edged securities and qualifying corporate bonds etc.

        2. 116. Reorganisations, conversions and reconstructions.

        3. 117. Meaning of "qualifying corporate bond".

      3. Deep discount securities, the accrued income scheme etc.

        1. 118. Amount to be treated as consideration on disposal of deep discount securities etc.

        2. 119. Transfers of securities subject to the accrued income scheme.

        3. 120. Increase in expenditure by reference to tax charged in relation to shares etc.

      4. Savings certificates etc.

        1. 121. Exemption for government non-marketable securities.

      5. Capital distribution in respect of shares etc,

        1. 122. Distribution which is not a new holding within Chapter II.

        2. 123. Disposal of right to acquire shares or debentures.

      6. Close companies

        1. 124. Disposal of shares: relief in respect of income tax consequent on shortfall in distributions.

        2. 125. Shares in close company transferring assets at an undervalue.

    2. II

      Reorganisation of Share Capital, Conversion of Securities etc.

      1. Reorganisation or reduction of share capital

        1. 126. Application of sections 127 to 131.

        2. 127. Equation of original shares and new holding.

        3. 128. Consideration given or received by holder.

        4. 129. Part disposal of new holding.

        5. 130. Composite new holdings.

        6. 131. Indexation allowance.

      2. Conversion of securities

        1. 132. Equation of converted securities and new holding.

        2. 133. Premiums on conversion of securities.

        3. 134. Compensation stock.

      3. Company reconstructions and amalgamations

        1. 135. Exchange of securities for those in another company.

        2. 136. Reconstruction or amalgamation involving issue of securities.

        3. 137. Restriction on application of sections 135 and 136.

        4. 138. Procedure for clearance in advance.

        5. 139. Reconstruction or amalgamation involving transfer of business.

        6. 140. Postponement of charge on transfer of assets to non-resident company.

    3. III

      Miscellaneous Provisions Relating to commodities, futures, options and other securities

      1. 141. Stock dividends: consideration for new holding.

      2. 142. Capital gains on certain stock dividends.

      3. 143. Commodity and financial futures and qualifying options.

      4. 144. Options and forfeited deposits.

      5. 145. Call options: indexation allowance.

      6. 146. Options: application of rules as to wasting assets.

      7. 147. Quoted options treated as part of new holdings.

      8. 148. Traded options: closing purchases.

      9. 149. Rights to acquire qualifying shares.

      10. 150. Business expansion schemes.

      11. 151. Personal equity plans.

  5. Part V

    Transfer of Business Assets

    1. I

      General Provisions

      1. Replacement of business assets

        1. 152. Roll-over relief.

        2. 153. Assets only partly replaced.

        3. 154. New assets which are depreciating assets.

        4. 155. Relevant classes of assets.

        5. 156. Assets of Class 1.

        6. 157. Trade carried on by family company: business assets dealt with by individual.

        7. 158. Activities other than trades, and interpretation.

        8. 159. Non-residents: roll-over relief.

        9. 160. Dual resident companies: roll-over relief.

      2. Stock in trade

        1. 161. Appropriations to and from stock.

      3. Transfer of business to a company

        1. 162. Roll-over relief on transfer of business.

      4. Retirement relief

        1. 163. Relief for disposals by individuals on retirement from family business.

        2. 164. Other retirement relief.

    2. II

      Gifts of Business Assets

      1. 165. Relief for gifts of business assets.

      2. 166. Gifts to non-residents.

      3. 167. Gifts to foreign-controlled companies.

      4. 168. Emigration of donee.

      5. 169. Gifts into dual resident trusts.

  6. Part VI

    Companies, Oil, Insurance etc.

    1. I

      Companies

      1. Groups of companies

        1. 170. Interpretation of sections 170 to 181.

      2. Transactions within groups

        1. 171. Transfers within a group: general provisions.

        2. 172. Transfer of United Kingdom branch or agency.

        3. 173. Transfers within a group: trading stock.

        4. 174. Disposal or acquisition outside a group.

        5. 175. Replacement of business assets by members of a group.

      3. Losses attributable to depreciatory transactions

        1. 176. Depreciatory transactions within a group.

        2. 177. Dividend stripping.

      4. Companies leaving groups

        1. 178. Company ceasing to be member of group: pre-appointed day cases.

        2. 179. Company ceasing to be member of group: post-appointed day cases.

        3. 180. Transitional provisions.

        4. 181. Exemption from charge under 178 or 179 in the case of certain mergers.

      5. Restriction on indexation allowance for groups and associated companies

        1. 182. Disposals of debts.

        2. 183. Disposals of shares.

        3. 184. Definitions and other provisions supplemental to sections 182 and 183.

      6. Non-resident and dual resident companies

        1. 185. Deemed disposal of assets on company ceasing to be resident in U.K.

        2. 186. Deemed disposal of assets on company ceasing to be liable to U.K. taxation.

        3. 187. Postponement of charge on deemed disposal under section 185 or 186.

        4. 188. Dual resident companies: deemed disposal of certain assets.

      7. Recovery of tax otherwise than from tax-payer company

        1. 189. Capital distribution of chargeable gains: recovery of tax from shareholder.

        2. 190. Tax on one member of group recoverable from another member.

        3. 191. Tax on non-resident company recoverable from another member of group or from controlling director.

      8. Demergers

        1. 192. Tax exempt distributions.

    2. II

      Oil and Mining Industries

      1. Oil exploration and exploitation

        1. 193. Roll-over relief not available for gains on oil licences.

        2. 194. Disposals of oil licences relating to undeveloped areas.

        3. 195. Allowance of certain drilling expenditure etc.

        4. 196. Interpretation of sections 194 and 195.

        5. 197. Disposals of interests in oil fields etc: ring fence provisions.

        6. 198. Replacement of business assets used in connection with oil fields.

        7. 199. Exploration or exploitation assets: deemed disposals

        8. 200. Limitation of losses on disposal of oil industry assets held on 31st March 1982.

      2. Mineral leases

        1. 201. Royalties.

        2. 202. Capital losses.

        3. 203. Provisions supplementary to sections 201 and 202.

    3. III

      Insurance

      1. 204. Policies of insurance.

      2. 205. Disallowance of insurance premiums as expenses.

      3. 206. Underwriters.

      4. 207. Disposal of assets in premiums trust fund etc.

      5. 208. Premiums trust funds: indexation.

      6. 209. Interpretation, regulations about underwriters etc.

      7. 210. Life assurance and deferred annuities.

      8. 211. Transfers of business.

      9. 212. Annual deemed disposal of holdings of unit trusts etc.

      10. 213. Spreading of gains and losses under section 212.

      11. 214. Transitional provisions.

    4. IV

      Miscellaneous Cases

      1. Building societies etc.

        1. 215. Disposal of assets on amalgamation of building societies etc.

        2. 216. Assets transferred from society to company.

        3. 217. Shares, and rights to shares, in successor company.

      2. The Housing Corporation, Housing for Wales, Scottish Homes and housing associations

        1. 218. Disposals of land between the Housing Corporation, Housing for Wales or Scottish Homes and housing associations.

        2. 219. Disposals by Housing Corporation, Housing for Wales, Scottish Homes and certain housing associations.

        3. 220. Disposals by Northern Ireland housing associations.

      3. Other bodies

        1. 221. Harbour authorities.

  7. Part VII

    Other Property, Businesses, Investments etc.

    1. Private residences

      1. 222. Relief on disposal of private residence.

      2. 223. Amount of relief.

      3. 224. Amount of relief: further provisions.

      4. 225. Private residence occupied under terms of settlement.

      5. 226. Private residence occupied by dependent relative before 6th April 1988.

    2. Employee share ownership trusts

      1. 227. Conditions for roll-over relief.

      2. 228. Conditions for relief: supplementary.

      3. 229. The relief.

      4. 230. Dwelling-houses: special provision.

      5. 231. Shares: special provision.

      6. 232. Chargeable event when replacement assets owned.

      7. 233. Chargeable event when replacement property owned.

      8. 234. Chargeable events when bonds owned.

      9. 235. Information.

      10. 236. Prevention of double charge.

    3. Superannuation funds, profit sharing schemes, employee trusts etc.

      1. 237. Superannuation funds, annuities and annual payments.

      2. 238. Approved profit sharing and share option schemes.

      3. 239. Employee trusts.

    4. Leases

      1. 240. Leases of land and other assets.

      2. 241. Furnished holiday lettings.

    5. Part disposals

      1. 242. Small part disposals.

      2. 243. Part disposal to authority with compulsory powers.

      3. 244. Part disposal: consideration exceeding allowable expenditure.

    6. Compulsory acquisition

      1. 245. Compensation paid on compulsory acquisition.

      2. 246. Time of disposal and acquisition.

      3. 247. Roll-over relief on compulsory acquisition.

      4. 248. Provisions supplementary to section 247.

    7. Agricultural land and woodlands

      1. 249. Grants for giving up agricultural land.

      2. 250. Woodlands.

    8. Debts

      1. 251. General provisions.

      2. 252. Foreign currency bank accounts.

      3. 253. Relief for loans to traders.

      4. 254. Relief for debts on qualifying corporate bonds.

        . Relief for local constituency associations of political parties on reorganisation of constituencies.

      5. 265. Designated international organisations.

      6. 266. Inter-American Development Bank.

      7. 267. Sharing of transmission facilities.

      8. 268. Decorations for valour or gallant conduct.

      9. 269. Foreign currency for personal expenditure.

      10. 270. Chevening Estate.

      11. 271. Other miscellaneous exemptions.

  8. Part VIII

    Supplemental

    1. 272. Valuation: general.

    2. 273. Unquoted shares and securities.

    3. 274. Value determined for inheritance tax.

    4. 275. Location of assets.

    5. 276. The territorial sea and the continental shelf.

    6. 277. Double taxation relief.

    7. 278. Allowance for foreign tax.

    8. 279. Foreign assets: delayed remittances.

    9. 280. Consideration payable by instalments.

    10. 281. Payment by instalments of tax on gifts.

    11. 282. Recovery of tax from donee.

    12. 283. Repayment supplements.

    13. 284. Income tax decisions.

    14. 285. Recognised investment exchanges.

    15. 286. Connected persons: interpretation.

    16. 287. Orders and regulations made by the Treasury or the Board.

    17. 288. Interpretation.

    18. 289. Commencement.

    19. 290. Savings, transitionals, consequential amendments and repeals.

    20. 291. Short title.

    1. Schedule 1

      Application of exempt amount in cases involving settled property.

    2. Schedule 2

      Assets held on 6th April 1965.

      1. Part I

        Quoted securities.

      2. Part II

        Land reflecting development value.

      3. Part III

        Other assets.

      4. Part IV

        Miscellaneous.

    3. Schedule 3

      Assets held on 31st March 1982.

    4. Schedule 4

      Deferred charges on gains before 31st March 1982.

    5. Schedule 5

      Attribution of gains to settlors with interest in non-resident or dual resident settlement.

    6. Schedule 6

      Retirement relief etc.

      1. Part I

        Interpretation.

      2. Part II

        The operation of the relief.

    7. Schedule 7

      Relief for gifts of business assets.

      1. Part I

        Agricultural property and settled property.

      2. Part II

        Reductions in held-over gain.

    8. Schedule 8

      Leases.

    9. Schedule 9

      Gilt-edged securities.

      1. Part I

        General.

      2. Part II

        Existing gilt-edged securities.

    10. Schedule 10

      Consequential amendments.

    11. Schedule 11

      Transitional provisions and savings.

      1. Part I

        Valuation.

      2. Part II

        Other transitory provisions.

      3. Part III

        Assets acquired before commencement.

      4. Part IV

        Other general savings.

    12. Schedule 12

      Repeals.

An Act to consolidate certain enactments relating to the taxation of chargeable gains.

[6th March 1992]

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 I Capital gains tax and corporation tax on chargeable gains

General

1 The charge to tax

(1) Tax shall be charged in accordance with this Act in respect of capital gains, that is to say chargeable gains computed in accordance with this Act and accruing to a person on the disposal of assets.

(2) Companies shall be chargeable to corporation tax in respect of chargeable gains accruing to them in accordance with section 6 of the Taxes Act and the other provisions of the Corporation Tax Acts.

(3) Without prejudice to subsection (2), capital gains tax shall be charged for all years of assessment in accordance with the following provisions of this Act.



Capital gains tax

2 Persons and gains chargeable to capital gains tax, and allowable losses

(1) Subject to any exceptions provided by this Act, and without prejudice to sections 10 and 276, a person shall be chargeable to capital gains tax in respect of chargeable gains accruing to him in a year of assessment during any part of which he is resident in the United Kingdom, or during which he is ordinarily resident in the United Kingdom.

(2) Capital gains tax shall be charged on the total amount of chargeable gains accruing to the person chargeable in the year of assessment, after deducting--

(a) any allowable losses accruing to that person in that year of assessment, and

(b) so far as they have not been allowed as a deduction from chargeable gains accruing in any previous year of assessment, any allowable losses accruing to that person in any previous year of assessment (not earlier than the year 1965-66).

(3) Except as provided by section 62, an allowable loss accruing in a year of assessment shall not be allowable as a deduction from chargeable gains accruing in any earlier year of assessment, and relief shall not be given under this Act more than once in respect of any loss or part of a loss, and shall not be given under this Act if and so far as relief has been or may be given in respect of it under the Income Tax Acts.

3 Annual exempt amount

(1) An individual shall not be chargeable to capital gains tax in respect of so much of his taxable amount for any year of assessment as does not exceed the exempt amount for the year.

(2) Subject to subsection (3) below, the exempt amount for any year of assessment shall be £5,500.

(3) If the retail prices index for the month of December preceding a year of assessment is higher than it was for the previous December, then, unless Parliament otherwise determines, subsection (2) above shall have effect for that year as if for the amount specified in that subsection as it applied for the previous year (whether by virtue of this subsection or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index and, if the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple.

(4) The Treasury shall, before each year of assessment, make an order specifying the amount which by virtue of this section is the exempt amount for that year.

(5) For the purposes of this section an individual's taxable amount for a year of assessment is the amount on which he is chargeable under section 2(2) for that year but--

(a) where the amount of chargeable gains less allowable losses accruing to an individual in any year of assessment does not exceed the exempt amount for the year, no deduction from that amount shall be made for that year in respect of allowable losses carried forward from a previous year or carried back from a subsequent year in which the individual dies, and

(b) where the amount of chargeable gains less allowable losses accruing to an individual in any year of assessment exceeds the exempt amount for the year, the deduction from that amount for that year in respect of allowable losses carried forward from a previous year or carried back from a subsequent year in which the individual dies shall not be greater than the excess.

(6) Where in a year of assessment--

(a) the amount of chargeable gains accruing to an individual does not exceed the exempt amount for the year, and

(b) the aggregate amount or value of the consideration for all the disposals of assets made by him (other than disposals gains accruing on which are not chargeable gains) does not exceed an amount equal to twice the exempt amount for the year,

a statement to the effect of paragraphs (a) and (b) above shall, unless the inspector otherwise requires, be sufficient compliance with any notice under section 8 of the Management Act requiring the individual to make a return of the chargeable gains accruing to him in that year.

(7) For the year of assessment in which an individual dies and for the next 2 following years, subsections (1) to (6) above shall apply to his personal representatives as they apply to an individual.

(8) Schedule 1 shall have effect as respects the application of this section to trustees.

4 Rates of capital gains tax

(1) Subject to the provisions of this section and section 5, the rate of capital gains tax in respect of gains accruing to a person in a year of assessment shall be equivalent to the basic rate of income tax for the year.

(2) If income tax is chargeable at the higher rate in respect of any part of the income of an individual for a year of assessment, the rate of capital gains tax in respect of gains accruing to him in the year shall be equivalent to the higher rate.

(3) If no income tax is chargeable at the higher rate in respect of the income of an individual for a year of assessment, but the amount on which he is chargeable to capital gains tax exceeds the unused part of his basic rate band, the rate of capital gains tax on the excess shall be equivalent to the higher rate of income tax for the year.

(4) The reference in subsection (3) above to the unused part of an individual's basic rate band is a reference to the amount by which the basic rate limit exceeds his total income (as reduced by any deductions made in accordance with the Income Tax Acts).

5 Accumulation and discretionary settlements

(1) The rate of capital gains tax in respect of gains accruing to trustees of an accumulation or discretionary settlement in a year of assessment shall be equivalent to the sum of the basic and additional rates of income tax for the year.

(2) For the purposes of subsection (1) above a trust is an accumulation or discretionary settlement where--

(a) all or any part of the income arising to the trustees in the year of assessment is income to which section 686 of the Taxes Act (liability to income tax at the additional rate) applies, or

(b) all the income arising to the trustees in the year of assessment is treated as the income of the settlor, but that section would apply to it if it were not so treated, or

(c) all the income arising to the trustees in the year of assessment is applied in defraying expenses of the trustees in that year, but that section would apply to it if it were not so applied, or

(d) no income arises to the trustees in the year of assessment, but that section would apply if there were income arising to the trustees and none of it were treated as the income of the settlor or applied as mentioned in paragraph (c) above.

6 Other special cases

(1) References in section 4 to income tax chargeable at the higher rate include references to tax chargeable by virtue of section 353(4), 369(3A), 683(1) or 684(1) of the Taxes Act (restriction to basic rate of relief on certain interest etc. and settlements) in respect of excess liability (that is, liability to income tax over what it would be if all income tax were charged at the basic rate to the exclusion of any higher rate); and

(a) where for any year of assessment a deduction is by virtue of section 353(4) or 369(3A) not allowed in computing the total income of a person for the purposes of excess liability then, whether or not he is chargeable to tax otherwise than at the basic rate, that deduction shall not be allowed for the purposes of section 4(4);

(b) where for any year of assessment income is treated by virtue of section 683(1) or 684(1) as the income of a person for the purposes of excess liability then, whether or not he is chargeable to tax otherwise than at the basic rate, it shall also be treated as his income for the purposes of section 4(4).

(2) Where for any year of assessment--

(a) by virtue of section 549(2) of the Taxes Act (gains under life policy or life annuity contract) a deduction of an amount is made from a person's total income for the purposes of excess liability, or

(b) by virtue of section 683(1) or 684(1) of that Act an amount of a person's income is treated as not being his income for those purposes, or

(c) by virtue of section 699(1) of that Act (income accruing before death) the residuary income of an estate is treated as reduced so as to reduce a person's income by any amount for those purposes,

section 4(4) shall have effect as if his income for the year were reduced by that amount.

(3) Where by virtue of section 547(1)(a) of the Taxes Act (gains from insurance policies etc.) a person's total income for a year of assessment is deemed to include any amount or amounts--

(a) section 4(4) shall have effect as if his total income included not the whole of the amount or amounts concerned but only the appropriate fraction within the meaning of section 550(3) of that Act, and

(b) if relief is given under section 550 of that Act and the calculation required by section 550(2)(b) does not involve the higher rate of income tax, section 4(2) and (3) shall have effect as if no income tax were chargeable at the higher rate in respect of his income.

(4) Nothing in subsection (1) above shall be taken to reduce, and nothing in subsections (2) and (3) above shall be taken to increase, the amount of the deduction which a person is entitled to make from his total income by virtue of any provision of Chapter I of Part VII of the Taxes Act which limits any allowance by reference to the level of his total income.

7 Time for payment of tax

Capital gains tax assessed on any person in respect of gains accruing in any year shall be payable by that person on or before 1st December following the end of that year, or at the expiration of a period of 30 days beginning with the date of the issue of the notice of assessment, whichever is the later.



Corporation tax

8 Company's total profits to include chargeable gains

(1) Subject to the provisions of this section and section 400 of the Taxes Act, the amount to be included in respect of chargeable gains in a company's total profits for any accounting period shall be the total amount of chargeable gains accruing to the company in the accounting period after deducting--

(a) any allowable losses accruing to the company in the period, and

(b) so far as they have not been allowed as a deduction from chargeable gains accruing in any previous accounting period, any allowable losses previously accruing to the company while it has been within the charge to corporation tax.

(2) For the purposes of corporation tax in respect of chargeable gains, "allowable loss" does not include a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it.

(3) Except as otherwise provided by this Act or any other provision of the Corporation Tax Acts, the total amount of the chargeable gains to be included in respect of chargeable gains in a company's total profits for any accounting period shall for purposes of corporation tax be computed in accordance with the principles applying for capital gains tax, all questions--

(a) as to the amounts which are or are not to be taken into account as chargeable gains or as allowable losses, or in computing gains or losses, or charged to tax as a person's gain; or

(b) as to the time when any such amount is to be treated as accruing,

being determined in accordance with the provisions relating to capital gains tax as if accounting periods were years of assessment.

(4) Subject to subsection (5) below, where the enactments relating to capital gains tax contain any reference to income tax or to the Income Tax Acts the reference shall, in relation to a company, be construed as a reference to corporation tax or to the Corporation Tax Acts; but--

(a) this subsection shall not affect the references to income tax in section 39(2); and

(b) in so far as those enactments operate by reference to matters of any specified description, account shall for corporation tax be taken of matters of that description which are confined to companies, but not of any which are confined to individuals.

(5) This Act as it has effect in accordance with this section shall not be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes but, so far as is consistent with the Corporation Tax Acts, shall apply in relation to capital gains tax and corporation tax on chargeable gains as if they were one tax, so that, in particular, a matter which in a case involving 2 individuals is relevant for both of them in relation to capital gains tax shall in a like case involving an individual and a company be relevant for him in relation to that tax and for it in relation to corporation tax.

(6) Where assets of a company are vested in a liquidator under section 145 of the [1986 c. 45.] Insolvency Act 1986 or Article 123 of the [S.I.1989/2405 (N.I.19).] Insolvency (Northern Ireland) Order 1989 or otherwise, this section and the enactments applied by this section shall apply as if the assets were vested in, and the acts of the liquidator in relation to the assets were the acts of, the company (acquisitions from or disposals to him by the company being disregarded accordingly).



Residence etc.

9 Residence, including temporary residence

(1) In this Act "resident" and "ordinarily resident" have the same meanings as in the Income Tax Acts.

(2) Section 207 of the Taxes Act (disputes as to domicile or ordinary residence) shall apply in relation to capital gains tax as it applies for the purposes mentioned in that section.

(3) Subject to section 10(1), an individual who is in the United Kingdom for some temporary purpose only and not with any view or intent to establish his residence in the United Kingdom shall be charged to capital gains tax on chargeable gains accruing in any year of assessment if and only if the period (or the sum of the periods) for which he is resident in the United Kingdom in that year of assessment exceeds 6 months.

10 Non-resident with United Kingdom branch or agency

(1) Subject to any exceptions provided by this Act, a person shall be chargeable to capital gains tax in respect of chargeable gains accruing to him in a year of assessment in which he is not resident and not ordinarily resident in the United Kingdom but is carrying on a trade in the United Kingdom through a branch or agency, and shall be so chargeable on chargeable gains accruing on the disposal--

(a) of assets situated in the United Kingdom and used in or for the purposes of the trade at or before the time when the capital gain accrued, or

(b) of assets situated in the United Kingdom and used or held for the purposes of the branch or agency at or before that time, or assets acquired for use by or for the purposes of the branch or agency.

(2) Subsection (1) above does not apply unless the disposal is made at a time when the person is carrying on the trade in the United Kingdom through a branch or agency.

(3) For the purposes of corporation tax the chargeable profits of a company not resident in the United Kingdom but carrying on a trade or vocation there through a branch or agency shall be, or include, such chargeable gains accruing on the disposal of assets situated in the United Kingdom as are by this section made chargeable to capital gains tax in the case of an individual not resident or ordinarily resident in the United Kingdom.

(4) This section shall not apply to a person who, by virtue of Part XVIII of the Taxes Act (double taxation relief agreements), is exempt from income tax or corporation tax chargeable for the chargeable period in respect of the profits or gains of the branch or agency.

(5) This section shall apply as if references in subsections (1) and (2) above to a trade included references to a profession or vocation, but subsection (1) shall not apply in respect of chargeable gains accruing on the disposal of assets only used in or for the purposes of the profession or vocation before 14th March 1989 or only used or held for the purposes of the branch or agency before that date.

(6) In this Act, unless the context otherwise requires, "branch or agency" means any factorship, agency, receivership, branch or management, but does not include any person within the exemptions in section 82 of the Management Act (general agents and brokers).

11 Visiting forces, agents-general etc

(1) A period during which a member of a visiting force to whom section 323(1) of the Taxes Act applies is in the United Kingdom by reason solely of his being a member of that force shall not be treated for the purposes of capital gains tax either as a period of residence in the United Kingdom or as creating a change in his residence or domicile.

This subsection shall be construed as one with subsection (2) of section 323 and subsections (4) to (8) of that section shall apply accordingly.

(2) An Agent-General who is resident in the United Kingdom shall be entitled to the same immunity from capital gains tax as that to which the head of a mission so resident is entitled under the [1964 c. 81.] Diplomatic Privileges Act 1964.

(3) Any person having or exercising any employment to which section 320(2) of the Taxes Act (staff of Agents-General etc.) applies (not being a person employed in any trade, business or other undertaking carried on for the purposes of profit) shall be entitled to the same immunity from capital gains tax as that to which a member of the staff of a mission is entitled under the Diplomatic Privileges Act 1964.

(4) Subsections (2) and (3) above shall be construed as one with section 320 of the Taxes Act.

12 Foreign assets of person with foreign domicile

(1) In the case of individuals resident or ordinarily resident but not domiciled in the United Kingdom, capital gains tax shall not be charged in respect of gains accruing to them from the disposal of assets situated outside the United Kingdom (that is, chargeable gains accruing in the year 1965-66 or a later year of assessment) except that the tax shall be charged on the amounts (if any) received in the United Kingdom in respect of those chargeable gains, any such amounts being treated as gains accruing when they are received in the United Kingdom.

(2) For the purposes of this section there shall be treated as received in the United Kingdom in respect of any gain all amounts paid, used or enjoyed in or in any manner or form transmitted or brought to the United Kingdom, and subsections (6) to (9) of section 65 of the Taxes Act (under which income applied outside the United Kingdom in payment of debts is, in certain cases, treated as received in the United Kingdom) shall apply as they would apply for the purposes of subsection (5) of that section if the gain were income arising from possessions out of the United Kingdom.

13 Attribution of gains to members of non-resident companies

(1) This section applies as respects chargeable gains accruing to a company--

(a) which is not resident in the United Kingdom, and

(b) which would be a close company if it were resident in the United Kingdom.

(2) Subject to this section, every person who at the time when the chargeable gain accrues to the company is resident or ordinarily resident in the United Kingdom, who, if an individual, is domiciled in the United Kingdom, and who holds shares in the company, shall be treated for the purposes of this Act as if a part of the chargeable gain had accrued to him.

(3) That part shall be equal to the proportion of the assets of the company to which that person would be entitled on a liquidation of the company at the time when the chargeable gain accrues to the company.

(4) If the part of a chargeable gain attributable to a person under subsection (2) above is less than one-twentieth, that subsection shall not apply to that person.

(5) This section shall not apply in relation to--

(a) any amount in respect of the chargeable gain which is distributed, whether by way of dividend or distribution of capital or on the dissolution of the company, to persons holding shares in the company, or creditors of the company, within 2 years from the time when the chargeable gain accrued to the company, or

(b) a chargeable gain accruing on the disposal of assets, being tangible property, whether movable or immovable, or a lease of such property, where the property was used, and used only, for the purposes of a trade carried on by the company wholly outside the United Kingdom, or

(c) a chargeable gain accruing on the disposal of currency or of a debt within section 252(1), where the currency or debt is or represents money in use for the purposes of a trade carried on by the company wholly outside the United Kingdom, or

(d) to a chargeable gain in respect of which the company is chargeable to tax by virtue of section 10(3).

(6) Subsection (5)(a) above shall not prevent the making of an assessment in pursuance of this section but if, by virtue of that paragraph, this section is excluded, all such adjustments, whether by way of repayment or discharge of tax or otherwise, shall be made as will give effect to the provisions of that paragraph.

(7) The amount of capital gains tax paid by a person in pursuance of subsection (2) above (so far as not reimbursed by the company) shall be allowable as a deduction in the computation under this Act of a gain accruing on the disposal by him of the shares by reference to which the tax was paid.

(8) So far as it would go to reduce or extinguish chargeable gains accruing by virtue of this section to a person in a year of assessment this section shall apply in relation to a loss accruing to the company on the disposal of an asset in that year of assessment as it would apply if a gain instead of a loss had accrued to the company on the disposal, but shall only so apply in relation to that person; and subject to the preceding provisions of this subsection this section shall not apply in relation to a loss accruing to the company.

(9) If the person owning any of the shares in the company at the time when the chargeable gain accrues to the company is itself a company which is not resident in the United Kingdom but which would be a close company if it were resident in the United Kingdom, an amount equal to the amount apportioned under subsection (3) above out of the chargeable gain to the shares so owned shall be apportioned among the issued shares of the second-mentioned company, and the holders of those shares shall be treated in accordance with subsection (2) above, and so on through any number of companies.

(10) The persons treated by this section as if a part of a chargeable gain accruing to a company had accrued to them shall include trustees owning shares in the company if when the gain accrues to the company the trustees are neither resident nor ordinarily resident in the United Kingdom.

(11) If any tax payable by any person by virtue of subsection (2) above is paid by the company to which the chargeable gain accrues, or in a case under subsection (9) above is paid by any such other company, the amount so paid shall not for the purposes of income tax, capital gains tax or corporation tax be regarded as a payment to the person by whom the tax was originally payable.

14 Non-resident groups of companies

(1) This section has effect for the purposes of section 13.

(2) Sections 171 to 174 and 175(1) shall apply in relation to non-resident companies which are members of a non-resident group of companies, as they apply in relation to companies resident in the United Kingdom which are members of a group of companies.

(3) Sections 178 to 180 shall apply for the purposes of section 13 as if for any reference therein to a group of companies there were substituted a reference to a non-resident group of companies, and as if references to companies were references to companies not resident in the United Kingdom.

(4) For the purposes of this section --

(a) a "non-resident group" of companies--

(i) in the case of a group, none of the members of which are resident in the United Kingdom, means that group, and

(ii) in the case of a group, 2 or more members of which are not resident in the United Kingdom, means the members which are not resident in the United Kingdom;

(b) "group" shall be construed in accordance with section 170 without subsections (2)(a), (9) and (12) to (14).



Part III General Provisions relating to computation of gains and acquisitions and disposals of assets

I Introductory

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15 Computation of gains

(1) The amount of the gains accruing on the disposal of assets shall be computed in accordance with this Part, subject to the other provisions of this Act.

(2) Every gain shall, except as otherwise expressly provided, be a chargeable gain.

16 Computation of losses

(1) Subject to section 72 of the [1991 c. 31.] Finance Act 1991 and except as otherwise expressly provided, the amount of a loss accruing on a disposal of an asset shall be computed in the same way as the amount of a gain accruing on a disposal is computed.

(2) Except as otherwise expressly provided, all the provisions of this Act which distinguish gains which are chargeable gains from those which are not, or which make part of a gain a chargeable gain, and part not, shall apply also to distinguish losses which are allowable losses from those which are not, and to make part of a loss an allowable loss, and part not; and references in this Act to an allowable loss shall be construed accordingly.

(3) A loss accruing to a person in a year of assessment during no part of which he is resident or ordinarily resident in the United Kingdom shall not be an allowable loss for the purposes of this Act unless, under section 10, he would be chargeable to tax in respect of a chargeable gain if there had been a gain instead of a loss on that occasion.

(4) In accordance with section 12(1), losses accruing on the disposal of assets situated outside the United Kingdom to an individual resident or ordinarily resident but not domiciled in the United Kingdom shall not be allowable losses.

17 Disposals and acquisitions treated as made at market value

(1) Subject to the provisions of this Act, a person's acquisition or disposal of an asset shall for the purposes of this Act be deemed to be for a consideration equal to the market value of the asset--

(a) where he acquires or, as the case may be, disposes of the asset otherwise than by way of a bargain made at arm's length, and in particular where he acquires or disposes of it by way of gift or on a transfer into settlement by a settlor or by way of distribution from a company in respect of shares in the company, or

(b) where he acquires or, as the case may be, disposes of the asset wholly or partly for a consideration that cannot be valued, or in connection with his own or another's loss of office or employment or diminution of emoluments, or otherwise in consideration for or recognition of his or another's services or past services in any office or employment or of any other service rendered or to be rendered by him or another.

(2) Subsection (1) shall not apply to the acquisition of an asset if--

(a) there is no corresponding disposal of it, and

(b) there is no consideration in money or money's worth or the consideration is of an amount or value lower than the market value of the asset.

18 Transactions between connected persons

(1) This section shall apply where a person acquires an asset and the person making the disposal is connected with him.

(2) Without prejudice to the generality of section 17(1) the person acquiring the asset and the person making the disposal shall be treated as parties to a transaction otherwise than by way of a bargain made at arm's length.

(3) Subject to subsection (4) below, if on the disposal a loss accrues to the person making the disposal, it shall not be deductible except from a chargeable gain accruing to him on some other disposal of an asset to the person acquiring the asset mentioned in subsection (1) above, being a disposal made at a time when they are connected persons.

(4) Subsection (3) above shall not apply to a disposal by way of gift in settlement if the gift and the income from it is wholly or primarily applicable for educational, cultural or recreational purposes, and the persons benefiting from the application for those purposes are confined to members of an association of persons for whose benefit the gift was made, not being persons all or most of whom are connected persons.

(5) Where the asset mentioned in subsection (1) above is an option to enter into a sale or other transaction given by the person making the disposal a loss accruing to the person acquiring the asset shall not be an allowable loss unless it accrues on a disposal of the option at arm's length to a person who is not connected with him.

(6) Subject to subsection (7) below, in a case where the asset mentioned in subsection (1) above is subject to any right or restriction enforceable by the person making the disposal, or by a person connected with him, then (where the amount of the consideration for the acquisition is, in accordance with subsection (2) above, deemed to be equal to the market value of the asset) that market value shall be--

(a) what its market value would be if not subject to the right or restriction, minus--

(b) the market value of the right or restriction or the amount by which its extinction would enhance the value of the asset to its owner, whichever is the less.

(7) If the right or restriction is of such a nature that its enforcement would or might effectively destroy or substantially impair the value of the asset without bringing any countervailing advantage either to the person making the disposal or a person connected with him or is an option or other right to acquire the asset or, in the case of incorporeal property, is a right to extinguish the asset in the hands of the person giving the consideration by forfeiture or merger or otherwise, the market value of the asset shall be determined, and the amount of the gain accruing on the disposal shall be computed, as if the right or restriction did not exist.

(8) Subsections (6) and (7) above shall not apply to a right of forfeiture or other right exercisable on breach of a covenant contained in a lease of land or other property, and shall not apply to any right or restriction under a mortgage or other charge.

19 Deemed consideration in certain cases where assets disposed of in a series of transactions

(1) For the purposes of this Act, in any case where--

(a) by way of 2 or more material transactions which are linked (a series of linked transactions), one person disposes of assets to another person with whom he is connected or to 2 or more other persons with each of whom he is connected, and

(b) the original market value of the assets disposed of by any of the transactions in the series, as determined under section 20, is less than the appropriate portion of the aggregate market value of the assets disposed of by all the transactions in the series, as so determined,

then, subject to subsection (2) below, the disposal effected by any linked transaction in the series in respect of which the condition in paragraph (b) above is fulfilled shall be deemed to be for a consideration equal to the appropriate portion referred to in that paragraph.

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