Taxation of Chargeable Gains Act 1992

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income tax decisions.

284

Any assessment to income tax or decision on a claim under the Income Tax Acts, and any decision on an appeal under the Income Tax Acts against such an assessment or decision, shall be conclusive so far as, under any provision of this Act, liability to tax depends on the provisions of the Income Tax Acts.

Concessions that defer a charge.

284A

• (1) This section applies where—

• (a) a person (“the original taxpayer”) has at any time obtained for any chargeable period (“the first chargeable period”) the benefit of any capital gains relief to which he had no statutory entitlement;

• (b) the benefit of the relief was obtained in reliance on any concession;

• (c) the concession was first published by the Board before 9th March 1999 or (having been published on or after that date) replaced a concession satisfying the requirements of this paragraph with a concession to the same or substantially the same effect; and

• (d) the concession involved the application (with or without modifications), to a case to which they would not otherwise have applied, of the provisions of any enactment (“the relevant statutory provisions”).

• (2) This section applies only if, at the time when the original taxpayer obtained the benefit of the relief, the concession was one available generally to any person falling within its terms.

• (3) If the benefit obtained for the first chargeable period by the original taxpayer is repudiated for any later chargeable period (whether by the original taxpayer or by another person), the enactments relating to the taxation of chargeable gains shall have effect as if a chargeable gain equal to the amount of that benefit accrued in the later chargeable period to the person repudiating the benefit.

• (4) For the purposes of this section—

• (a) a capital gains relief for any chargeable period is a relief (of whatever description) the effect of which is that the amount of the chargeable gains taken to have accrued to that person in that period is less than it otherwise would have been; and

• (b) the amount of the benefit of any such relief is the amount by which, as a consequence of that relief, those gains are less than they otherwise would have been.

• (5) Where, without applying a specific enactment, any concession has the effect that—

• (a) any asset is treated as the same as another asset and as acquired as the other asset was acquired,

• (b) any two or more assets are treated as a single asset, or

• (c) any disposal is treated as having been a disposal on which neither a gain nor a loss accrued,

that concession shall be assumed for the purposes of this section to have involved the application, to a case to which it would not otherwise have applied, of the provisions of an enactment to the corresponding effect.

• (6) For the purposes of this section the benefit of any relief obtained by the original taxpayer for the first chargeable period is repudiated by a person for a later chargeable period if—

• (a) circumstances arise such that, had the equivalent circumstances arisen in the case of the corresponding relief under the relevant statutory provisions, the whole or a part of the benefit of that relief would have fallen to be recouped from that person in the later chargeable period;

• (b) apart from this section, the recoupment in the actual circumstances of the whole or a part of the benefit obtained by the original taxpayer is prevented by the fact that the original taxpayer relied on a concession (rather than on the relevant statutory provisions) to obtain that benefit; and

• (c) the person from whom, in the equivalent circumstances, the amount of the benefit or any part of it would have fallen to be recouped is not precluded by subsection (8) below from relying on that fact in relation to that amount or part.

• (7) For the purposes of this section an amount of the benefit of a capital gains relief is recouped from any person in a chargeable period to the extent that an amount is so brought into account in his case for that period as to secure that—

• (a) the amount of his chargeable gains for that period is taken to be more than it otherwise would have been by an amount directly or indirectly representing the whole or a part of the amount of the benefit; or

• (b) the amount of his allowable losses for that period is taken to be less than it otherwise would have been by an amount directly or indirectly representing the whole or a part of the amount of the benefit.

• (8) Where—

• (a) any such circumstances as are mentioned in subsection (6)(a) above have arisen in relation to the relief the benefit of which has been obtained by the original taxpayer,

• (b) the person from whom, in the equivalent circumstances, the whole or any part of the amount of the benefit would have fallen to be recouped has accepted that, in the actual circumstances, the whole or a part of the benefit obtained by the original taxpayer may be recouped from him, and

• (c) that acceptance is indicated in writing to the Board (whether by the making or amendment of a self-assessment or otherwise),

that person’s rights subsequently to amend, appeal against or otherwise challenge any assessment shall not be exercised in any manner inconsistent with his acceptance of that matter (which shall be irrevocable).

• (9) In this section “concession” includes any practice, interpretation or other statement in the nature of a concession.

Provisions supplementary to section 284A.

284B

• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) The total amount of chargeable gains that are treated as accruing to any person under subsection (3) of section 284A in respect of any such benefit as is referred to in that subsection shall not exceed the amount of that benefit.

• (3) Where, after any assessment to tax has been made on the basis that any chargeable gain is treated as having accrued to any person under section 284A(3)—

• (a) the person assessed, within any of the periods allowed by subsection (4) below, gives an indication for the purposes of section 284A(8), or

• (b) a final determination of the original taxpayer’s liability to tax for the first chargeable period is made on the basis that the original taxpayer did not, or was not entitled to, rely on the concession in question,

all such adjustments shall be made (whether by way of assessment, amendment of an assessment, repayment of tax or otherwise) as are necessary to secure that no person is subjected to any greater liability by virtue of section 284A(3) than he would have been had the indication been given, or the final determination made, before the making of the assessment.

• (4) The periods allowed by this subsection are—

• (a) the period of twelve months beginning with the making of the assessment;

• (b) the period within which the person is entitled to amend his self-assessment or company tax return for the chargeable period in which the chargeable gain under section 284A(3) is treated as having accrued to him;

• (c) where the person makes a claim for any further relief against the amount that may be recouped from him by virtue of his indication under section 284A(8), the period allowed for making that claim.

• (5) Subsection (3) above has effect notwithstanding any time limits relating to the making or amendment of an assessment for any chargeable period.

Recognised investment exchanges.

285

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

UK Economic Interest Groupings European Economic Interest Groupings

285A

• (1) The following rules about UK Economic Interest Groupings and European Economic Interest Groupings apply for the purposes of charging tax in respect of chargeable gains—

• Rule 1A grouping is treated as acting as the agent of its members.

• Rule 2The activities of a grouping are treated as those of its members acting jointly.

• Rule 3Each member of a grouping is treated as having a share of the grouping's property, rights and liabilities.

• Rule 4Any trade or profession carried on by the grouping is treated as carried on in partnership by members of the grouping.

• Rule 5A person is to be regarded as acquiring or disposing of a share of the assets of the grouping not only where there is an acquisition or disposal of assets by the grouping while he is a member of it, but also where he becomes or ceases to be a member of a grouping or there is a change in his share of the property of the grouping.

• (2) For the purposes of Rule 3, a member's share of any property, rights or liabilities of a grouping is determined according to the contract under which the grouping is established.

• (3) If the contract does not provide for this, the member's share is determined by reference to the share of the profits of the grouping to which the member is entitled under the contract.

• (4) If the contract does not provide for this either, the members are treated as having equal shares of the property, rights and liabilities of the grouping.

• (5) “European Economic Interest Grouping” means a grouping registered in a member State and formed in pursuance of Council Regulation (EEC) No. 2137/85 of 25 July 1985 on the European Economic Interest Grouping as it has effect in EU law.

Connected persons: interpretation.

286

• (1) Any question whether a person is connected with another shall for the purposes of this Act be determined in accordance with the following subsections of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).

• (2) A person is connected with an individual if that person is the individual’s spouse or civil partner, or is a relative, or the spouse or civil partner of a relative, of the individual or of the individual’s spouse or civil partner.

• (3) A person, in his capacity as trustee of a settlement, is connected with—

• (a) any individual who in relation to the settlement is a settlor,

• (b) any person who is connected with such an individual, ...

• (c) any body corporate which is connected with that settlement,

• (d) if the settlement is the principal settlement in relation to one or more sub-fund settlements, the trustees of the sub-fund settlements, and

• (e) if the settlement is a sub-fund settlement in relation to a principal settlement, the trustees of any other sub-fund settlements in relation to the principal settlement.

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

• (3ZA) For the purpose of subsection (3) above—

• (a) “settlement” has the same meaning as in section 620 of ITTOIA 2005, and

• (b) “trustee”, in relation to a settlement in relation to which there would be no trustees apart from this paragraph, means any person in whom the settled property or its management is for the time being vested.

• (3A) For the purpose of subsection (3) above a body corporate is connected with a settlement if—

• (a) it is a close company (or only not a close company because it is not resident in the United Kingdom) and the participators include the trustees of the settlement; or

• (b) it is controlled (within the meaning of section 1124 of CTA 2010) by a company falling within paragraph (a) above.

• (4) Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the spouse or civil partner or a relative of any individual with whom he is in partnership.

• (5) A company is connected with another company—

• (a) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other, or

• (b) if a group of 2 or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

• (6) A company is connected with another person, if that person has control of it or if that person and persons connected with him together have control of it.

• (7) Any 2 or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

• (8) In this section “relative” means brother, sister, ancestor or lineal descendant.

Residence of companies

286A

Chapter 3 of Part 2 of CTA 2009 (rules for determining residence of companies) applies for the purposes of—

• (a) this Act (so far as relating to capital gains tax), and

• (b) any other enactment relating to capital gains tax,

as it applies for the purposes of the Corporation Tax Acts.

Orders and regulations made by the Treasury or the Board.

287

• (1) Subject to subsections (2) and (2A) below, any power of the Treasury or the Board to make any order or regulations under this Act or any other enactment relating to the taxation of chargeable gains passed after this Act shall be exercisable by statutory instrument.

• (2) Subsection (1) above shall not apply in relation to any power conferred by section 288(6).

• (2A) Subsection (1) above shall not apply in relation to any power conferred by TIOPA 2010 (see instead section 499 of that Act).

• (3) Subject to subsection (4) below and to any other provision to the contrary, any statutory instrument to which subsection (1) above applies shall be subject to annulment in pursuance of a resolution of the House of Commons.

• (4) Subsection (3) above shall not apply in relation to an order or regulations made under section ... 265 or paragraph 1 of Schedule 9, or—

• (a) if any other Parliamentary procedure is expressly provided; or

• (b) if the order or regulations provide for any provision of an enactment relating to the taxation of chargeable gains to come into force or have effect in accordance with the order or regulations.

Interpretation.

288

• (1) In this Act, unless the context otherwise requires—

• “the 1979 Act” means the Capital Gains Tax Act 1979;

• ...

• “allowable loss” shall be construed in accordance with sections 8(2) , 16 , 16A , 261B, 261D and 263ZA;

• ...

• “the Board” means the Commissioners of Inland Revenue;

• “building society” has the same meaning as in the Building Societies Act 1986;

• “the Capital Allowances Act” means the Capital Allowances Act 2001;

• “chargeable period” means a year of assessment or an accounting period of a company for purposes of corporation tax;

• “class”, in relation to shares or securities, means a class of shares or securities of any one company;

• “close company” shall be construed in accordance with Chapter 2 of Part 10 of CTA 2010 (see in particular section 439) (subject to section 138ZA(6));

• “collective investment scheme” has the meaning given by section 235 of the Financial Services and Markets Act 2000 (subject to section 99A);

• “company” includes any body corporate or unincorporated association but does not include a partnership, and shall be construed in accordance with section 99;

• “control” shall be construed in accordance with sections 450 and 451 of CTA 2010;

• “CTA 2009” means the Corporation Tax Act 2009;

• “CTA 2010” means the Corporation Tax Act 2010;

• “disposal of a UK residential property interest” has the meaning given by Schedule B1;

• “double taxation relief arrangements”— in relation to a company means arrangements that have effect under section 2(1) of TIOPA 2010 except so far as they have effect in relation to petroleum revenue tax, andin relation to any other person means arrangements that have effect under section 2(1) of TIOPA 2010 but only so far as they have effect in relation to capital gains tax;

• “dual resident investing company” has the meaning given by section 404 of the Taxes Act;

• “foreign employment election” means a claim under section 41M of ITEPA 2003;

• “foreign gain claim” means a claim under paragraph 1 of Schedule D1;

• “foreign income claim” means a claim under section 845A of ITTOIA 2005;

• “inspector” means any inspector of taxes;

• “investment trust” has the meaning given by section 1158 of CTA 2010;

• “ITEPA 2003” means the Income Tax (Earnings and Pensions) Act 2003;

• “ITTOIA 2005” means the Income Tax (Trading and Other Income) Act 2005;

• “ITA 2007” means the Income Tax Act 2007;

• “land” includes messuages, tenements, and hereditaments, houses and buildings of any tenure;

• “local authority” has the meaning given by section 999 of ITA 2007;

• “the Management Act” means the Taxes Management Act 1970;

• “net income” has the same meaning as in the Income Tax Acts (see section 989 of ITA 2007);

• ...

• “notice” means notice in writing;

• ...

• ...

• ...

• “NRCGT return” has the meaning given by section 12ZB(2) of the Management Act;

• “offshore fund” has the meaning given in section 355 of TIOPA 2010 (but where two or more offshore funds make up a collective investment scheme they are to be treated as a single offshore fund subject to section 99A of this Act));

• “participant”, in relation to a collective investment scheme, has the meaning given by section 103C(10);

• “period of account” has the meaning given by section 989 of ITA 2007;

• “permanent establishment”, in relation to a company, is to be read in accordance with Chapter 2 of Part 24 of CTA 2010;

• “personal representatives” has the same meaning as in the Corporation Tax Acts (see section 1119 of CTA 2010);

• “property investment LLP” has the meaning given by section 1004 of ITA 2007;

• “qualifying new resident” has the meaning given by section 845B of ITTOIA 2005 (which sets out the circumstances in which an individual will be a qualifying new resident following a period of 10 years of non-residence);

• “recognised stock exchange” has the meaning given by section 1005 of ITA 2007;

• “registered pension scheme” has the meaning given by section 150(2) of the Finance Act 2004;

• “Registrar of Government Stock” means the person or persons appointed in accordance with regulations under section 47(1)(b) of the Finance Act 1942 (see regulation 3 of the Government Stock Regulations 2004);

• ...

• “resident” means resident in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013;

• “shares” includes stock;

• “split year”, as respects an individual, means a tax year that, as respects that individual, is a split year within the meaning of Part 3 of Schedule 45 to the Finance Act 2013 (statutory residence test: split year treatment);

• “stepchild”, in relation to a civil partner, shall be construed in accordance with section 246 of the Civil Partnership Act 2004;

• “the Taxes Act” means the Income and Corporation Taxes Act 1988;

• “TIOPA 2010” means the Taxation (International and Other Provisions) Act 2010;

• “trade” has the same meaning as in the Income Tax Acts;

• “trading stock” has the meaning given by section 163 of CTA 2009;

• “the tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal;

• “UK property business” means— a UK property business within the meaning of the Income Tax Acts (see section 989 of ITA 2007), ora UK property business within the meaning of the Corporation Tax Acts (see section 1119 of CTA 2010);

• “venture capital trust” has the same meaning as in Part 6 of ITA 2007;

• “wasting asset” has the meaning given by section 44 and paragraph 1 of Schedule 8;

• “year of assessment” means tax year;

and any reference to a particular section, Part or Schedule is a reference to that section or Part of, or that Schedule to, this Act.

• (1ZA) In this Act and other enactments relating to capital gains tax “tax year” means a year beginning on 6 April and ending on the following 5 April; and “the tax year 2008-09” means the tax year beginning on 6 April 2008 (and any corresponding expression in which two years are similarly mentioned is to be read in the same way).

• (1ZB) A reference in this Act to “the overseas part” or “the UK part” of a split year is to be read in accordance with Part 3 of Schedule 45 to the Finance Act 2013 (statutory residence test: split year treatment).

• (1A) If any employment-related securities option would not otherwise be regarded as an option for the purposes of this Act, it shall be so regarded; and the acquisition of securities by an associated person pursuant to an employment-related securities option is to be treated for the purposes of this Act as the exercise of the option.

In this subsection “employment-related securities option” means a securities option within the meaning of Chapter 5 of Part 7 of ITEPA 2003 (see section 420(8) of that Act) to which that Chapter applies ... (see section 471 of that Act); and other expressions used in this subsection and that Chapter have the same meaning in this subsection as in that Chapter.

• (2) In this Act “retail prices index” has the same meaning as in the Income Tax Acts and, accordingly, any reference in this Act to the retail prices index shall be construed in accordance with section 989 of ITA 2007.

• (2A) In this Act “consumer prices index” means the all items consumer prices index published by the Statistics Board.

• (3) References in this Act to an individual living with his spouse or civil partner (however expressed) shall be construed in accordance with section 1011 of ITA 2007.

• (3A) For the purposes of this Act, the following are “the no gain/no loss provisions”—

• (a) sections 58, 73, 139, 140A, 140E, 171, 211, 211B, 215, 216, 217A, 217D, 218 to 220, 257(3), 258(4), 264 and 267(2) of this Act;

• (b) section 148 of the 1979 Act;

• (c) section 148 of the Finance Act 1982;

• (d) section 130(3) of the Transport Act 1985;

• (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (f) paragraph 2(1) of Schedule 7 to the Broadcasting Act 1996;

• (g) paragraphs 3 and 9 of Schedule 26 to the Transport Act 2000;

• (h) paragraphs 3, 18, 29 and 32 of Schedule 9 to the Energy Act 2004;

• (i) paragraph 9 of Schedule 4 to the Consumers, Estate Agents and Redress Act 2007;

• (j) Schedule 7 to the Housing and Regeneration Act 2008;

• (k) paragraph 4 of Schedule 4 to the Budget Responsibility and National Audit Act 2011;

• (l) paragraph 1(2) or 4 of Schedule 2 to the Postal Services Act 2011;

• (m) paragraph 6(1) of Schedule 24 to the Localism Act 2011.

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

• (5) For the purposes of this Act, shares or debentures comprised in any letter of allotment or similar instrument shall be treated as issued unless the right to the shares or debentures thereby conferred remains provisional until accepted and there has been no acceptance.

• (5A) References in this Act to shares or securities which are listed on a recognised stock exchange shall be construed in accordance with subsections (3) and (4) of section 1005 of ITA 2007.

• (5B) References in this Act to shares or securities which are included in the official UK list shall be construed in accordance with subsection (5) of that section.

• (6) In this Act “recognised futures exchange” means the London International Financial Futures Exchange and any other futures exchange which is for the time being designated for the purposes of this Act by order made by the Board.

• (7) An order made by the Board under subsection (6) above—

• (a) may designate a futures exchange by name or by reference to any class or description of futures exchanges, including, in the case of futures exchanges in a country outside the United Kingdom, a class or description framed by reference to any authority or approval given in that country; and

• (b) may contain such transitional and other supplemental provisions as appear to the Board to be necessary or expedient.

• (7A) In the application of this Act to Scotland “surrender” includes renunciation.

• (7B) For the purposes of this Act, a person is Treaty non-resident at any time if, at that time, he falls to be regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief arrangements having effect at that time.

• (8) The Table below indexes other general definitions in this Act.

Expression defined	Reference
“Absolutely entitled as against the trustee"	S.60(2)
Authorised contractual scheme	s 103D(2)
“Authorised unit trust"	S.99
“Branch or agency"	s 1B(5)
“Chargeable gain"	S.15(2)
“Connected", in references to persons being connected with one another	S.286
Co-ownership scheme	s 103D(2)
“Court investment fund"	S.100
“Gilt-edged securities"	Sch.9
“Indexation allowance"	S.53
“Lease" and cognate expressions	Sch.8 para.10(1)
“Legatee"	S.64(2),(3)
“Market value"	S.272 to 274 and Sch.11
“Part disposal"	S.21(2)
“Principal settlement”	Sch.4ZA para. 1
“Qualifying corporate bond"	S.117
“Relevant allowable expenditure"	S.53
“Reserved Investor Fund (Contractual Scheme)”	s 103D(2)
. . .	. . .
“Settled property"	S.68
“Settlor”	S.68A
“Settlor of property”	S.68A
“Sub-fund”	Sch.4ZA para. 1
“Sub-fund election”	Sch.4ZA para. 2
“Sub-fund settlement”	Sch.4ZA para. 1
“Unit trust scheme" and “unit holder”	Ss. 99 , 99A and 151W(a)

Commencement.

289

• (1) Except where the context otherwise requires, this Act has effect in relation to tax for the year 1992-93 and subsequent years of assessment, and tax for other chargeable periods beginning on or after 6th April 1992, and references to the coming into force of this Act or any provision in this Act shall be construed accordingly.

• (2) The following provisions of this Act, that is—

• (a) so much of any provision of this Act as authorises the making of any order or other instrument, and

• (b) except where the tax concerned is all tax for chargeable periods to which this Act does not apply, so much of any provision of this Act as confers any power or imposes any duty the exercise or performance of which operates or may operate in relation to tax for more than one chargeable period,

shall come into force for all purposes on 6th April 1992 to the exclusion of the corresponding enactments repealed by this Act.

Savings, transitionals, consequential amendments and repeals.

290

• (1) Schedules 10 (consequential amendments) and 11 (transitory provisions and savings) shall have effect.

• (2) No letters patent granted or to be granted by the Crown to any person, city, borough or town corporate of any liberty, privilege, or exemption from subsidies, tolls, taxes, assessments or aids, and no statute which grants any salary, annuity or pension to any person free of any taxes, deductions or assessments, shall be construed or taken to exempt any person, city, borough or town corporate, or any inhabitant of the same, from tax chargeable in pursuance of this Act.

• (3) Subject to Schedule 11, the enactments and instruments mentioned in Schedule 12 to this Act are hereby repealed to the extent specified in the third column of that Schedule (but Schedule 12 shall not have effect in relation to any enactment in so far as it has previously been repealed subject to a saving which still has effect on the coming into force of this section).

• (4) The provisions of this Part of this Act are without prejudice to the provisions of the Interpretation Act 1978 as respects the effect of repeals.

Short title.

291

This Act may be cited as the Taxation of Chargeable Gains Act 1992.

SCHEDULE A1 — Application of taper relief

Introductory

1

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

Period for which an asset is held and relevant period of ownership

2

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

Rules for determining whether a gain is a gain on the disposal of a business asset or non-business asset

3

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

Conditions for shares to qualify as business assets

4

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

Conditions for other assets to qualify as business assets

5

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

Companies which are qualifying companies

6

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

Meaning of “material interest”

6A

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

Persons who are eligible beneficiaries

7

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

Cases where there are non-qualifying beneficiaries

8

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

Cases where an asset is used at the same time for different purposes

9

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

Periods of limited exposure to fluctuations in value not to count

10

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

Periods of share ownership not to count where there is a change of activity by the company

11

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

Periods of share ownership not to count if company is not active

11A

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

Periods of share ownership not to count in a case of value shifting

12

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

Rules for options

13

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

Further rules for assets derived from other assets

14

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

Special rules for assets transferred between spouses or civil partners

15

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

Special rules for postponed gains

16

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

Special rule for property settled by a company

17

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

Special rules for assets acquired in the reconstruction of mutual businesses et ceteralaetc.

18

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

Special rule for ancillary trust funds

19

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

General rules for settlements

20

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

General rule for apportionments under this Schedule

21

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

Interpretation of Schedule

22

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

Meaning of “trading company”

22A

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

Meaning of “trading group”

22B

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

Qualifying shareholdings in joint venture companies

23

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

Joint enterprise companies: relevant connection

24

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

SCHEDULE B1 — Disposals of UK residential property interests

Meaning of “disposal of a UK residential property interest”

1

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

“Interest in UK land”

2

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

Grants of options

3

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

Meaning of “dwelling”

4

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

Power to modify meaning of “use as a dwelling”

5

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

Damage to a dwelling

6

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

Demolition of a building

7

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

Disposal of a building that has undergone works

8

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

Retrospective planning permission or development consent

9

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

Interpretation

10

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

SCHEDULE BA1 — Disposals of non-UK residential property interests

Meaning of “disposal of a non-UK residential property interest”

1

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

“Interest in non-UK land”

2

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

Grants of options

3

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

Meaning of “dwelling”

4

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

Interpretation

5

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

SCHEDULE C1 — Section 14F: meaning of “closely-held company” and “widely-marketed scheme”

PART 1 — Meaning of “closely-held company”

Introduction

1

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

Main definition

2

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

3

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

4

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

5

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

6

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

Meaning of “control”

7

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

8

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

Interpretation

9

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

PART 2 — Unit trust schemes and OEICs: widely-marketed schemes

Introduction

10

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

Widely-marketed schemes

11

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

Interpretation

12

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

Schedule D1 — Relief for new residents on foreign gains

Claim for relief for qualifying new residents

1

• (1) An individual may make a claim for relief for a tax year under this paragraph (a “foreign gain claim”) if the individual is a qualifying new resident for that tax year.

• (2) Paragraphs 2, 3 and 4 set out the reliefs that may be obtained by making a foreign gain claim.

• (3) A foreign gain claim must be made in a return.

• (4) A foreign gain claim in relation to a tax year must be made before the end of the period of 12 months beginning with 31 January after the end of that tax year.

• (5) A foreign gain claim may not be made as a consequential claim (within the meaning of section 43C(5) of the Management Act) if the circumstances which give rise to the consequential claim result from a loss of tax brought about carelessly or deliberately by the individual or a person acting on the individual’s behalf.

• (6) For the purposes of this paragraph—

• (a) “return” means a return under section 8 of the Management Act (personal return),

• (b) references to a claim being included in a return include a claim being so included as a result of an amendment of the return, and

• (c) subsections (5) to (7) of section 118 of the Management Act (loss of tax brought about carelessly or deliberately) apply as they apply for the purposes of that Act.

Relief for qualifying foreign gains

2

• (1) Where an individual makes a foreign gain claim for a tax year, the individual is entitled to relief for each qualifying foreign gain accruing to the individual in that year that is identified in the claim.

• (2) The relief is given by deducting an amount equal to the sum of those gains from the total amount of qualifying foreign gains accruing to the individual in that tax year.

Relief in respect of deemed gains under section 86

3

• (1) This paragraph applies if—

• (a) an amount of chargeable gains would (but for this paragraph) be treated as accruing to an individual in a tax year under section 86(4) (attribution of gains to settlors of non-resident settlements),

• (b) a qualifying foreign gain accrued in that tax year to the trustees of the settlement concerned (or would have done on the assumption in section 86(3)), and

• (c) the individual identifies the gain mentioned in paragraph (b) in a foreign gain claim for that tax year.

• (2) For the purposes of section 86(1)(e) as it applies to the individual, the following are to be disregarded (in that tax year and in later tax years)—

• (a) the gain mentioned in sub-paragraph (1)(b);

• (b) any qualifying foreign loss that accrued to the trustees in that tax year (or that would have so accrued on the assumption in section 86(3)).

Relief in respect of deemed gains under sections 87 and 89(2) and Schedule 4C

4

• (1) This paragraph applies if—

• (a) a settlement is for a tax year—

• (i) one to which section 87 or 89(2) applies (attribution of gains to beneficiaries of settlements), or

• (ii) a relevant settlement in relation to a Schedule 4C pool, within the meaning of paragraph 8A of Schedule 4C (transfers of value: attribution of gains etc),

• (b) a beneficiary of the settlement receives a capital payment from the trustees in that tax year, and

• (c) the individual identifies the capital payment in a foreign gain claim for that tax year.

• (2) The capital payment is to be disregarded (in that tax year and in later tax years) for the purposes of sections 87, 87A and 89(2) and paragraph 8 of Schedule 4C.

• (3) The following apply for the purposes of this paragraph as they apply for the purposes of section 87—

• (a) section 87G (which provides for capital payments made to a close member of the settlor’s family to be treated in certain cases as received by the settlor);

• (b) section 97 (which makes provision about the construction of “capital payment”, “settlement”, “trustees” and “beneficiary”).

Other effects of claim

5

For other effects of making a foreign gain claim, see—

• (a) section 1K(6)(b) (annual exempt amount), which provides that where a foreign gain claim has effect in relation to an individual for a tax year, the individual has no entitlement to an annual exempt amount for that year,

• (b) section 16(4) (computation of losses), which provides that where a foreign gain claim has effect in relation to an individual for a tax year, qualifying foreign losses accruing to the individual in that year are not allowable losses, and

• (c) sections 845C to 845E of ITTOIA 2005, which set out some income tax consequences of making a foreign gain claim.

Interpretation of Schedule

6

In this Schedule—

• “qualifying foreign asset” means an asset that—is situated outside the United Kingdom, anddoes not derive at least 75% of its value from UK land (see Schedule 1A);

• “qualifying foreign gain” means—a chargeable gain accruing on the disposal of a qualifying foreign asset,a chargeable gain treated as accruing as a result of section 3 (gains of non-UK resident close companies attributed to UK residents) where the gain accruing to the non-UK resident close company to which the deemed gain relates accrued on the disposal of a qualifying foreign asset, ora qualifying QAHC gain,but a chargeable gain falling within paragraph (a) or (b) is not a qualifying foreign gain if it is a gain to which paragraph 1(2) of Schedule 1 applies (pre-2025-26 gains subject to the remittance basis);

• “qualifying foreign loss” means a loss accruing on the disposal of an asset that is a qualifying foreign asset;

• “qualifying QAHC gain” means the foreign proportion (see paragraph 46(4) to (6) of Schedule 2 to FA 2022) of a chargeable gain accruing to an individual who provided investment management services in connection with investment arrangements to which a QAHC is party on the disposal of shares in the QAHC that were acquired during the course of the provision of those services;

• “QAHC” and “investment management services” have the meanings they have in that Schedule.

SCHEDULE 1 — UK resident individuals to whom the remittance basis applied

Foreign gains treated as accruing when remitted to UK

1

• (1) This paragraph applies in the case of an individual to whom the remittance basis applied for a tax year if—

• (a) in that year the individual disposes of foreign assets,

• (b) chargeable gains accrue to the individual on the disposal of those assets, and

• (c) the gains are not taken outside the charge to capital gains tax as a result of section 1G (cases where tax year is a split year).

• (2) The gains are treated as accruing to the individual only so far as, and at the time when, they are remitted to the United Kingdom.

• (3) The amount treated as accruing is equal to the full amount remitted to the United Kingdom at that time.

Use of allowable losses against foreign gains remitted in later year

2

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

Matching rules for relieving allowable losses

3

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

Rules for matching losses to chargeable gains

4

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

Definitions

5

• (1) For the purposes of this Schedule “foreign asset” means an asset situated outside the United Kingdom.

• (2) For the purposes of this Schedule any reference to “the remittance basis” applying to an individual for a tax year is to section 809B, 809D or 809E of ITA 2007 applying to the individual for the year.

• (3) For the purposes of this Schedule any question as to whether, and when, amounts are “remitted to the United Kingdom” is determined in accordance with the rules in Chapter A1 of Part 14 of ITA 2007.

SCHEDULE 1A — Assets deriving 75% of value from UK land etc

PART 1 — Introduction

1

This Schedule makes provision, for the purposes of section 1A(3)(c) or 2B(4)(b) or paragraph 6 of Schedule D1, for determining in the case of any disposal of any asset—

• (a) whether the asset derives at least 75% of its value from UK land (see Part 2 of this Schedule), and

• (b) whether the person making the disposal has a substantial indirect interest in the UK land (see Part 3 of this Schedule).

2

The provision made by this Schedule needs to be read together with—

• (a) paragraph 5 of Schedule 5AAA (which treats units in a CoACS as shares for the purposes of this Schedule), and

• (b) paragraph 6 of that Schedule (which treats certain disposals of interests in collective investment vehicles as meeting the conditions in Part 3 of this Schedule).

PART 2 — Whether asset derives at least 75% of its value from UK land

The basic rule

3

• (1) An asset derives at least 75% of its value from UK land if—

• (a) the asset consists of a right or an interest in a company, and

• (b) at the time of the disposal, at least 75% of the total market value of the company's qualifying assets derives (directly or indirectly) from interests in UK land.

• (2) Market value may be traced through any number of companies, partnerships, trusts and other entities or arrangements but may not be traced through a normal commercial loan.

• (3) It is irrelevant whether the law under which a company, partnership, trust or other entity or an arrangement is established or has effect is—

• (a) the law of any part of the United Kingdom, or

• (b) the law of any territory outside the United Kingdom.

• (4) The assets held by a company, partnership or trust or other entity or arrangement must be attributed to the shareholders, partners, beneficiaries or other participants at each stage in whatever way is appropriate in the circumstances.

• (5) For the purposes of this paragraph—

• “normal commercial loan” means a loan which is a normal commercial loan for the purposes of section 158(1)(b) or 159(4)(b) of CTA 2010, and

• “qualifying assets” has the meaning given by paragraph 4.

• (6) The provision made by this paragraph is subject to exceptions provided by—

• (a) paragraph 5 (interests in UK land used for trading purposes), and

• (b) paragraph 6 (certain disposals of rights or interests in connected companies).

Meaning of “qualifying assets”

4

• (1) Subject as follows, all of the assets of the company are qualifying assets.

• (2) An asset of the company is not a qualifying asset so far as it is matched to a related party liability.

• (3) But an interest in UK land is a qualifying asset of the company even if it is matched to any extent to a related party liability.

• (4) An asset of the company is matched to a related party liability if—

• (a) the asset consists of a right under a transaction (for example, a right under a loan relationship or derivative contract),

• (b) the right entitles the company to require another person to meet a liability arising under the transaction, and

• (c) the other person is relevant to the paragraph 3 tracing exercise or is a related party of the company on the day of the disposal.

• (5) For the purposes of this paragraph a person is relevant to the paragraph 3 tracing exercise if—

• (a) the person has assets that fall to be taken into account in the tracing exercise mentioned in paragraph 3, or

• (b) the person has obligations (whether as a trustee or otherwise) in relation to the holding of assets comprised in any trust or other arrangement that fall to be taken into account in that exercise.

• (6) Whether, for the purposes of this paragraph, a person is a related party of the company on any day is determined in accordance with the rules in Part 8ZB of CTA 2010 but as if, in section 356OT(4) of that Act, the words “, within the period of 6 months beginning with that day” were omitted.

• (7) In this paragraph a liability includes a contingent liability (such as one arising as a result of the giving of a guarantee, indemnity or other form of financial assistance).

Exception in relation to interests in UK land used for trading purposes

5

• (1) A disposal of a right or interest in a company is not to be regarded as a disposal of an asset deriving at least 75% of its value from UK land if it is reasonable to conclude that, so far as the market value of the company's qualifying assets derives (directly or indirectly) from interests in UK land—

• (a) all of the interests in UK land are used for trading purposes, or

• (b) all of the interests in UK land would be used for those purposes if low-value non-trade interests in UK land were left out of account.

• (2) An interest in UK land is “used for trading purposes” for the purposes of this paragraph if (and only if), at the time of the disposal—

• (a) it is being used in, or for the purposes of, a qualifying trade, or

• (b) it has been acquired for use in, or for the purposes of, a qualifying trade.

• (3) A trade is a “qualifying” trade for the purposes of this paragraph if—

• (a) it has been carried on by the company, or by a person connected with the company, throughout the period of one year ending with the time of the disposal on a commercial basis with a view to the realisation of profits, and

• (b) it is reasonable to conclude that the trade will continue to be carried on (for more than an insignificant period of time) on a commercial basis with a view to the realisation of profits.

• (4) For the purposes of this paragraph, “low-value non-trade interests in UK land” means interests in UK land—

• (a) which are not used for trading purposes, and

• (b) the total market value of which is, at the time of the disposal, no more than 10% of the total market value at that time of the interests in UK land that are used for trading purposes.

Exception for certain disposals of rights or interests under same arrangements etc

6

• (1) This paragraph applies if—

• (a) there are two or more disposals of rights or interests in companies,

• (b) the disposals are linked with each other,

• (c) some but not all of the disposals would, apart from this paragraph, be disposals of assets deriving at least 75% of their value from UK land, and

• (d) if one of the companies included all of the assets of the others, a disposal of a right or interest in it would not be a disposal of an asset deriving at least 75% of its value from UK land.

• (2) None of the disposals are to be regarded as disposals of assets deriving at least 75% of their value from UK land.

• (3) In determining whether the condition in sub-paragraph (1)(d) is met in the case of a disposal of a right or interest in a company, it is to be assumed that, for the purposes of paragraph 4, each of the other companies in which rights or interest are disposed of is (so far as this would not otherwise be the case) a related party of the company on the day of the disposal.

• (4) For the purposes of this paragraph a disposal of a right or interest in a company is linked with a disposal of a right or interest in another company if—

• (a) the disposals are made under the same arrangements,

• (b) the disposals are made by the same person or by persons connected with each other,

• (c) the disposals are made to the same person or to persons connected with each other, and

• (d) in the case of each disposal, the person making the disposal is connected with the company in which the right or interest is disposed of.

• (5) For the purposes of this paragraph, the question whether or not a person is connected with another is to be determined immediately before the arrangements are entered into.

• (6) Section 286 (connected persons: interpretation) has effect for the purposes of this paragraph as if, in subsection (4), the words “Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements,” were omitted.

Meaning of “interest in UK land”

7

For the purposes of this Part of this Schedule “interest in UK land” has the meaning given by section 1C.

PART 3 — Whether person has substantial indirect interest in UK land

Basic rule

8

• (1) If—

• (a) a person disposes of an asset consisting of a right or an interest in a company, and

• (b) the asset derives at least 75% of its value from UK land,

the person has a substantial indirect interest in UK land if, at any time in the period of 2 years ending with the time of the disposal, the person has a 25% investment in the company.

• (2) But a person is not to be regarded as having a 25% investment in the company at times falling in the person's qualifying ownership period if, having regard to the length of that period, the times (taken as whole) constitute an insignificant proportion of that period.

• (3) The “person's qualifying ownership period” means the period throughout which the person has held an asset consisting of a right or an interest in the company, but excluding times that fall before the beginning of the 2 year period mentioned in sub-paragraph (1).

Meaning of “25% investment”

9

• (1) A person (“P”) has a 25% investment in a company (“C”) if—

• (a) P possesses or is entitled to acquire 25% or more of the voting power in C,

• (b) in the event of a disposal of the whole of the equity in C, P would receive 25% or more of the proceeds,

• (c) in the event that the income in respect of the equity in C were distributed among the equity holders in C, P would receive 25% or more of the amount so distributed, or

• (d) in the event of a winding-up of C or in any other circumstances, P would receive 25% or more of C's assets which would then be available for distribution among the equity holders in C in respect of the equity in C.

• (2) In this paragraph references to the equity in C are to—

• (a) the shares in C other than restricted preference shares, or

• (b) loans to C other than normal commercial loans.

• (3) For this purpose “shares in C” includes—

• (a) stock, and

• (b) any other interests of members in C.

• (4) For the purposes of this paragraph a person is an equity holder in C if the person possesses any of the equity in C.

• (5) For the purposes of this paragraph—

• “normal commercial loan” means a loan which is a normal commercial loan for the purposes of section 158(1)(b) or 159(4)(b) of CTA 2010, and

• “restricted preference shares” means shares which are restricted preference shares for the purposes of section 160 of CTA 2010.

• (6) In a case where C is a company which does not have share capital, in applying for the purposes of this paragraph the definitions of “normal commercial loan” and “restricted preference shares”—

• (a) sections 160(2) to (7) and 161 to 164 of CTA 2010, and

• (b) any other relevant provisions of that Act,

have effect with the necessary modifications.

• (7) In this paragraph references to a person receiving any proceeds, amount or assets include—

• (a) the direct or indirect receipt of the proceeds, amount or assets, and

• (b) the direct or indirect application of the proceeds, amount or assets for the person's benefit,

and it does not matter whether the receipt or application is at the time of the disposal, distribution, winding-up or other circumstances or at a later time.

• (8) If—

• (a) there is a direct receipt or direct application of any proceeds, amount or assets by or for the benefit of a person (“A”), and

• (b) another person (“B”) directly or indirectly owns a percentage of the equity in A,

there is, for the purposes of sub-paragraph (7), an indirect receipt or indirect application of that percentage of the proceeds, amount or assets by or for the benefit of B.

• (9) For this purpose the percentage of the equity in A directly or indirectly owned by B is to be determined by applying the rules in sections 1155 to 1157 of CTA 2010 with such modifications (if any) as may be necessary.

• (10) Sub-paragraph (7) is not to result in a person being regarded as having a 25% investment in another person merely as a result of their being parties to a normal commercial loan.

• (11) Any reference in this paragraph, in the case of a person who is a member of a partnership, to the proceeds, amount or assets of the person includes the person's share of the proceeds, amount or assets of the partnership (apportioning those things between the partners on a just and reasonable basis).

Attribution of rights and interests

10

• (1) In determining for the purposes of paragraph 9 the investment that a person (“P”) has in a company, P is to be taken to have all of the rights and interests of any person connected with P.

• (2) A person is not to be regarded as connected with another person for the purposes of this paragraph merely as a result of their being parties to a loan that is a normal commercial loan for the purposes of paragraph 9.

• (3) Section 286 (connected persons: interpretation) has effect for the purposes of this paragraph—

• (a) as if, in subsection (2), for the words from “, or is a relative” to the end there were substituted “ or is a lineal ancestor or lineal descendant of the individual or of the individual's spouse or civil partner ”, and

• (b) as if subsections (4) and (8) were omitted.

PART 4 — Cell companies and anti-avoidance

Cell companies

10A

• (1) In the application of this Schedule in relation to the disposal of an asset consisting of a right or an interest in a cell company, each cell of the company is to be treated as if it were an individual company.

• (2) For the purposes of this paragraph—

• (a) a company is a “cell company” if under the law under which the company is formed, under the company’s articles of association or other document regulating the company or under arrangements entered into by or in relation to the company—

• (i) some or all of the assets of the company are available primarily, or only, to meet particular liabilities of the company, and

• (ii) some or all of the members of the company, and some or all of its creditors, have rights primarily, or only, in relation to particular assets of the company;

• (b) “cell”, in relation a cell company, means an identifiable part of the company that carries on distinct business activities and to which particular assets and liabilities of the company are primarily or wholly attributable.

Anti-avoidance

11

• (1) This paragraph applies if a person has entered into any arrangements the main purpose, or one of the main purposes, of which is to obtain a tax advantage for the person as a result (wholly or partly) of—

• (a) a provision of this Schedule applying or not applying, or

• (b) double taxation arrangements having effect despite a provision of this Schedule in a case where the advantage is contrary to the object and purpose of the double taxation arrangements.

• (2) The tax advantage is to be counteracted by the making of such adjustments as are just and reasonable.

• (3) The adjustments may be made (whether by an officer of Revenue and Customs or the person) by way of an assessment, the modification of an assessment, amendment or disallowance of a claim, or otherwise.

• (4) The counteraction has effect in a treaty shopping case regardless of section 6(1) of TIOPA 2010.

• (5) This paragraph applies by reference to—

• (a) arrangements entered into on or after 22 November 2017 in a treaty shopping case, and

• (b) arrangements entered into on or after 6 July 2018 in any other case.

• (6) In this paragraph—

• “arrangements” (except in the expression “double taxation arrangements”) includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),

• “double taxation arrangements” means arrangements that have effect under section 2(1) of TIOPA 2010,

• “tax” means capital gains tax or corporation tax,

• “tax advantage” includes—relief or increased relief from tax,repayment or increased repayment of tax,avoidance or reduction of a charge to tax or an assessment to tax,avoidance of a possible assessment to tax,deferral of a payment of tax or advancement of a repayment of tax, andavoidance of an obligation to deduct or account for tax, and

• “treaty shopping case” means a case where this paragraph applies as a result of sub-paragraph (1)(b).

SCHEDULE 1B — Residential property gains

Meaning of “residential property gain”

1

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

Attribution of gain to residential property

2

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

Disposing of residential property

3

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

Interest in land

4

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

Dwelling: basic meaning

5

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

Building temporarily unsuitable for use as a dwelling

6

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

Disposal of a building that has undergone works

7

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

Other definitions

8

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

Power to modify meaning of “use as a dwelling”

9

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

Regulations

10

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

SCHEDULE 1C — Annual exempt amount in cases involving settled property

Introductory

1

• (1) This Schedule provides for the application of section 1K (in some cases with modifications) in relation to the trustees of a settlement for a tax year.

• (2) The application of this Schedule depends on (among other things) whether or not—

• (a) a settlement is for the benefit of a disabled person, and

• (b) a settlement is a qualifying UK settlement.

• (3) For the definitions of those expressions, see paragraphs 3 and 7 respectively.

• (4) In this Schedule any reference to the application of section 1K in relation to an individual for a tax year is to its application in relation to an individual to whom subsection (6) of that section does not apply.

Settlements for the benefit of disabled persons

2

• (1) In the case of a settlement for the benefit of a disabled person for a tax year, section 1K applies in relation to the trustees of the settlement for the year as it applies in relation to an individual for the year.

• (2) This paragraph needs to be read with—

• (a) paragraph 6 (cases where settlement is a qualifying UK settlement comprised in a group), and

• (b) paragraph 8 (sub-fund settlements).

3

• (1) A settlement is a “settlement for the benefit of a disabled person” for a tax year if, for the whole or part of that year, settled property is held on trusts which secure that, during the lifetime of a disabled person, the property and income tests are met.

• (2) The property test is met if any of the property which is applied for the benefit of a beneficiary is applied for the disabled person's benefit.

• (3) The income test is met if either—

• (a) the disabled person is entitled to all of the income (if any) arising from any of the property, or

• (b) if any income arising from any of the property is applied for the benefit of a beneficiary, it is applied for the disabled person's benefit.

• (4) A settlement is not prevented from being a settlement for the benefit of a disabled person for a tax year just because—

• (a) the trustees have power to apply amounts (of any nature) not exceeding the de minimis threshold for that year,

• (b) the trustees have the powers of advancement conferred by section 32 of the Trustee Act 1925 or section 33 of the Trustee Act (Northern Ireland) 1958,

• (c) the trustees have those powers but free from, or subject to a less restrictive limitation than, the limitation imposed by—

• (i) proviso (a) of section 32(1) of the Trustee Act 1925, or

• (ii) section 33(1)(a) of the Trustee Act (Northern Ireland) 1958, or

• (d) the trustees have powers to the same effect as the powers mentioned in paragraph (b) or (c).

• (5) For the purposes of sub-paragraph (4)(a) “the de minimis threshold” means—

• (a) £3,000, or

• (b) 3% of the maximum value of the settled property during the tax year,

whichever is the lower.

• (6) In this paragraph “disabled person” has the meaning given by Schedule 1A to the Finance Act 2005.

• (7) If the income from settled property is held for the benefit of a disabled person (“D”) on trusts of the kind described in section 33 of the Trustee Act 1925 (protective trusts), the reference in this paragraph to D's lifetime is to be read as a reference to the period during which the income is held on trust for D.

• (8) This paragraph applies for the purposes of this Schedule.

4

• (1) The Treasury may by order—

• (a) specify circumstances in which paragraph 3(4)(a) is, or is not, to apply, and

• (b) amend the definition of “the de minimis threshold” in paragraph 3(5).

• (2) The order may—

• (a) make different provision for different purposes, and

• (b) contain transitional and saving provision.

• (3) A statutory instrument containing an order under this paragraph which reduces the annual exempt amount in any case may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, the House of Commons.

Other settlements

5

• (1) This paragraph applies if settlement is not a settlement for the benefit of a disabled person for a tax year.

• (2) Section 1K applies in relation to the trustees of the settlement for the year as it applies in relation to an individual for the year but as if the annual exempt amount for the year were one-half of the amount available for the individual for the year.

• (3) This paragraph needs to be read be with—

• (a) paragraph 6 (cases where settlement is qualifying UK settlement comprised in a group), and

• (b) paragraph 8 (sub-fund settlements).

Special rules for qualifying UK settlements comprised in groups

6

• (1) This paragraph reduces the annual exempt amount for trustees of a settlement for a tax year if the settlement is one of two or more qualifying UK settlements comprised in a group.

• (2) In the case of a settlement for the benefit of a disabled person for the year, the annual exempt amount for the year is to be reduced so that it is equal to—

• (a) one-tenth of an individual's amount for that year, or

• (b) the amount resulting from dividing the individual's amount for that year by the number of settlements in the group,

whichever is the greater.

• (3) In the case of any other settlement, the annual exempt amount for the year is to be reduced so that it is equal to—

• (a) one-tenth of an individual's amount for that year, or

• (b) the amount resulting from dividing half of an individual's amount for that year by the number of settlements in the group,

whichever is the greater.

• (4) In this paragraph “an individual's amount”, in relation to a tax year, means the annual exempt amount applying to an individual for the year under section 1K.

• (5) For the purposes of this paragraph all qualifying UK settlements in relation to which the same person is the settlor constitute a group.

• (6) If—

• (a) two or more persons are settlors in relation to a settlement, and

• (b) a settlement is consequently comprised in two or more groups comprising different numbers of settlement,

sub-paragraphs (2)(b) and (3)(b) have effect by reference to the largest group.

7

• (1) In this Schedule “qualifying UK settlement”, in relation to a tax year, means any settlement in relation to which both of the following conditions are met—

• (a) the trustees of the settlement are resident in the United Kingdom during any part of the tax year, and

• (b) the property comprised in the settlement is not held for a charitable or pensions purpose.

• (2) Property comprised in a settlement is held for a charitable purpose if (and only if)—

• (a) it is held for charitable purposes only, and

• (b) it cannot become applicable for other purposes.

• (3) Property comprised in a settlement is held for a pensions purpose if (and only if) it is held for the purposes of—

• (a) a registered pension scheme,

• (b) a superannuation fund to which section 615(3) of the Taxes Act applies, or

• (c) an occupational pension scheme (within the meaning of section 150(5) of the Finance Act 2004) that is not a registered pension scheme.

• (4) For this purposes of any provision of this Schedule other than paragraph 8 a settlement is not a qualifying UK settlement if—

• (a) in the case of one for the benefit of a disabled person, it was made before 10 March 1981, or

• (b) in any other case, it was made before 6 June 1978.

Special rules for principal settlements and sub-funds

8

• (1) This paragraph—

• (a) applies if the trustees of a settlement (“the principal settlement”) have made an election under paragraph 1 of Schedule 4ZA the effect of which is that one or more other settlements (“sub-fund settlements”) are treated as created, and

• (b) provides for the annual exempt for the trustees of each of the affected settlements to be determined by reference to the assumed annual amount.

• (2) For this purposes of this paragraph—

• (a) the principal settlement and each of the sub-fund settlements is an “affected settlement”, and

• (b) the “assumed annual amount” means the amount which would be the annual exempt for the trustees of the principal settlement on the assumption that no election had been made under paragraph 1 of Schedule 4ZA.

• (3) The annual exempt amount for the trustees of each of the affected settlements is the assumed annual amount unless there are two or more qualifying UK settlements in the affected settlements.

• (4) In that case, the annual exempt amount for the trustees of each of the affected settlements is the assumed annual amount divided by the number of qualifying UK settlements in the affected settlements.

SCHEDULE 2 — Assets held on 6th April 1965

Part I — Quoted securities

Deemed acquisition at 6th April 1965 value

1

• (1) This paragraph applies—

• (a) to shares and securities which on 6th April 1965 had quoted market values on a recognised stock exchange, or which had such quoted market values at any time in the period of 6 years ending on 6th April 1965, and

• (b) to rights of unit holders in any unit trust scheme the prices of which are published regularly by the managers of the scheme.

• (2) For the purposes of this Act it shall be assumed, wherever relevant, that any assets to which this paragraph applies were sold by the owner, and immediately reacquired by him, at their market value on 6th April 1965.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Restriction of gain or loss by reference to actual cost

2

• (1) Subject to paragraph 4 below and section 109(4), paragraph 1(2) above shall not apply in relation to a disposal of assets—

• (a) if on the assumption in paragraph 1(2) a gain would accrue on that disposal to the person making the disposal and either a smaller gain or a loss would so accrue if paragraph 1(2) did not apply, or

• (b) if on the assumption in paragraph 1(2) a loss would so accrue and either a smaller loss or a gain would accrue if paragraph 1(2) did not apply,

and accordingly the amount of the gain or loss accruing on the disposal shall be computed without regard to the preceding provisions of this Schedule except that in a case where this sub-paragraph would otherwise substitute a loss for a gain or a gain for a loss it shall be assumed, in relation to the disposal, that the relevant assets were sold by the owner, and immediately reacquired by him, for a consideration such that, on the disposal, neither a gain nor a loss accrued to the person making the disposal.

• (2) For the purpose of—