Taxation of Chargeable Gains Act 1992

• (3) The trustees are to be treated, for the purposes of section 236L(2)(b) or 236M(1)(b), as entitled to dividends on shares even if the trustees are required, or permitted, by the trusts of the settlement to waive their entitlement to those dividends.

• (4) In determining whether section 236L(2)(d) or 236M(1)(d) applies, ignore any provision of—

• (a) a mortgage or charge (or, in Scotland, a charge or security) granted by the trustees to a third party to secure any debt, or

• (b) an agreement in respect of a loan made to the trustees by a third party,

which confers any entitlement on the third party in the event of a default by the trustees in performing their obligations in relation to that debt or loan.

• (5) In this section—

• “third party” means a person other than—C or a member of a group of which C is the principal company,a person who is, or has at any time in the preceding 12 months been, a participator in C or in a member of such a group, ora person connected with a person within paragraph (b);

• “close company” and “participator” have the same meaning as in Part 4 of the Inheritance Tax Act 1984 (see section 102 of that Act), and a reference to a participator in a company is, in the case of a company which is not a close company, to be construed as a reference to a person who would be a participator in the company if it were a close company.

Interpretation of sections 236H to 236U

236U

• (1) In sections 236H to 236T and this section—

• “company” has the meaning given by section 170(9);

• “ordinary share capital” has the meaning given by section 1119 of CTA 2010;

• “trade” means any trade which is conducted on a commercial basis and with a view to the realisation of profits.

• (2) In those sections—

• (a) references to a group, to membership of a group or to the principal company of a group, are to be construed in accordance with section 170, and

• (b) references to a group are to be construed with any necessary modifications where applied to a company incorporated under the law of a country or territory outside the United Kingdom.

• (3) In determining whether a person is connected with another for the purposes of those sections, section 286 applies as if subsection (8) of that section also mentioned uncle, aunt, nephew and niece.

Superannuation funds, profit sharing schemes, employee trusts etc.

Superannuation funds, annuities and annual payments.

237

No chargeable gain shall accrue to any person on the disposal of a right to, or to any part of—

• (a) any allowance, annuity or capital sum payable out of any superannuation fund, or under any superannuation scheme, established solely or mainly for persons employed in a profession, trade, undertaking or employment, and their dependants, or

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) annual payments which are due under a covenant made by any person and which are not secured on any property.

Share option schemes: release and replacement of options.

237A

• (1) This section applies in any case where a right to acquire shares in a body corporate (“the old right”) which was obtained by an individual by reason of his office or employment as a director or employee of that or any other body corporate is released in whole or in part for a consideration which consists of or includes the grant to that individual of another right (“the new right”) to acquire shares in that or any other body corporate.

• (2) As respects the person to whom the new right is granted—

• (a) without prejudice to subsection (1) above, the new right shall not be regarded for the purposes of capital gains tax as consideration for the release of the old right;

• (b) the amount or value of the consideration given by him or on his behalf for the acquisition of the new right shall be taken for the purposes of section 38(1) to be the amount or value of the consideration given by him or on his behalf for the old right; and

• (c) any consideration paid for the acquisition of the new right shall be taken to be expenditure falling within section 38(1)(b).

• (3) As respects the grantor of the new right, in determining for the purposes of this Act the amount or value of the consideration received for the new right, the release of the old right shall be disregarded.

Approved profit sharing and share option schemes.

238

• (1) Notwithstanding anything in a profit sharing scheme approved under Schedule 9 of the Taxes Act or in paragraph 2(2) of that Schedule or in the trust instrument relating to that scheme, for the purposes of capital gains tax a person who is a participant in relation to that scheme shall be treated as absolutely entitled to his shares as against the trustees of the scheme.

• (2) For the purposes of capital gains tax—

• (a) no deduction shall be made from the consideration for the disposal of any shares by reason only that an amount determined under section 186 or 187 of or Schedule 9 or 10 to the Taxes Act counts as employment income (or was chargeable to income tax for the year 2002-03 or an earlier year of assessment under section 186(3) or (4) of that Act;

• (b) any charge to income tax by virtue of section 186(3) of that Act shall be disregarded in determining whether a distribution is a capital distribution within the meaning of section 122(5)(b);

• (c) nothing in any provision of section 186 or 187 of or Schedule 9 or 10 to that Act with respect to—

• (i) the order in which any of a participant’s shares are to be treated as disposed of for the purposes of those provisions as they have effect in relation to profit sharing schemes, or

• (ii) the shares in relation to which an event is to be treated as occurring for any such purpose,

shall affect the rules applicable to the computation of a gain accruing on a part disposal of a holding of shares or other securities which were acquired at different times; and

• (d) a gain accruing on an appropriation of shares to which section 186(11) of that Act applies shall not be a chargeable gain.

• (3) In this section “participant” and “the trust instrument” have the meanings given by section 187 of the Taxes Act.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

... Share schemes and share incentives

238A

• (1) Schedule 7D ( ... share schemes and share incentives) shall have effect.

• (2) Schedule 7D relates—

• (a) in Part 1, to Schedule 2 share incentive plans (SIPs) (see section 488 of ITEPA 2003),

• (b) in Part 2, to Schedule 3 SAYE option schemes (see section 516 of that Act),

• (c) in Part 3, to Schedule 4 CSOP schemes (CSOPs) (see section 521 of that Act), ...

• (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Disposals to trustees of employee trusts

239

• (1) Where—

• (a) a close company disposes of an asset to trustees in circumstances such that the disposal is a disposition which by virtue of section 13 of the Inheritance Tax Act 1984 (employee trusts) is not a transfer of value for the purposes of inheritance tax, or

• (b) an individual disposes of an asset to trustees in circumstances such that the disposal is an exempt transfer by virtue of section 28 of that Act (employee trusts: inheritance tax),

this Act shall have effect in relation to the disposal in accordance with subsections (2) and (3) below.

• (2) Section 17(1) shall not apply to the disposal; and if the disposal is by way of gift or is for a consideration not exceeding the sums allowable as a deduction under section 38—

• (a) the disposal, and the acquisition by the trustees, shall be treated for the purposes of this Act as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal, and

• (b) where the trustees dispose of the asset, its acquisition by the company or individual shall be treated as its acquisition by the trustees.

Paragraph (b) above also applies where section 149(1) of the 1979 Act applied on the disposal of an asset to trustees who have not disposed of it before the coming into force of this section.

• (3) Where the disposal is by a close company, section 125(1) shall apply to the disposal as if for the reference to market value there were substituted a reference to market value or the sums allowable as a deduction under section 38, whichever is the less.

• (4) Subject to subsection (5) below, this Act shall also have effect in accordance with subsection (2) above in relation to any disposal made by a company other than a close company if—

• (a) the disposal is made to trustees otherwise than under a bargain made at arm’s length, and

• (b) the property disposed of is to be held by them on trusts of the description specified in section 86(1) of the Inheritance Tax Act 1984 (that is to say, those in relation to which the said section 13 of that Act has effect) and the persons for whose benefit the trusts permit the property to be applied include all or most of either—

• (i) the persons employed by or holding office with the company, or

• (ii) the persons employed by or holding office with the company or any one or more subsidiaries of the company.

• (5) Subsection (4) above does not apply if the trusts permit any of the property to be applied at any time (whether during any such period as is referred to in the said section 86(1) or later) for the benefit of—

• (a) a person who is a participator in the company (“the donor company”), or

• (b) any other person who is a participator in any other company that has made a disposal of property to be held on the same trusts as the property disposed of by the donor company, being a disposal in relation to which this Act has had effect in accordance with subsection (2) above, or

• (c) any other person who has been a participator in the donor company or any such company as is mentioned in paragraph (b) above at any time after, or during the 10 years before, the disposal made by that company, or

• (d) any person who is connected with a person within paragraph (a), (b) or (c) above.

• (6) The participators in a company who are referred to in subsection (5) above do not include any participator who—

• (a) is not beneficially entitled to, or to rights entitling him to acquire, 5 per cent. or more of, or of any class of the shares comprised in, its issued share capital, and

• (b) on a winding-up of the company would not be entitled to 5 per cent. or more of its assets;

and in determining whether the trusts permit property to be applied as mentioned in that subsection, no account shall be taken—

• (i) of any power to make a payment which is the income of any person for any of the purposes of income tax, or would be the income for any of those purposes of a person not resident in the United Kingdom if he were so resident, or

• (ii) if the trusts are those of a profit sharing scheme approved under Schedule 9 to the Taxes Act of any power to appropriate shares in pursuance of the scheme.

• (7) In subsection (4) above “subsidiary” has the meaning given by section 1159 of and Schedule 6 to the Companies Act 2006 and in subsections (5) and (6) above “participator” has the meaning given by section 454 of CTA 2010, except that it does not include a loan creditor.

• (8) In this section “close company” includes a company which, if resident in the United Kingdom, would be a close company as defined in section 288.

Relief for disposals by trustees of employee trusts

239ZA

• (1) Any gain accruing to trustees on the disposal of an asset comprised in the settled property of an employee trust shall not be a chargeable gain where the disposal is—

• (a) a disposal to a beneficiary, or

• (b) a deemed disposal under section 71(1),

if the conditions in subsection (2) are satisfied.

• (2) The conditions are that—

• (a) an amount that is equal to or exceeds the market value of the asset is chargeable to income tax as employment income within the meaning of section 7 of ITEPA 2003 (meaning of “employment income” etc);

• (b) neither the beneficiary nor (if different) the person who is liable for the income tax is an excluded person;

• (c) no actual consideration (as opposed to consideration deemed to be given by any enactment relating to the taxation of chargeable gains) is given directly or indirectly to the trustees for the asset; and

• (d) Schedule 7D does not to any extent prevent the gain being a chargeable gain.

• (3) The following are excluded persons—

• (a) a participator in a company, shares in or securities of which are comprised in the settled property;

• (b) a participator in a close company that has provided any property that has become comprised in the settled property;

• (c) a person who was a participator in a company within paragraph (a) or (b) at any time during the 10 years before the shares, securities or other property concerned became comprised in the settled property;

• (d) a person connected with a person within any of paragraphs (a) to (c).

• (4) For the purposes of subsection (3)—

• (a) “participator” has the same meaning as in section 239 and shall, in the case of a company which is not a close company, be construed as a person who would be a participator in the company if it were a close company, but

• (b) a person is not a participator unless either—

• (i) that person is entitled to, or entitled to rights enabling the acquisition of, 5% or more of the share capital of the company or any class of shares in the company, or

• (ii) that person would be entitled to 5% or more of the company’s assets on winding-up.

• (5) In determining whether a person is connected with another for the purposes of this section, section 286 shall apply as if subsection (8) of that section also mentioned uncle, aunt, nephew and niece.

• (6) In this section—

• “beneficiary” means a person within paragraph (a) or (b) of section 86(1) of the Inheritance Tax Act 1984 (trusts for benefit of employees);

• “close company” includes a company which, if resident in the United Kingdom, would be a close company as defined in section 288;

• “employee trust” means a settlement of property to which section 86 of the Inheritance Tax Act 1984 applies or would apply but for subsection (3) of that section;

• “market value” means the market value for the purposes of capital gains tax (as to which see section 272).

Registered pension schemes

De-registration of registered pension schemes

239A

• (1) This section applies where tax is charged in accordance with section 242 of the Finance Act 2004 (de-registration charge) where the registration of a registered pension scheme is withdrawn.

• (2) For the purposes of this Act the assets which at the relevant time are held for the purposes of the pension scheme—

• (a) are treated as having been acquired at the relevant time for a consideration equal to the amount on which tax is charged by virtue of section 242 of the Finance Act 2004 by the person who would be chargeable in respect of a chargeable gain accruing on a disposal of the assets at the relevant time, and

• (b) are not to be treated as having been disposed of by any person at the relevant time.

• (3) In subsection (2) “the relevant time” means the time immediately before the date of withdrawal of registration of the pension scheme.

Leases

Leases of land and other assets.

240

Schedule 8 shall have effect as respects leases of land and, to the extent specified in paragraph 9 of that Schedule, as respects leases of property other than land.

UK furnished holiday lettings.

241

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

EEA furnished holiday lettings

241A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part disposals

Small part disposals.

242

• (1) This section applies to a transfer of land forming part only of a holding of land, where—

• (a) the amount or value of the consideration for the transfer does not exceed one-fifth of the market value of the holding as it subsisted immediately before the transfer, and

• (b) the transfer is not one which, by virtue of section 58 or 171(1), is treated as giving rise to neither a gain nor a loss.

• (2) Subject to subsection (3) below, if the transferor so claims, the transfer shall not be treated for the purposes of this Act as a disposal, but all sums which, if it had been so treated, would have been brought into account as consideration for that disposal in the computation of the gain shall be deducted from any expenditure allowable under Chapter III of Part II as a deduction in computing a gain on any subsequent disposal of the holding.

• (2A) A claim under subsection (2) above shall be made—

• (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made;

• (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

• (3) This section shall not apply—

• (a) if the amount or value of the consideration for the transfer exceeds £20,000, or

• (b) where in the year of assessment in which the transfer is made, the transferor made any other disposal of land, if the total amount or value of the consideration for all disposals of land made by the transferor in that year exceeds £20,000.

• (4) No account shall be taken under subsection (3) above of any transfer of land to which section 243 applies.

• (5) In relation to a transfer which is not for full consideration in money or money’s worth “the amount or value of the consideration” in this section shall mean the market value of the land transferred.

• (6) For the purposes of this section the holding of land shall comprise only the land in respect of which the expenditure allowable under paragraphs (a) and (b) of section 38(1) would be apportioned under section 42 if the transfer had been treated as a disposal (that is, as a part disposal of the holding).

• (7) In this section references to a holding of land include references to any estate or interest in a holding of land, not being an estate or interest which is a wasting asset, and references to part of a holding shall be construed accordingly.

Part disposal to authority with compulsory powers.

243

• (1) This section applies to a transfer of land forming part only of a holding of land to an authority exercising or having compulsory powers where—

• (a) the amount or value of the consideration for the transfer, or if the transfer is not for full consideration in money or money’s worth, the market value of the land transferred, is small, as compared with the market value of the holding as it subsisted immediately before the transfer, and

• (b) the transferor had not taken any steps by advertising or otherwise to dispose of any part of the holding or to make his willingness to dispose of it known to the authority or others.

• (2) If the transferor so claims, the transfer shall not be treated for the purposes of this Act as a disposal, but all sums which, if it had been so treated, would have been brought into account as consideration for that disposal in the computation of the gain shall be deducted from any expenditure allowable under Chapter III of Part II as a deduction in computing a gain on any subsequent disposal of the holding.

• (2A) A claim under subsection (2) above shall be made—

• (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made;

• (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

• (3) For the purposes of this section the holding of land shall comprise only the land in respect of which the expenditure allowable under paragraphs (a) and (b) of section 38(1) would be apportioned under section 42 if the transfer had been treated as a disposal (that is, as a part disposal of the holding).

• (4) In this section references to a holding of land include references to an estate or interest in a holding of land, not being an estate or interest which is a wasting asset, and references to part of a holding shall be construed accordingly.

• (5) In this section “authority exercising or having compulsory powers” means, in relation to the land transferred, a person or body of persons acquiring it compulsorily or who has or have been, or could be, authorised to acquire it compulsorily for the purposes for which it is acquired, or for whom another person or body of persons has or have been, or could be, authorised so to acquire it.

Part disposal: consideration exceeding allowable expenditure.

244

• (1) The provisions of sections 242(2) and 243(2) shall have effect subject to this section.

• (2) Where the allowable expenditure is less than the consideration for the part disposal (or is nil)—

• (a) the said provisions shall not apply, and

• (b) if the recipient so elects (and there is any allowable expenditure)—

• (i) the consideration for the part disposal shall be reduced by the amount of the allowable expenditure, and,

• (ii) none of that expenditure shall be allowable as a deduction in computing a gain accruing on the occasion of the part disposal or on any subsequent occasion.

In this subsection “allowable expenditure” means expenditure which, immediately before the part disposal, was attributable to the holding of land under paragraphs (a) and (b) of section 38(1).

• (3) An election under subsection (2)(b) above shall be made—

• (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the part disposal is made;

• (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the part disposal is made.

Compulsory acquisition

Compensation paid on compulsory acquisition.

245

• (1) Where land or an interest in or right over land is acquired and the acquisition is, or could have been, made under compulsory powers, then in considering whether, under section 52(4), the purchase price or compensation or other consideration for the acquisition should be apportioned and treated in part as a capital sum within section 22(1)(a), whether as compensation for loss of goodwill or for disturbance or otherwise, or should be apportioned in any other way, the fact that the acquisition is or could have been made compulsorily, and any statutory provision treating the purchase price or compensation or other consideration as exclusively paid in respect of the land itself, shall be disregarded.

• (2) In any case where land or an interest in land is acquired as mentioned in subsection (1) above from any person and the compensation or purchase price includes an amount in respect of severance of the land comprised in the acquisition or sale from other land in which that person is entitled in the same capacity to an interest, or in respect of that other land as being injuriously affected, there shall be deemed for the purposes of this Act to be a part disposal of that other land.

Time of disposal and acquisition.

246

Where an interest in land is acquired, otherwise than under a contract, by an authority possessing compulsory purchase powers, the time at which the disposal and acquisition is made is the time at which the compensation for the acquisition is agreed or otherwise determined (variations on appeal being disregarded for this purpose) ... .

Roll-over relief on compulsory acquisition.

247

• (1) This section applies where—

• (a) land (“the old land”) is disposed of by any person (“the landowner”) to an authority exercising or having compulsory powers; and

• (b) the landowner did not take any steps, by advertising or otherwise, to dispose of the old land or to make his willingness to dispose of it known to the authority or others; and

• (c) the consideration for the disposal is applied by the landowner in acquiring other land (“the new land”) not being land excluded from this paragraph by section 248.

• (2) Subject to section 248, in a case where the whole of the consideration for the disposal was applied as mentioned in subsection (1)(c) above, the landowner, on making a claim as respects the consideration so applied, shall be treated for the purposes of this Act—

• (a) as if the consideration for the disposal of the old land were (if otherwise of a greater amount or value) of such amount as would secure that on the disposal neither a gain nor a loss accrues to him; and

• (b) as if the amount or value of the consideration for the acquisition of the new land were reduced by the excess of the amount or value of the actual consideration for the disposal of the old land over the amount of the consideration which he is treated as receiving under paragraph (a) above.

• (3) If part only of the consideration for the disposal of the old land was applied as mentioned in subsection (1)(c) above, then, subject to section 248, if the part of the consideration which was not so applied (“the unexpended consideration”) is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the old land, the landowner, on making a claim as respects the consideration which was so applied, shall be treated for the purposes of this Act—

• (a) as if the amount of the gain so accruing were reduced to the amount of the unexpended consideration (and, if not all chargeable gain, with a proportionate reduction in the amount of the chargeable gain); and

• (b) as if the amount or value of the consideration for the acquisition of the new land were reduced by the amount by which the gain is reduced (or, as the case may be, the amount by which the chargeable gain is proportionately reduced) under paragraph (a) above.

• (4) Nothing in subsection (2) or subsection (3) above affects the treatment for the purposes of this Act of the authority by whom the old land was acquired or of the other party to the transaction involving the acquisition of the new land.

• (5) For the purposes of this section—

• (a) subsection (2) of section 152 shall apply in relation to subsection (2)(a) and subsection (2)(b) above as it applies in relation to subsection (1)(a) and subsection (1)(b) of that section; and

• (b) subsections (3) and (4) of that section shall apply as if any reference to the new assets were a reference to the new land, any reference to the old assets were a reference to the old land and any reference to that section were a reference to this.

• (5A) Subsections (2A) and (2C) of section 175 shall apply in relation to this section as they apply in relation to section 152 (but as if the reference in subsection (2C) to the new assets were a reference to the new land).

• (6) Where this section applies, any such amount as is referred to in subsection (2) of section 245 shall be treated as forming part of the consideration for the disposal of the old land and, accordingly, so much of that subsection as provides for a deemed disposal of other land shall not apply.

• (7) The provisions of this Act fixing the amount of the consideration deemed to be given for the acquisition or disposal of assets shall be applied before this section is applied.

• (8) In this section—

• “land” includes any interest in or right over land; and

• “authority exercising or having compulsory powers” shall be construed in accordance with section 243(5).

Provisional application of section 247.

247A

• (1) This section applies where a person who disposes of land (“the old land”) to an authority exercising or having compulsory powers declares, in his return for the chargeable period in which the disposal takes place—

• (a) that the whole or any specified part of the consideration for the disposal will be applied in the acquisition of other land (“the new land”);

• (b) that the acquisition will take place as mentioned in subsection (3) of section 152; and

• (c) that the new land will not be land excluded from section 247(1)(c) by section 248.

• (2) Until the declaration ceases to have effect, section 247 shall apply as if the acquisition had taken place and the person had made a claim under that section.

• (3) For the purposes of this section, subsections (3) to (5) of section 153A shall apply as if the reference to section 152 or 153 were a reference to section 247 and the reference to the old assets were a reference to the old land.

• (4) In this section “land” and “authority exercising or having compulsory powers” have the same meaning as in section 247.

Provisions supplementary to section 247.

248

• (1) Land is excluded from paragraph (c) of subsection (1) of section 247 if—

• (a) it is a dwelling-house or part of a dwelling-house (or an interest in or right over a dwelling-house), and

• (b) by virtue of, or of any claim under, any provision of sections 222 to 226 the whole or any part of a gain accruing on a disposal of it by the landowner at a material time would not be a chargeable gain;

and for the purposes of this subsection “a material time” means any time during the period of 6 years beginning on the date of the acquisition referred to in the said paragraph (c).

• (2) If, at any time during the period of 6 years referred to in subsection (1) above, land which at the beginning of that period was not excluded from section 247(1)(c) by virtue of that subsection becomes so excluded, the amount of any chargeable gain accruing on the disposal of the old land shall be redetermined without regard to any relief previously given under section 247 by reference to the amount or value of the consideration for the acquisition of that land; and all such adjustments of capital gains tax, whether by way of assessment or otherwise, may be made at any time, notwithstanding anything in section 34 of the Management Act (time limit for assessments).

This subsection also applies where the period of 6 years referred to above began before the commencement of this section (and accordingly the references to section 247 include references to section 111A of the 1979 Act).

• (3) Where the new land is a depreciating asset, within the meaning of section 154, that section has effect as if—

• (a) any reference in subsection (1) or subsection (4) to section 152 or 153 were a reference to subsection (2) or subsection (3) respectively of section 247; and

• (b) paragraph (b) of subsection (2) were omitted; and

• (c) the reference in subsection (5) to section 152(3) were a reference to that provision as applied by section 247(5).

• (4) No claim may be made under section 243 in relation to a transfer which constitutes a disposal in respect of which a claim is made under section 247.

• (5) Expressions used in this section have the same meaning as in section 247.

Joint interests in land

Roll-over relief on disposal of joint interests in land: conditions

248A

• (1) Section 248B applies where conditions A to E are met.

• (2) Condition A is that a person (“the landowner”) and one or more other persons jointly hold—

• (a) a holding of land, or

• (b) two or more separate holdings of land.

• (3) Condition B is that the landowner disposes of an interest (“the relinquished interest”) in—

• (a) the holding, or

• (b) one or more of the holdings,

to the co-owner or to one or more of the co-owners.

• (4) Condition C is that the consideration for the disposal is or includes an interest (“the acquired interest”) in a holding of land held jointly by the landowner and one or more of the co-owners.

• (5) Condition D is that as a consequence of the disposal (taken together with any related disposals) the landowner and each of the co-owners become—

• (a) in a case falling within subsection (2)(a), the sole owner of part of the holding, or

• (b) in a case falling within subsection (2)(b), the sole owner of one or more of the holdings.

• (6) Condition E is that the acquired interest is not an interest in excluded land (see section 248C).

• (7) For the purposes of this section—

• (a) references to a holding of land include references to an estate or interest in a holding of land, and are to be read in accordance with section 243(3);

• (b) references to holding land jointly are to holding land—

• (i) in England and Wales, as joint tenants or tenants in common,

• (ii) in Scotland, as joint owners or owners in common, or

• (iii) in Northern Ireland, as joint tenants, tenants in common or coparceners;

• (c) “co-owner” means any person who holds a holding of land jointly with the landowner;

• (d) a related disposal (in relation to a disposal mentioned in condition B) is a disposal of an interest in the holding, or in one or more of the holdings, which is made—

• (i) by the landowner to a co-owner, or

• (ii) by a co-owner to the landowner or another co-owner,

at the same time as the disposal mentioned in that condition;

• (e) spouses who are living together, or civil partners who are living together, are together treated as a landowner or a co-owner.

• (8) Section 248B applies in relation to cases where, immediately before the disposal, the land is held by a partnership comprising the landowner and the co-owner or co-owners (whether the partnership is formed in Scotland or elsewhere) as it applies in relation to other cases (and the partners are regarded as the landowner and the co-owner or co-owners for the purposes of this section and section 248B).

Calculation of relief

248B

• (1) If the amount or value of the consideration for the disposal of the relinquished interest is equal to or less than the amount or value of the consideration for the acquired interest, the landowner, on making a claim, is to be treated for the purposes of this Act—

• (a) as if the consideration for the disposal of the relinquished interest were of such amount as would secure that on the disposal neither a gain nor a loss accrues to the landowner, and

• (b) as if the amount or value of the consideration for the acquired interest were reduced by the excess of the amount or value of the consideration for the disposal of the relinquished interest over the amount of the consideration which the landowner is treated as receiving under paragraph (a).

• (2) Where the amount or value of the consideration for the disposal of the relinquished interest exceeds the amount or value of the consideration for the acquired interest, then if the excess (“the unexpended consideration”) is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the relinquished interest, the landowner on making a claim is to be treated for the purposes of this Act—

• (a) as if the amount of the gain so accruing were reduced to the amount of the unexpended consideration (and, if not all chargeable gain, with a proportionate reduction in the amount of the chargeable gain), and

• (b) as if the amount or value of the consideration for the acquired interest were reduced by the amount by which the gain is reduced (or, as the case may be, the amount by which the chargeable gain is proportionately reduced) under paragraph (a).

• (3) Subsections (1) and (2) are subject to section 248C(3).

• (4) Nothing in subsection (1) or (2) affects the treatment for the purposes of this Act of a co-owner (within the meaning given by section 248A(7)).

• (5) Where subsection (1)(a) applies to exclude a gain which, in consequence of Schedule 2 (assets held on 6th April 1965) is not all chargeable gain, the amount of the reduction to be made under subsection (1)(b) shall be the amount of the chargeable gain, and not the whole amount of the gain.

Excluded land

248C

• (1) Land is excluded land to the extent that—

• (a) it is a dwelling-house or part of a dwelling-house (or an interest in or right over a dwelling-house), and

• (b) by virtue of, or of any claim under, any provision of sections 222 to 226 (private residences) the whole or any part of a gain accruing on a disposal of it by the landowner at a material time would not be a chargeable gain.

• (2) In subsection (1)(b), “a material time” means any time during the period of 6 years beginning on the date of the acquisition of the acquired interest.

• (3) If land was not excluded land at the date of the acquisition of the acquired interest but becomes excluded land within 6 years of the acquisition, the amount of any chargeable gain accruing on the disposal of the relinquished interest shall be re-determined without regard to any relief previously given under section 248B by reference to the amount or value of the consideration for the acquisition of the interest in that land.

• (4) Any adjustments of capital gains tax in accordance with subsection (3), whether by way of assessment or otherwise, may be made at any time, despite anything in section 34 of the Management Act (time limit for assessments).

• (5) Expressions used in this section have the same meaning as in section 248A.

Milk quotas

248D

• (1) This section applies where—

• (a) section 248B applies to a holding (or holdings) of land, and

• (b) milk quota is associated with the holding in which the relinquished interest is held and with the holding in which the acquired interest is held.

• (2) Section 248B(1), (2) and (4) apply—

• (a) to the disposal of quota associated with the holding in which the relinquished interest is held as they apply to the disposal of that interest, and

• (b) to the acquisition of quota associated with the holding in which the acquired interest is held as they apply to the acquisition of that interest.

Relief on disposal of joint interests in private residence

248E

• (1) This section applies where conditions A to E are met.

• (2) Condition A is that a person (“the landowner”) and one or more other persons jointly hold an interest in two or more dwelling–houses.

• (3) Condition B is that the landowner disposes of an interest (“the relinquished interest”) in one or more of the dwelling-houses to the co-owner or to one or more of the co-owners.

• (4) Condition C is that the consideration for the disposal is or includes an interest (“the acquired interest”) in one of the other dwelling–houses.

• (5) Condition D is that as a consequence of the disposal (taken together with any related disposals)—

• (a) the dwelling-house in which the landowner acquires an interest becomes the only or main residence of the landowner, and

• (b) each of the other dwelling-houses becomes the only or main residence of one (and only one) of the co-owners.

• (6) Condition E is that if each dwelling-house were disposed of immediately after the disposal (or disposals) mentioned in subsection (5) then by virtue of sections 222, 223 and 223B (private residences) no part of the gain accruing on each of those disposals would be a chargeable gain.

• (7) The landowner, on making a claim jointly with the co-owner or co-owners, shall be treated for the purposes of this Act—

• (a) as if the consideration for the disposal of the relinquished interest were of such amount as would secure that on the disposal neither a gain nor a loss accrues, and

• (b) as if the acquired interest were acquired by the landowner—

• (i) at the time it was acquired jointly by the landowner and the co-owner or co-owners, and

• (ii) for a consideration equal to the amount of the sums that would have been allowable under section 38(1)(a) and (b) (acquisition and disposal costs etc) as a deduction in the computation of any gain on a disposal of the acquired interest by the co-owner or co-owners.

• (8) For the purposes of this section—

• (a) “co-owner” means any person who holds an interest in a dwelling-house jointly with the landowner;

• (b) references to holding land jointly are to holding land—

• (i) in England and Wales, as joint tenants or tenants in common,

• (ii) in Scotland, as joint owners or owners in common, or

• (iii) in Northern Ireland, as joint tenants, tenants in common or coparceners;

• (c) a related disposal (in relation to a disposal mentioned in condition B) is a disposal of an interest in a dwelling-house which is made—

• (i) by the landowner to a co-owner, or

• (ii) by a co-owner to the landowner or another co-owner,

at the same time as the disposal mentioned in that condition;

• (d) spouses who are living together, or civil partners who are living together, are together treated as a landowner or a co-owner.

• (9) This section applies in relation to cases where, immediately before the disposal, the land is held by a partnership comprising the landowner and the co-owner or co-owners (whether the partnership is formed in Scotland or elsewhere) as it applies in relation to other cases (and the partners are regarded as the landowner and the co-owner or co-owners for the purposes of this section).

Woodlands

Grants for giving up agricultural land.

249

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Woodlands.

250

• (1) Consideration for the disposal of trees standing or felled or cut on woodlands managed by the occupier on a commercial basis and with a view to the realisation of profits shall be excluded from the computation of the gain if the person making the disposal is the occupier.

• (2) Capital sums received under a policy of insurance in respect of the destruction of or damage or injury to trees by fire or other hazard on such woodlands shall be excluded from the computation of the gain if the person making the disposal is the occupier.

• (3) Subsection (2) above has effect notwithstanding section 22(1).

• (4) In the computation of the gain so much of the cost of woodland in the United Kingdom shall be disregarded as is attributable to trees growing on the land.

• (5) In the computation of the gain accruing on a disposal of woodland in the United Kingdom so much of the consideration for the disposal as is attributable to trees growing on the land shall be excluded.

• (6) References in this section to trees include references to saleable underwood.

Debts

General provisions.

251

• (1) Where a person incurs a debt to another, whether in sterling or in some other currency, no chargeable gain shall accrue to that (that is the original) creditor or his personal representative or legatee on a disposal of the debt, except in the case of the debt on a security (as defined in section 132).

• (2) Subject to the provisions of sections 132, 135 and 136 and subject to subsection (1) above, the satisfaction of a debt or part of it (including a debt on a security as defined in section 132) shall be treated as a disposal of the debt or of that part by the creditor made at the time when the debt or that part is satisfied.

• (3) Where property is acquired by a creditor in satisfaction of his debt or part of it, then subject to the provisions of sections 132, 135 and 136 the property shall not be treated as disposed of by the debtor or acquired by the creditor for a consideration greater than its market value at the time of the creditor’s acquisition of it; but if under subsection (1) above (and in a case not falling within section 132, 135 or 136) no chargeable gain is to accrue on a disposal of the debt by the creditor (that is the original creditor), and a chargeable gain accrues to him on a disposal by him of the property, the amount of the chargeable gain shall (where necessary) be reduced so as not to exceed the chargeable gain which would have accrued if he had acquired the property for a consideration equal to the amount of the debt or that part of it.

• (4) A loss accruing on the disposal of a debt acquired by the person making the disposal from the original creditor or his personal representative or legatee at a time when the creditor or his personal representative or legatee is a person connected with the person making the disposal, and so acquired either directly or by one or more purchases through persons all of whom are connected with the person making the disposal, shall not be an allowable loss.

• (5) Where the trustees of a settlement are the original creditor, subsections (1) and (4) above shall apply as if for the references to the original creditor’s personal representative or legatee there were substituted references to any person becoming absolutely entitled, as against the trustees, to the debt on its ceasing to be settled property, and to that person’s personal representative or legatee.

• (5A) References in this section to the disposal of a debt include the disposal of an interest in a debt (and, in the case of an interest in a debt, the reference in subsection (3) to the amount of the debt is to the amount of the person's interest in the debt).

• (6) For the purposes of this section a debenture issued by any company on or after 16th March 1993 shall be deemed to be a security (as defined in section 132) if—

• (a) it is issued on a reorganisation (as defined in section 126(1)) or in pursuance of its allotment on any such reorganisation;

• (b) it is issued in exchange for shares in or debentures of another company and in a case to which section 135 applies and which is unaffected by section 137(1);

• (c) it is issued under any such arrangements as are mentioned in subsection (1)(a) of section 136 and in a case unaffected by section 137 where section 136 requires shares or debentures in another company to be treated as exchanged for, or for anything that includes, that debenture; or

• (d) it is issued in pursuance of rights attached to any debenture issued on or after 16th March 1993 and falling within paragraph (a), (b) or (c) above

and any debenture which results from a conversion of securities within the meaning of section 132, or is issued in pursuance of rights attached to such a debenture, shall be deemed for the purposes of this section to be a security (as defined in that section).

• (7) Where any instrument specified in subsection (8) below is not a security (as defined in section 132), that instrument shall be deemed to be such a security for the purposes of this section, other than the purposes of determining what is or is not an allowable loss in any case.

• (8) The instruments mentioned in subsection (7) above are—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) any instrument which ... is not a loan relationship of a company but which would be a deeply discounted security for the purposes of Chapter 8 of Part 4 of ITTOIA 2005 if section 432(2) of that Act (excluded indexed securities) were omitted.

Foreign currency bank accounts.

252

• (1) Section 251(1) does not apply in relation to a gain accruing to a person on a disposal of a foreign currency debt (or an interest in such a debt) unless that person is—

• (a) an individual,

• (b) the trustees of a settlement, or

• (c) the personal representatives of a deceased person.

• (2) A “foreign currency debt” is a debt—

• (a) owed by a bank in a currency other than sterling, and

• (b) represented by a sum standing to the credit of an account-holder in an account in that bank.

Foreign currency bank accounts and the remittance basis

252A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Relief for loans to traders.

253

• (1) In this section “a qualifying loan” means a loan in the case of which—

• (a) the money lent is used by the borrower wholly for the purposes of a trade carried on by him, not being a trade which consists of or includes the lending of money, and

• (b) if the loan is made before 24 January 2019, the borrower is resident in the United Kingdom, and

• (c) the borrower’s debt is not a debt on a security as defined in section 132;

and for the purposes of paragraph (a) above money used by the borrower for setting up a trade which is subsequently carried on by him shall be treated as used for the purposes of that trade.

• (2) In subsection (1) above references to a trade include references to a profession or vocation; and where money lent to a company is lent by it to another company in the same group, being a trading company, that subsection shall apply to the money lent to the first-mentioned company as if it had used it for any purpose for which it is used by the other company while a member of the group.

• (3) Where a person who has made a qualifying loan makes a claim and at that time—

• (a) any outstanding amount of the principal of the loan has become irrecoverable, and

• (b) the claimant has not assigned his right to recover that amount, and

• (c) the claimant and the borrower were not each other’s spouses or civil partners, or companies in the same group, when the loan was made or at any subsequent time,

then, to the extent that that amount is not an amount which, in the case of the claimant, falls to be brought into account as a debit given for the purposes of Part 5 of CTA 2009 (loan relationships), this Act shall have effect as if an allowable loss equal to that amount had accrued to the claimant at the time of the claim or (subject to subsection (3A) below) any earlier time specified in the claim.

• (3A) For the purposes of subsection (3) above, an earlier time may be specified in the claim if:

• (a) the amount to which that subsection applies was also irrecoverable at the earlier time; and either

• (b) for capital gains tax purposes the earlier time falls not more than two years before the beginning of the year of assessment in which the claim is made; or

• (c) for corporation tax purposes the earlier time falls on or after the first day of the earliest accounting period ending not more than two years before the time of the claim.

• (4) Where a person who has guaranteed the repayment of a loan which is, or but for subsection (1)(c) above would be, a qualifying loan makes a claim and at that time—

• (a) any outstanding amount of, or of interest in respect of, the principal of the loan has become irrecoverable from the borrower, and

• (b) the claimant has made a payment under the guarantee (whether to the lender or a co-guarantor) in respect of that amount, and

• (c) the claimant has not assigned any right to recover that amount which has accrued to him (whether by operation of law or otherwise) in consequence of his having made the payment, and

• (d) the lender and the borrower were not each other’s spouses or civil partners, or companies in the same group, when the loan was made or at any subsequent time and the claimant and the borrower were not each other’s spouses or civil partners, and the claimant and the lender were not companies in the same group, when the guarantee was given or at any subsequent time,

this Act shall have effect as if an allowable loss had accrued to the claimant when the payment was made; and the loss shall be equal to the payment made by him in respect of the amount mentioned in paragraph (a) above less any contribution payable to him by any co-guarantor in respect of the payment so made.

• (4A) A claim under subsection (4) above shall be made—

• (a) for the purposes of capital gains tax, not more than 4 years after the end of the year of assessment in which the payment was made;

• (b) for the purposes of corporation tax, within 4 years after the end of the accounting period in which the payment was made.

• (5) Where an allowable loss has been treated under subsection (3) or (4) above as accruing to any person and the whole or any part of the outstanding amount mentioned in subsection (3)(a) or, as the case may be, subsection (4)(a) is at any time recovered by him, this Act shall have effect as if there had accrued to him at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

• (6) Where—

• (a) an allowable loss has been treated under subsection (4) above as accruing to any person, and

• (b) the whole or any part of the amount of the payment mentioned in subsection (4)(b) is at any time recovered by him,

this Act shall have effect as if there had accrued to him at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

• (7) Where—

• (a) an allowable loss has been treated under subsection (3) above as accruing to a company (“the first company”), and

• (b) the whole or any part of the outstanding amount mentioned in subsection (3)(a) is at any time recovered by a company (“the second company”) in the same group as the first company,

this Act shall have effect as if there had accrued to the second company at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

• (8) Where—

• (a) an allowable loss has been treated under subsection (4) above as accruing to a company (“the first company”), and

• (b) the whole or any part of the outstanding amount mentioned in subsection (4)(a), or the whole or any part of the amount of the payment mentioned in subsection (4)(b), is at any time recovered by a company (“the second company”) in the same group as the first company,

this Act shall have effect as if there had accrued to the second company at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

• (9) For the purposes of subsections (5) to (8) above, a person shall be treated as recovering an amount if he (or any other person by his direction) receives any money or money’s worth in satisfaction of his right to recover that amount or in consideration of his assignment of the right to recover it; and where a person assigns such a right otherwise than by way of a bargain made at arm’s length he shall be treated as receiving money or money’s worth equal to the market value of the right at the time of the assignment.

• (10) No amount shall be treated under this section as giving rise to an allowable loss or chargeable gain in the case of any person if it falls to be taken into account in computing his income for the purposes of income tax or corporation tax.

• (11) Where an allowable loss has been treated as accruing to a person under subsection (4) above by virtue of a payment made by him at any time under a guarantee—

• (a) no chargeable gain shall accrue to him otherwise than under subsection (5) above, and

• (b) no allowable loss shall accrue to him under this Act,

on his disposal of any rights that have accrued to him (whether by operation of law or otherwise) in consequence of his having made any payment under the guarantee at or after that time.

• (12) References in this section to an amount having become irrecoverable do not include references to cases where the amount has become irrecoverable in consequence of the terms of the loan, of any arrangements of which the loan forms part, or of any act or omission by the lender or, in a case within subsection (4) above, the guarantor.

• (13) For the purposes of subsections (7) and (8) above, 2 companies are in the same group if they were in the same group when the loan was made or have been in the same group at any subsequent time.

• (14) In this section—

• (a) “spouses” means spouses who are living together (construed in accordance with section 288(3)),

• (aa) “civil partners” means civil partners who are living together (construed in accordance with section 288(3)),

• (b) “trading company” has the same meaning as in section 165 (see section 165A), and

• (c) “group” shall be construed in accordance with section 170.

• (15) Subsection (3) above does not apply where the loan was made before 12th April 1978 and subsection (4) above does not apply where the guarantee was given before that date.

Relief for debts on qualifying corporate bonds.

254

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provisions supplementary to section 254.

255

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investments in social enterprises

Hold-over relief for gains re-invested in social enterprises

255A

Schedule 8B to this Act (which provides relief in respect of gains re-invested in social enterprises) has effect.

Gains and losses on investments in social enterprises

255B

• (1) For the purpose of determining the gain or loss on any disposal of an asset by an individual where—

• (a) an amount of SI relief is attributable to the asset, and

• (b) apart from this subsection there would be a loss,

treat the consideration given by the individual for the acquisition of the asset as reduced by the amount of the SI relief.

• (2) If—

• (a) an individual disposes of an asset,

• (b) an amount of SI relief is attributable to the asset,

• (c) the disposal takes place after the end of the 3 years beginning with the day when the individual acquired the asset, and

• (d) apart from this subsection, there would be a gain on the disposal,

the gain is not a chargeable gain, subject to section 255C.

• (3) Despite section 16(2), subsection (2) above does not apply to a disposal on which a loss accrues.

• (4) Any question as to—

• (a) which of any assets acquired by an individual at different times a disposal relates to, being assets to which SI relief is attributable, or

• (b) whether a disposal relates to assets to which SI relief is attributable or to other assets,

is to be determined for the purposes of capital gains tax as provided by section 257TA of ITA 2007.

• (5) Chapter 1 of this Part has effect subject to subsection (4).

• (6) Sections 104, 105 and 106A do not apply to assets to which SI relief is attributable.

• (7) There are to be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of SI relief being given or withdrawn.

• (8) In this section and sections 255C to 255E “SI relief” means relief under Part 5B of ITA 2007 (income tax relief for investments in social enterprises).

• (9) That Part applies for the purposes of this section and sections 255C to 255E to determine whether SI relief is attributable to any asset and, if so, the amount of SI relief so attributable.

Application of section 255B(2) where maximum SI relief not obtained

255C

• (1) Subsection (2) applies if—

• (a) an individual's liability to income tax has been reduced (or treated by virtue of section 257T of ITA 2007 (spouses or civil partners) as reduced) for any tax year under section 257JA of ITA 2007 (SI relief) in respect of the acquisition of an asset,

• (b) the amount of the reduction (“D”) is less than the amount given by—

$$I × R$where—I is the amount on which the individual has SI relief in the case of the asset, andR is the SI rate for the tax year for which the SI relief was obtained, and$

• (c) D is not within paragraph (b) solely by virtue of section 29(2) and (3) of ITA 2007.

• (2) If the individual disposes of the asset and there is a gain on the disposal, section 255B(2) has effect in relation to the gain as if it were reduced by multiplying it by—

$D I × R$

• (3) In this section “SI rate” has the meaning given by section 257JA(5) of ITA 2007.

Application of section 255B(2) where SI relief has been reduced

255D

• (1) Subsection (2) applies if before a disposal of an asset—

• (a) value is received in circumstances where SI relief attributable to the asset is reduced by an amount under section 257Q(1)(a) of ITA 2007, or

• (b) there is a repayment, redemption, repurchase or payment in circumstances where SI relief attributable to the asset is reduced by an amount under section 257QJ(2)(a) of ITA 2007, or

• (c) paragraphs (a) and (b) both apply.

• (2) If section 255B(2) applies on the disposal but section 255C does not, section 255B(2) applies only to so much of the gain as remains after deducting so much of it as is found by multiplying it by the fraction—

$$A B$where—A is equal to the amount by which the SI relief given in respect of the asset is reduced as mentioned in subsection (1) above, andB is equal to the amount of the SI relief given in respect of the asset.$

• (3) If sections 255B(2) and 255C apply on the disposal, section 255B(2) applies only to so much of the gain as is found by—

• (a) taking the part of the gain found under section 255C, and

• (b) deducting from that part so much of it as is found by multiplying it by the fraction mentioned in subsection (2).

• (4) If the SI relief given in respect of the asset is reduced as mentioned in subsection (1) by more than one amount, the amount referred to as A in subsection (2) is to be taken to be equal to the aggregate of those amounts.

• (5) The amount referred to in subsection (2) as B is to be found without regard to any reduction mentioned in subsection (1).

Reorganisations involving shares to which SI relief is attributable

255E

• (1) Subsection (2) applies if an individual holds shares which form part of the ordinary share capital of a company and include shares of more than one of the following kinds—

• (a) shares to which SI relief is attributable and to which subsection (3) applies,

• (b) shares to which SI relief is attributable and to which subsection (3) does not apply, and

• (c) shares to which SI relief is not attributable and to which subsection (3) does not apply.

• (2) If there is a reorganisation within the meaning of section 126 affecting the shares listed in subsection (1), section 127 applies separately to those shares so that shares of each kind are treated as a separate holding of original shares and identified with a separate new holding.

• (3) This subsection applies to any shares if—

• (a) expenditure on the shares has been set under Schedule 8B to this Act against the whole or part of any gain, and

• (b) in relation to the shares there has been no chargeable event for the purposes of that Schedule.

• (4) If—

• (a) an individual holds shares (“the existing holding”) which form part of the ordinary share capital of a company,

• (b) there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the existing holding, and

• (c) immediately following the reorganisation, SI relief is attributable to the existing holding or the allotted shares,

sections 127 to 130 do not apply in relation to the existing holding.

• (5) Subject to subsection (6), sections 135 and 136 do not apply in respect of shares to which SI relief is attributable.

• (6) Subsection (5) does not have effect to disapply section 135 or 136 in a case where the original shares are shares to which SI relief is attributable if—

• (a) the new holding consists of new ordinary shares which meet conditions A and B of section 257L of ITA 2007,

• (b) the new shares are issued after the end of three years beginning with the day on which the original shares were acquired,

• (c) before issuing the new shares, the company had issued shares which met conditions A and B of section 257L of ITA 2007, and

• (d) the company issued a compliance certificate in relation to those earlier shares for the purposes of section 257PA(1) of ITA 2007 and in accordance with sections 257PB and 257PC of ITA 2007.

• (7) In subsection (6) “new holding” is to be construed in accordance with sections 126, 127, 135 and 136.

• (8) In this section—

• “ordinary share capital” has the meaning given in section 989 of ITA 2007;

• “ordinary shares”, in relation to a company, means shares forming part of its ordinary share capital.

Charities and gifts of non-business assets etc.

Charities.

256

• (1) Subject to ... the following provisions of this section, a gain shall not be a chargeable gain if it accrues to a charity and is applicable and applied for charitable purposes.

• (2) If property held on charitable trusts ceases to be subject to charitable trusts—

• (a) the trustees shall be treated as if they had disposed of, and immediately reacquired, the property for a consideration equal to its market value, any gain on the disposal being treated as not accruing to a charity, and

• (b) if and so far as any of that property represents, directly or indirectly, the consideration for the disposal of assets by the trustees, any gain accruing on that disposal shall be treated as not having accrued to a charity,

and an assessment to capital gains tax chargeable by virtue of paragraph (b) above may be made at any time not more than 3 years after the end of the year of assessment in which the property ceases to be subject to charitable trusts.

• (3) Subsection (4) below applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.

• (3A) Subsection (4) below also applies if a charitable company has a non-exempt amount under section 493 of CTA 2010 for an accounting period.

• (4) Gains accruing—

• (a) to the charitable trust in the year of assessment, or

• (b) to the charitable company in the accounting period,

are treated as being, and always having been, chargeable gains so far as they are attributed to the non-exempt amount under section 256A (in the case of a charitable trust) or section 256C (in the case of a charitable company).

• (5) For restrictions on exemptions under Part 10 of ITA 2007 (special rules about charitable trusts etc) see section 539 of that Act.

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (7) For restrictions on exemptions under Part 11 of CTA 2010 (charitable companies etc) see section 492 of that Act.

• (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Attributing gains to the non-exempt amount: charitable trusts

256A

• (1) This section applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.

• (2) Attributable gains of the charitable trust for the year of assessment may be attributed to the non-exempt amount but only so far as the non-exempt amount has not been used up.

• (3) The non-exempt amount can be used up (in whole or in part) by—

• (a) attributable gains being attributed to it under this section, or

• (b) attributable income being attributed to it under section 541 of ITA 2007.

• (4) The whole of the non-exempt amount must be used up by—

• (a) attributable gains being attributed to the whole of it under this section,

• (b) attributable income being attributed to the whole of it under section 541 of ITA 2007, or

• (c) a combination of attributable gains being attributed to some of it under this section and attributable income being attributed to the rest of it under section 541 of ITA 2007.

• (5) See section 256B for the way in which gains are to be attributed to the non-exempt amount under this section.

• (6) In this section and section 256B a charitable trust's “attributable income”, and “attributable gains”, for a tax year have the same meaning as in Part 10 of ITA 2007 (see section 540 of that Act).

How gains are attributed to the non-exempt amount: charitable trusts

256B

• (1) This section is about the ways in which attributable gains can be attributed to a non-exempt amount under section 256A.

• (2) The trustees of the charitable trust may specify the attributable gains that are to be attributed to the non-exempt amount.

• (3) A specification under subsection (2) is made by notice to an officer of Revenue and Customs.

• (4) Subsection (6) applies if—

• (a) an officer of Revenue and Customs requires the trustees of a charitable trust to make a specification under this section, and

• (b) the trustees have not given notice under subsection (3) of the specification before the end of the required period.

• (5) The required period is 30 days beginning with the day on which the officer made the requirement.

• (6) An officer of Revenue and Customs may determine the attributable gains that are to be attributed to the non-exempt amount.

Attributing gains to the non-exempt amount: charitable companies

256C

• (1) This section applies if a charitable company has a non-exempt amount under section 493 of CTA 2010 for an accounting period.

• (2) Attributable gains of the charitable company for the period may be attributed to the non-exempt amount but only so far as the non-exempt amount has not been used up.

• (3) The non-exempt amount can be used up (in whole or in part) by—

• (a) attributable gains being attributed to it under this section, or

• (b) attributable income being attributed to it under section 494 of CTA 2010.

• (4) The whole of the non-exempt amount must be used up by—

• (a) attributable gains being attributed to the whole of it under this section,

• (b) attributable income being attributed to the whole of it under section 494 of CTA 2010, or

• (c) a combination of attributable gains being attributed to some of it under this section and attributable income being attributed to the rest of it under section 494 of CTA 2010.

• (5) In this section and section 256D a charitable company's “attributable income” and “attributable gains” for an accounting period have the same meaning as in Part 11 of CTA 2010 (see section 493 of that Act).

• (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How gains are attributed to the non-exempt amount: charitable companies

256D

• (1) This section is about the ways in which attributable gains can be attributed to a non-exempt amount under section 256C.

• (2) The charitable company may specify the attributable gains that are to be attributed to the non-exempt amount.

• (3) A specification under subsection (2) is made by notice to an officer of Revenue and Customs.

• (4) Subsection (6) applies if—

• (a) an officer of Revenue and Customs requires a charitable company to make a specification under this section, and

• (b) the charitable company has not given notice under subsection (3) of the specification before the end of the required period.

• (5) The required period is 30 days beginning with the day on which the officer made the requirement.

• (6) An officer of Revenue and Customs may determine the attributable gains that are to be attributed to the non-exempt amount.

• (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Gifts to charities etc.

257

• (1) Subsection (2) below shall apply where a disposal of an asset is made otherwise than under a bargain at arm’s length—

• (a) to a charity or a registered club, or