Taxation of Chargeable Gains Act 1992

• (5) Treat the section 1(3) amount for the transferor settlement for any tax year as reduced by the amount by which the section 1(3) amount for the transferee settlement for that year is increased under subsection (3).

• (6) If neither section 87 nor section 89(2) would otherwise apply to the transferee settlement for the year of transfer—

• (a) section 89(2) to (4) apply to the settlement for that year (and subsequent tax years), and

• (b) for this purpose, references there to the last non-resident tax year are to be read as the year of transfer.

• (7) The increase under subsection (3) has effect for the year of transfer and subsequent tax years.

• (8) The reduction under subsection (5) has effect for tax years after the year of transfer.

• (9) When calculating the market value of property for the purposes of this section or section 90A in a case where the property is subject to a debt, reduce the market value by the amount of the debt.

• (10) This section does not apply to—

• (a) a transfer to which Schedule 4B applies, or

• (b) any section 1(3) amount that is in a Schedule 4C pool (see paragraph 1 of Schedule 4C).

Section 90: transfers made for consideration in money or money's worth

90A

• (1) Section 90 does not apply to a transfer of settled property made for consideration in money or money's worth if the amount (or value) of that consideration is equal to or exceeds the market value of the property transferred.

• (2) The following provisions apply if—

• (a) section 90 applies to a transfer of settled property made for consideration in money or money's worth, and

• (b) the amount (or value) of that consideration is less than the market value of the property transferred.

• (3) If the transfer is of all of the settled property, for the purposes of section 90 treat the transfer as being of part only of the settled property.

• (4) Deduct the amount (or value) of the consideration from the amount of the market value referred to in section 90(4)(a).

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

91

• (1) This section applies if—

• (a) chargeable gains are treated under section 87 ... or 89(2) as accruing to an individual directly, or indirectly, by virtue of the matching (under section 87A) of all or part of a capital payment with the section 1(3) amount for a tax year (“the relevant tax year”),

• (b) the individual is charged to tax by virtue of that matching, and

• (c) the capital payment was made more than one year after the end of the relevant tax year.

• (1A) Where part of a capital payment is matched, references in subsections (2) and (3) to the capital payment are to the part matched.

• (2) The tax payable by the individual in respect of the payment shall be increased by the amount found under subsection (3) below, except that it shall not be increased beyond the amount of the payment; and an assessment may charge tax accordingly.

• (3) The amount is one equal to the interest that would be yielded if an amount equal to the tax which would be payable by the individual in respect of the payment (apart from this section) carried interest for the chargeable period at the rate of 10 per cent. per annum.

• (4) The chargeable period is the period which—

• (a) begins with the later of the 2 days specified in subsection (5) below, and

• (b) ends with 30th November in the year of assessment following that in which the capital payment is made.

• (5) The 2 days are—

• (a) 1st December in the tax year immediately after the relevant tax year, and

• (b) 1st December falling 6 years before 1st December in the year of assessment following that in which the capital payment is made.

• (6) The Treasury may by order substitute for the percentage specified in subsection (3) above (whether as originally enacted or as amended at any time under this subsection) such other percentage as they think fit.

• (7) An order under subsection (6) above may provide that an alteration of the percentage is to have effect for periods beginning on or after a day specified in the order in relation to interest running for chargeable periods beginning before that day (as well as interest running for chargeable periods beginning on or after that day).

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

Qualifying amounts and matching.

92

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

Matching: special cases.

93

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

Transfers of settled property where qualifying amounts not wholly matched.

94

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

Matching after transfer.

95

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

Payments by and to companies.

96

• (1) Where a capital payment is received from a qualifying company which is controlled by the trustees of a settlement at the time it is received, for the purposes of sections 87 to 90 and Schedule 4C it shall be treated as received from the trustees.

• (2) Where a capital payment is received from the trustees of a settlement (or treated as so received by virtue of subsection (1) above) and it is received by a non-resident qualifying company, the rules in subsections (3) to (6) below shall apply for the purposes of sections 87 to 90 and Schedule 4C.

• (3) If the company is controlled by one person alone at the time the payment is received, and that person is then resident ... in the United Kingdom, it shall be treated as a capital payment received by that person.

• (4) If the company is controlled by 2 or more persons (taking each one separately) at the time the payment is received, then—

• (a) if one of them is then resident ... in the United Kingdom, it shall be treated as a capital payment received by that person;

• (b) if 2 or more of them are then resident ... in the United Kingdom (“the residents”) it shall be treated as being as many equal capital payments as there are residents and each of them shall be treated as receiving one of the payments.

• (5) If the company is controlled by 2 or more persons (taking them together) at the time the payment is received ... —

• (a) it shall be treated as being as many capital payments as there are participators in the company at the time it is received, and

• (b) each such participator (whatever his residence ... ) shall be treated as receiving one of the payments, quantified on the basis of a just and reasonable apportionment,

but where (by virtue of the preceding provisions of this subsection and apart from this provision) a participator would be treated as receiving less than one-twentieth of the payment actually received by the company, he shall not be treated as receiving anything by virtue of this subsection.

• (6) For the purposes of subsection (1) above a qualifying company is a close company or a company which would be a close company if it were resident in the United Kingdom.

• (7) For the purposes of subsection (1) above a company is controlled by the trustees of a settlement if it is controlled by the trustees alone or by the trustees together with a person who (or persons each of whom) falls within subsection (8) below.

• (8) A person falls within this subsection if—

• (a) he is a settlor in relation to the settlement, or

• (b) he is connected with a person falling within paragraph (a) above.

• (9) For the purposes of subsection (2) above a non-resident qualifying company is a company which is not resident in the United Kingdom and would be a close company if it were so resident.

• (9A) For the purposes of this section an individual shall be deemed to have been resident in the United Kingdom at any time in any year of assessment for which he or she was not so resident if—

• (a) section 1M applies to him or her, and

• (b) the year falls within the temporary period of non-residence.

• (9B) If—

• (a) it appears after the end of any year of assessment that any individual is to be treated by virtue of subsection (9A) above as having been resident in the United Kingdom at any time in that year, and

• (b) as a consequence, any adjustments fall to be made to the amounts of tax taken to have been chargeable by virtue of this section on any person,

nothing in any enactment limiting the time for the making of any claim or assessment shall prevent the making of those adjustments (whether by means of an assessment, an amendment of an assessment, a repayment of tax or otherwise).

• (10) For the purposes of this section—

• (a) the question whether a company is controlled by a person or persons shall be construed in accordance with sections 450 and 451 of CTA 2010, but in deciding that question for those purposes no rights or powers of (or attributed to) an associate or associates of a person shall be attributed to him under section 451(4) to (6) of CTA 2010 if he is not a participator in the company;

• (aa) a person is not to be regarded as a participator in a company controlled by the trustees of a settlement where the person has a share or interest in the capital or income of the company solely by virtue of an interest which the person has under the settlement;

• (b) “participator” has the meaning given by section 454 of CTA 2010.

• (11) This section shall apply to payments received on or after 19th March 1991.

Supplementary provisions.

97

• (1) In sections 86A to 96 and Schedule 4C and this section “capital payment”—

• (a) means any payment which is neither—

• (i) chargeable to income tax on the recipient, nor

• (ii) chargeable to income tax on another person under Chapter 5 of Part 5 of ITTOIA 2005 (settlements) or Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad),

or, in the case of a recipient who is not resident in the United Kingdom, any payment received otherwise than as income, but

• (b) does not include a payment under a transaction entered into at arm’s length if it is received on or after 19th March 1991.

• (2) In subsection (1) above references to a payment include references to the transfer of an asset and the conferring of any other benefit, and to any occasion on which settled property becomes property to which section 60 applies.

• (3) The fact that the whole or part of a benefit is by virtue of Chapter 5 of Part 5 of ITTOIA 2005 (settlements) or Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad), treated as an individual's income for a year of assessment after that in which it is received—

• (a) shall not prevent the benefit or that part of it being treated for the purposes of sections 86A to 96 and Schedule 4C as a capital payment in relation to any year of assessment earlier than that in which it is treated as his income; but

• (b) shall preclude its being treated for those purposes as a capital payment in relation to that or any later year of assessment.

• (4) For the purposes of sections 86A to 96 and Schedule 4C the amount of a capital payment made by way of loan, and of any other capital payment which is not an outright payment of money, shall be taken to be equal to the value of the benefit conferred by it (see sections 97A to 97C for the value of benefits conferred by a capital payment made by way of loan or by way of making movable property or land available).

• (5) For the purposes of sections 86A to 90 and Schedule 4C a capital payment shall be regarded as received by a beneficiary from the trustees of a settlement if—

• (a) he receives it from them directly or indirectly, or

• (b) it is directly or indirectly applied by them in payment of any debt of his or is otherwise paid or applied for his benefit, or

• (c) it is received by a third person at the beneficiary’s direction.

• (6) Section 16(3) shall not prevent losses accruing to trustees in a year of assessment for which section 87 of this Act or section 17 of the 1979 Act applied to the settlement from being allowed as a deduction from chargeable gains accruing in any later year (so far as they have not previously been set against gains for the purposes of a computation under either of those sections or otherwise).

• (7) In sections 86A to 96 and Schedule 4C and in ... this section—

• “settlement” has the meaning given by section 620 of ITTOIA 2005, and

• “settled property” and references (however expressed) to property comprised in a settlement shall be construed accordingly.

• (7A) In this section, sections 86A to 96 and Schedule 4C “trustee”, in relation to a settlement in relation to which there would be no trustees apart from this subsection, means any person in whom the settled property or its management is for the time being vested (and a person who is treated as a trustee of the settlement by virtue of this subsection shall be treated as a trustee of the settlement for the purposes of section 69).

• (8) In a case where—

• (a) at any time on or after 19th March 1991 a capital payment is received from the trustees of a settlement or is treated as so received by virtue of section 96(1),

• (b) it is received by a person, or treated as received by a person by virtue of section 96(2) to (5),

• (c) at the time it is received or treated as received, the person is not (apart from this subsection) a beneficiary of the settlement, and

• (d) subsection (9) or (10) below does not prevent this subsection applying,

for the purposes of sections 86A to 90 and Schedule 4C the person shall be treated as a beneficiary of the settlement as regards events occurring at or after that time.

• (9) Subsection (8) above shall not apply where a payment mentioned in paragraph (a) is made in circumstances where it is treated (otherwise than by subsection (8) above) as received by a beneficiary.

• (10) Subsection (8) above shall not apply so as to treat—

• (a) the trustees of the settlement referred to in that subsection, or

• (b) the trustees of any other settlement,

as beneficiaries of the settlement referred to in that subsection.

Value of benefit conferred by capital payment made by way of loan

97A

• (1) For the purposes of section 97(4), the value of the benefit conferred on a person (P) by a capital payment made by way of loan to P is, for each tax year in which the loan is outstanding, the amount (if any) by which—

• (a) the amount of interest that would have been payable in that year on the loan if interest had been payable on the loan at the official rate, exceeds

• (b) the amount of interest (if any) actually paid by P in that year on the loan.

• (2) In this section and section 97B the “official rate”, in relation to interest, means the rate applicable from time to time under section 178 of the Finance Act 1989 for the purposes of Chapter 7 of Part 3 of ITEPA 2003.

Value of benefit conferred by capital payment made by way of making movable property available

97B

• (1) For the purposes of section 97(4), the value of the benefit conferred by a capital payment consisting of making movable property available, without any transfer of the property in it, to a person (P) is, for each tax year in which the benefit is conferred on P—

$$( CC × R × D Y ) − T$where—CC is the capital cost of the movable property on the date when the property is first made available to P in the tax year,D is the number of days in the tax year on which the property is made available to P (the relevant period),R is the official rate of interest for the relevant period (but see subsection (3)),T is the total of the amounts (if any) paid in the tax year by P—to the person conferring the benefit, in respect of the availability of the movable property, orso far as not within paragraph (a), in respect of the repair, insurance, maintenance or storage of the movable property, andY is the number of days in the tax year.$

• (2) In subsection (1), in the meaning of CC, the “capital cost” of movable property means an amount equal to the total of—

• (a) the amount which is the greater of—

• (i) the amount or value of the consideration given for the acquisition of the movable property by, or on behalf of, the person (A) conferring the benefit, and

• (ii) its market value at the time of that acquisition, and

• (b) the amount of any expenditure wholly and exclusively incurred by, or on behalf of, A for the purpose of enhancing the value of the movable property.

• (3) If the official rate of interest changes during the relevant period, then in subsection (1) R is the average official rate of interest for the period calculated as follows.

• Step 1 Multiply each official rate of interest in force during the relevant period by the number of days when it is in force.

• Step 2 Add together the products found in Step 1.

• Step 3 Divide the total found in Step 2 by the number of days in the relevant period.

• (4) In subsections (1) and (2), “movable property” means any tangible movable property other than money.

Value of benefit conferred by capital payment made by way of making land available

97C

• (1) For the purposes of section 97(4), the value of the benefit conferred by a capital payment consisting of making land available for the use of a person (P) is, for each tax year in which the benefit is conferred on P, the amount by which—

• (a) the rental value of the land for the period of the tax year during which the land is made available to P, exceeds

• (b) the total of the amounts (if any) paid in the tax year by P—

• (i) to the person conferring the benefit, in respect of the availability of the land, or

• (ii) so far as not within sub-paragraph (i), in respect of costs of repair, insurance or maintenance relating to the land.

• (2) Subsection (1) does not apply in the case where the person conferring the benefit transfers the whole of the person's interest in the land to P.

• (3) In subsection (1) “the rental value” of the land for a period means the rent which would have been payable for the period if the land had been let to P at an annual rent equal to the annual value.

• (4) For the purposes of subsection (3) “the annual value” of land is the rent that might reasonably be expected to be obtained on a letting from year to year if—

• (a) the tenant undertook to pay all taxes, rates and charges usually paid by a tenant, and

• (b) the landlord undertook to bear the costs of the repairs and insurance and the other expenses (if any) necessary for maintaining the property in a state to command that rent.

• (5) For the purposes of subsection (4) that rent—

• (a) is to be taken to be the amount that might reasonably be expected to be so obtained in respect of a letting of the land, and

• (b) is to be calculated on the basis that the only amounts that may be deducted in respect of services provided by the landlord are amounts in respect of the costs to the landlord of providing any relevant services.

• (6) In subsection (5) “relevant service” means a service other than the repair, insurance or maintenance of the property.

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

98

• (1) The Board may by notice require any person to furnish them within such time as they may direct, not being less than 28 days, with such particulars as they think necessary for the purposes of sections 87 to 90.

• (2) Sections 748(3) to (5), 749 and 750 of ITA 2007 shall have effect in relation to subsection (1) above as they have effect in relation to section 748(1) and (2) of that Act, but in their application by virtue of this subsection—

• (a) references to Chapter 2 of Part 13 of that Act shall be construed as references to sections 87 to 90; ...

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

• (3) The provisions of subsections (1) and (2) above have effect as if the references to sections 87 to 90 included references to Schedule 4C.

Settlements with foreign element: information.

98A

Schedule 5A to this Act (which contains general provisions about information relating to settlements with a foreign element) shall have effect.

Chapter III — Collective investment schemes and investment trusts etc

Application of Act to unit trust schemes.

99

• (1) This Act shall apply in relation to any unit trust scheme as if—

• (a) the scheme were a company,

• (b) the rights of the unit holders were shares in the company, and

• (c) in the case of an authorised unit trust, the company were resident ... in the United Kingdom,

except that nothing in this section shall be taken to bring a unit trust scheme within the charge to corporation tax on chargeable gains.

• (1A) Subsection (1) does not apply to an offshore fund that is a transparent fund within the meaning given by regulation 11 of the Offshore Funds (Tax) Regulations 2009 (see instead section 103D).

• (2) Subject to subsection (3) and sections 99A and 151W(a) below, in this Act—

• (a) “unit trust scheme” has the meaning given by section 237(1) of the Financial Services and Markets Act 2000,

• (aa) “unit holder” means a person entitled to a share of the investments subject to the trusts of a unit trust scheme;

• (b) “authorised unit trust” means, as respects an accounting period, a unit trust scheme in the case of which an order under section 243 of the Financial Services and Markets Act 2000 is in force during the whole or part of that period.

• (3) The Treasury may by regulations provide that any scheme of a description specified in the regulations shall be treated as not being a unit trust scheme for the purposes of this Act; and regulations under this section may contain such supplementary and transitional provisions as appear to the Treasury to be necessary or expedient.

Treatment of umbrella schemes

99A

• (1) In this section an “umbrella scheme” means a relevant collective investment scheme—

• (a) which provides arrangements for separate pooling of the contributions of the participants and the profits or income out of which payments are to be made to them, and

• (b) under which the participants are entitled to exchange rights in one pool for rights in another,

and any reference to a part of an umbrella scheme is a reference to such of the arrangements as relate to a separate pool.

• (2) For the purposes of this Act (except subsection (1) and section 103C)—

• (a) each of the parts of an umbrella scheme shall itself be regarded as a collective investment scheme of the same form as the umbrella scheme as a whole, and

• (b) the umbrella scheme as a whole shall not be regarded as a collective investment scheme of that form or as any other form of collective investment scheme,

and the participants in the umbrella scheme are to be treated accordingly.

• (2A) Subsection (2)—

• (a) does not prevent gains or losses accruing to an umbrella scheme which is a unit trust scheme (other than an authorised unit trust) being regarded as gains or losses accruing to the umbrella scheme as a whole, and

• (b) does not apply for the purposes of section 100(2).

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

• (4) Nothing in subsection (2) shall prevent—

• (a) gains accruing to an umbrella scheme being regarded as gains accruing to an authorised unit trust for the purposes of section 100(1) (exemption for authorised unit trusts etc);

• (b) a transfer of business to an umbrella scheme being regarded as a transfer to a unit trust scheme for the purposes of section 139(4) (exclusion of transfers to authorised unit trusts etc);

• (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) For the purposes of subsection (1), “arrangements” includes arrangements provided in a company’s instrument of incorporation.

• (6) In this section, “relevant collective investment scheme” means a collective investment scheme which is—

• (a) an authorised contractual scheme which is a co-ownership scheme,

• (aa) a Reserved Investor Fund (Contractual Scheme),

• (b) a unit trust scheme, or

• (c) an offshore fund.

Calculation of the disposal cost of accumulation units

99B

• (1) For the purposes of computing the gain accruing on a disposal by a unit holder of units in a unit trust scheme and for the purposes of all other provisions of this Act, an amount shall be treated as expenditure falling within section 38(1)(b) if—

• (a) it represents income from the investments subject to the unit trust scheme,

• (b) it has been reinvested in respect of the units on behalf of the unit holder (without an issue of new units), and

• (c) it is either—

• (i) charged to income tax as income of the unit holder (or would be charged to income tax as his income but for a relief which has effect in respect of it) for the purposes of the Income Tax Acts, or

• (ii) taken into account as a receipt in calculating profits, gains or losses of the unit holder for the purposes of the Income Tax Acts.

• (2) Where an amount is treated as expenditure by virtue of subsection (1), the expenditure shall be treated for the purposes of this Act as having been incurred—

• (a) in relation to an authorised unit trust, on the distribution date for the distribution period in respect of which the amount is reinvested, and

• (b) in relation to any other unit trust scheme, on the date on which the amount is reinvested.

• (3) In subsection (2)(a) “distribution date” and “distribution period” shall have the meaning given by regulations made under section 17(3) of the Finance (No. 2) Act 2005 (as at 1st April 2006, see regulation 15 of the Authorised Investment Funds (Tax) Regulations 2006 (S.I. 2006/964)).

• (4) Subsection (1) does not apply to disposals in units of an offshore fund that is a transparent fund within the meaning given by regulation 11 of the Offshore Funds (Tax) Regulations 2009 (see instead section 103D).

Exemption for authorised unit trusts etc.

100

• (1) Gains accruing to an authorised unit trust, an investment trust a venture capital trust or a court investment fund shall not be chargeable gains.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In this Act “court investment fund” means a fund established under section 42 of the Administration of Justice Act 1982.

Exemption for certain EEA UCITS

100A

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

Transfer of company’s assets to investment trust.

101

• (1) Where section 139 has applied on the transfer of a company’s business (in whole or in part) to a company which at the time of the transfer was not an investment trust, then if—

• (a) at any time after the transfer the company becomes for an accounting period an investment trust, and

• (b) at the beginning of that accounting period the company still owns any of the assets of the business transferred,

the company shall be treated for all the purposes of this Act as if immediately after the transfer it had sold, and immediately reacquired, the assets referred to in paragraph (b) above at their market value at that time.

• (1A) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the end of the last accounting period to end before the beginning of the accounting period mentioned in that subsection.

• (1B) This section does not apply if at the time at which the company becomes an investment trust there has been an event by virtue of which it falls by virtue of section 101B(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above.

• (2) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of subsection (1) above may be made at any time within 6 years after the end of the accounting period referred to in subsection (1) above, and where under this section a company is to be treated as having disposed of, and reacquired, an asset of a business, all such recomputations of liability in respect of other disposals and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.

Transfer within group to investment trust.

101A

• (1) This section applies where—

• (a) an asset has been disposed of to a company (the “acquiring company") and the disposal has been treated by virtue of section 171(1) as giving rise to neither a gain nor a loss,

• (b) at the time of the disposal the acquiring company was not an investment trust, and

• (c) the conditions set out in subsection (2) below are satisfied by the acquiring company.

• (2) Those conditions are satisfied by the acquiring company if—

• (a) it becomes an investment trust for an accounting period beginning not more than 6 years after the time of the disposal,

• (b) at the beginning of that accounting period, it owns, otherwise than as trading stock—

• (i) the asset, or

• (ii) property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,

• (c) it has not been an investment trust for any earlier accounting period beginning after the time of the disposal, and

• (d) at the time at which it becomes an investment trust, there has not been an event by virtue of which it falls by virtue of section 179(3) or 101C(3) to be treated as having sold, and immediately reacquired, the asset at the time specified in subsection (3) below.

• (3) The acquiring company shall be treated for all the purposes of this Act as if immediately after the disposal it had sold, and immediately reacquired, the asset at its market value at that time.

• (4) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the acquiring company on the sale referred to in subsection (3) above shall be treated as accruing to it immediately before the end of the last accounting period to end before the beginning of the accounting period for which the acquiring company becomes an investment trust.

• (5) For the purposes of this section a chargeable gain is carried forward from an asset to other property on a replacement of business assets if—

• (a) by one or more claims under sections 152 to 158, the chargeable gain accruing on a disposal of the asset is reduced, and

• (b) as a result an amount falls to be deducted from the expenditure allowable in computing a gain accruing on the disposal of the other property.

• (6) For the purposes of this section an asset acquired by the acquiring company shall be treated as the same as an asset owned by it at a later time if the value of the second asset is derived in whole or in part from the first asset; and, in particular, assets shall be so treated where—

• (a) the second asset is a freehold and the first asset was a leasehold; and

• (b) the lessee has acquired the reversion.

• (7) Where under this section a company is to be treated as having disposed of and reacquired an asset—

• (a) all such recomputations of liability in respect of other disposals, and

• (b) all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax,

as may be required in consequence of the provisions of this section shall be carried out.

• (8) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may be made at any time within 6 years after the end of the accounting period referred to in subsection (2)(a) above.

Transfer of company’s assets to venture capital trust.

101B

• (1) Where section 139 has applied on the transfer of a company’s business (in whole or in part) to a company which at the time of the transfer was not a venture capital trust, then if—

• (a) at any time after the transfer the company becomes a venture capital trust by virtue of an approval for the purposes of Part 6 of ITA 2007; and

• (b) at the time as from which the approval has effect the company still owns any of the assets of the business transferred,

the company shall be treated for all the purposes of this Act as if immediately after the transfer it had sold, and immediately reacquired, the assets referred to in paragraph (b) above at their market value at that time.

• (2) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the company on the sale referred to in subsection (1) above shall be treated as accruing to the company immediately before the time mentioned in subsection (1)(b) above.

• (3) This section does not apply if at the time mentioned in subsection (1)(b) above there has been an event by virtue of which the company falls by virtue of section 101(1) to be treated as having sold, and immediately reacquired, the assets immediately after the transfer referred to in subsection (1) above.

• (4) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the approval mentioned in subsection (1)(a) above has effect as from the beginning of an accounting period, be made at any time within 6 years after the end of that accounting period.

• (5) Where under this section a company is to be treated as having disposed of, and reacquired, an asset of a business, all such recomputations of liability in respect of other disposals and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.

Transfer within group to venture capital trust.

101C

• (1) This section applies where—

• (a) an asset has been disposed of to a company (the “acquiring company") and the disposal has been treated by virtue of section 171(1) as giving rise to neither a gain nor a loss,

• (b) at the time of the disposal the acquiring company was not a venture capital trust, and

• (c) the conditions set out in subsection (2) below are satisfied by the acquiring company.

• (2) Those conditions are satisfied by the acquiring company if—

• (a) it becomes a venture capital trust by virtue of an approval having effect as from a time (the “time of approval") not more than 6 years after the time of the disposal,

• (b) at the time of approval the company owns, otherwise than as trading stock—

• (i) the asset, or

• (ii) property to which a chargeable gain has been carried forward from the asset on a replacement of business assets,

• (c) it has not been a venture capital trust at any earlier time since the time of the disposal, and

• (d) at the time of approval, there has not been an event by virtue of which it falls by virtue of section 179(3) or 101A(3) to be treated as having sold, and immediately reacquired, the asset at the time specified in subsection (3) below.

• (3) The acquiring company shall be treated for all the purposes of this Act as if immediately after the disposal it had sold, and immediately reacquired, the asset at its market value at that time.

• (4) Any chargeable gain or allowable loss which, apart from this subsection, would accrue to the acquiring company on the sale referred to in subsection (3) above shall be treated as accruing to it immediately before the time of approval.

• (5) Subsections (5) to (7) of section 101A apply for the purposes of this section as they apply for the purposes of that section.

• (6) Notwithstanding any limitation on the time for making assessments, any assessment to corporation tax chargeable in consequence of this section may, in a case in which the time of approval is the time at which an accounting period of the company begins, be made at any time within 6 years after the end of that accounting period.

• (7) Any reference in this section to an approval is a reference to an approval for the purposes of Part 6 of ITA 2007.

Collective investment schemes with property divided into separate parts.

102

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

Restriction on availability of indexation allowance.

103

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

Application of Act to certain offshore funds

103A

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

Application of section 99B to transparent funds

103B

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

Power to make regulations about collective investment schemes

103C

• (1) The Treasury may by regulations make provision about the treatment of participants in collective investment schemes for the purposes of this Act.

• (2) The regulations may, in particular, specify descriptions of collective investment scheme in relation to which they are to apply.

• (3) Regulations under this section may make different provision for different cases or different purposes.

• (4) Regulations under this section—

• (a) may modify this Act or any other enactment or instrument (whenever passed or made), and

• (b) may include incidental, consequential, supplementary or transitional provision.

• (5) A statutory instrument containing regulations under this section must be laid before the House of Commons after being made.

• (6) The regulations cease to have effect at the end of the period of 40 days beginning with the day on which the instrument is made unless before the end of that period the instrument is approved by a resolution of the House of Commons.

• (7) After an instrument containing regulations under this section has been approved under subsection (6), subsections (5) and (6) do not apply to any subsequent such instrument (and accordingly section 287(3) applies to any such instrument).

• (8) If regulations cease to have effect as a result of subsection (6), that does not—

• (a) affect anything previously done under the regulations, or

• (b) prevent the making of new regulations to the same or similar effect.

• (9) In calculating the period of 40 days for the purposes of subsection (6), no account is to be taken of any time during which Parliament is dissolved or prorogued or during which the House of Commons is adjourned for more than 4 days.

• (10) In this section—

• “modify” includes amend, repeal or revoke, and

• “participant”, in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000.

Application of Act to tax transparent funds

103D

• (1) For the purposes of this section—

• “tax transparent fund” means—an authorised contractual scheme which is a co-ownership scheme, ... a Reserved Investor Fund (Contractual Scheme), or an offshore fund that is a transparent fund within the meaning given by regulation 11 of the Offshore Funds (Tax) Regulations 2009, and

• “fund property”, in relation to a tax transparent fund, means the property subject to the fund.

• (2) For the purposes of this Act—

• “authorised contractual scheme” has the meaning given by section 237(3) of the Financial Services and Markets Act 2000, ...

• “co-ownership scheme” has the meaning given by section 235A of that Act , and

• “Reserved Investor Fund (Contractual Scheme)” has the meaning given by section 20 of the Finance (No.2) Act 2024.

• (3) A unit in a tax transparent fund is treated as an asset for the purposes of this Act, and, accordingly, a participant’s interest in the fund property is disregarded for those purposes.

• (3A) But if a participant is entitled to an allowance under Part 2A of CAA 2001 (structures and buildings allowances) by reference to expenditure in relation to any fund property, the participant’s interest in the fund property is not to be disregarded under subsection (3) for the purposes of the application of section 37B (exclusion of certain expenditure: structures and buildings allowances) in relation to the disposal by the participant of units in the fund.

• (4) In computing the gain accruing on a disposal by a participant of units in a tax transparent fund, an amount which—

• (a) represents income from the fund property, and

• (b) is taken into account as a receipt or other credit of the participant in calculating an amount chargeable to income tax,

is treated as expenditure falling within section 38(1)(b).

• (5) In computing the gain accruing on a disposal by a participant of units in a tax transparent fund—

• (a) the sums that would otherwise be allowable under section 38(1) as a deduction from the consideration in the computation of the gain are reduced (but not below nil) by the amounts within subsection (7), and

• (b) if those amounts exceed the sums that would otherwise be so allowable, the consideration is treated as increased by the amount of the excess.

• (6) So far as an amount within subsection (7) is dealt with under subsection (5)(a), it is not also dealt with under section 39.

• (7) An amount is within this subsection if it is—

• (a) any amount arising to the participant from the fund property which is taken into account as an expense or other debit of the participant in calculating an amount chargeable to income tax, or

• (b) anything paid or transferred to the participant, or anything else of value received by the participant, which is referable to the holding of the units (whenever paid, transferred or received) unless section 22 applies to whatever is paid, transferred or received.

• (8) In the case of any asset transferred as mentioned in subsection (7)(b), the value of the asset on the date of the transfer is taken to be its market value on that date.

• (9) If a participant has incurred expenditure in relation to any fund property in respect of which a capital allowance or renewals allowance (as defined by section 41(4) or (5)) has been or may be made, that expenditure is excluded from the sums allowable as a deduction in computing the amount of a loss accruing to the participant on a disposal of the units in the fund.

• (10) In this section—

• “participant”—in relation to a collective investment scheme, is to be read in accordance with section 235 of the Financial Services and Markets Act 2000, andin relation to an offshore fund (which is not a collective investment scheme), has the meaning given in section 362(1) of TIOPA 2010, and

• “units”, in relation to a tax transparent fund, means the rights or interests (however described) of the participants in the fund.

Tax transparent funds: share pooling etc

103DA

A unit in a transparent fund is to be regarded as a security for the purposes of sections 104, 105, 107, 110 and 114 (share pooling, identification of securities and indexation).

UK property rich collective investment vehicles etc

103DB

Schedule 5AAA makes provision in relation to collective investment vehicles where the property which is the subject of or held by the vehicles consists of or includes direct or indirect interests in land in the United Kingdom.

Co-ownership schemes which are to be treated as partnerships

103DC

• (1) The assets of a co-ownership scheme, which is not a tax transparent fund or an offshore collective investment vehicle, are treated for the purposes of tax in respect of chargeable gains as held by the participants in the scheme as partners.

• (2) Any dealings by the operator of a such a scheme are treated for those purposes as dealings by the participants in the scheme in partnership.

• (3) If a participant is entitled to an allowance under Part 2A of CAA 2001 (structures and buildings allowances) by reference to expenditure in relation to their interest in such a scheme, that allowance is not to be disregarded for the purposes of the application of section 37B (exclusion of certain expenditure: structures and buildings allowances) in relation to a disposal of their interest.

• (4) Where—

• (a) expenditure has been made in respect of the assets of such a scheme, and

• (b) a capital allowance or renewals allowance (within the meaning of section 41(4) or (5)) has been given to a participant in the scheme in relation to that expenditure,

the capital allowance or renewals allowance that was given to the investor is to be excluded from the sums allowable as a deduction in computing the amount of a loss accruing to the participant in relation to a disposal of their interest in the assets of the scheme.

• (5) Subsections (6) and (7) apply for the purposes of this Act at any time that a co-ownership scheme, which is not a tax transparent fund or an offshore collective investment vehicle, becomes an authorised contractual scheme or a Reserved Investor Fund (Contractual Scheme) (a “relevant scheme”).

• (6) Each participant in the co-ownership scheme is deemed to, immediately before the time that the scheme becomes a relevant scheme, have sold their interest in the assets held by the participants in the scheme as partners at its market value at that time.

• (7) Each participant is treated as having acquired their units in the relevant scheme—

• (a) at the time the co-ownership scheme becomes a relevant scheme, and

• (b) at their market value at that time.

• (8) For the purposes of this section, a participant’s interest in the assets held by the participants of a co-ownership scheme as partners is a just and reasonable proportion of the assets having regard to the participant’s units in the scheme.

• (9) In this section—

• “offshore collective investment vehicle” has the meaning it has in Schedule 5AAA (see paragraph 2 of that Schedule);

• “tax transparent fund” has the meaning it has in section 103D.

• (10) In subsection (1), the reference to the assets of a co-ownership scheme is a reference to assets which are subject to the scheme.

Chapter 4 — Collective investment schemes: exchanges, mergers and schemes of reconstruction

Application of Chapter

103E

• (1) In this Chapter (except this section) references to a collective investment scheme are to a collective investment scheme falling within any of the following paragraphs—

• (a) an authorised contractual scheme which is a co-ownership scheme,

• (aa) a Reserved Investor Fund (Contractual Scheme),

• (b) a unit trust scheme, or

• (c) an offshore fund.

• (2) Sections 126 to 138A (reorganisation of share capital, conversion of securities etc) do not apply for the purposes of the treatment of participants in collective investment schemes falling within subsection (1)(a) to (c) except as applied by this Chapter.

• (3) But sections 135 to 138A (company reconstructions) may apply for those purposes where either company A or company B is not a collective investment scheme falling within subsection (1)(a) to (c).

• (4) In subsection (3), “company A” and “company B” have the meaning given by section 135 or 136 as the case may be.

• (5) In this Chapter, “units” includes shares in a company.

Exchanges of units for units in the same scheme

103F

• (1) This section applies in the following cases.

• Case 1Where—a participant in a collective investment scheme exchanges units in the scheme for other units in the scheme (“new units”) of substantially the same value, andthe property subject to the scheme and the rights of participants to share in the capital and income in relation to that property are the same immediately before and immediately after the event (ignoring any changes as a result of a variation in management charges).

• Case 2Where there is a reorganisation of the units in a collective investment scheme in which all the participants holding units in the scheme or, where there are different classes of unit in the scheme, all the participants holding units in the same class, exchange all their units for other units (“new units”) in the scheme.

• (2) Where this section applies—

• (a) sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if the collective investment scheme were a company and the event mentioned in subsection (1) were a reorganisation of its share capital, and

• (b) any distribution in relation to any new units is to be treated for the purposes of capital gains tax, corporation tax or income tax on the basis set out in section 127 (as adapted).

• (3) In subsection (1), “management charges” mean the costs charged to the property subject to the scheme in respect of remunerating the parties operating the scheme, administrating the scheme or investing or safeguarding the property subject to the scheme.

Exchange of units for those in another collective investment scheme

103G

• (1) This section applies in the following cases where units in a collective investment scheme (“collective investment scheme B”) are issued to a person in exchange for units in another collective investment scheme (“collective investment scheme A”).

• (2) The cases are—

• Case 1Where units in collective investment scheme B are issued in exchange for units as the result of a general offer—made to participants in collective investment scheme A or any class of them, andmade in the first instance on a condition such that if it were satisfied the property subject to collective investment scheme B would include units in collective investment scheme A giving rights to more than 50% of the capital, and more than 50% of the income, of collective investment scheme A.

• Case 2Where—under an arrangement, participants in collective investment scheme A exchange units in that scheme for units of substantially the same value in collective investment scheme B, andin consequence of the exchanges under the arrangement, 85% or more of the property subject to collective investment scheme B is constituted by units in collective investment scheme A.

• (3) Where this section applies, sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if collective investment scheme A and collective investment scheme B were the same company and the exchange were a reorganisation of its share capital.

• (4) This section has effect subject to section 103K (anti-avoidance).

Scheme of reconstruction involving issue of units

103H

• (1) This section applies where—

• (a) for the purposes of, or in connection with, a scheme of reconstruction an arrangement is entered into by all the participants holding units in an original collective investment scheme (“scheme A”), or where there are different classes of units in the scheme, all the participants holding any class of those units, and

• (b) under the arrangement—

• (i) units in a successor collective investment scheme or feeder fund (“scheme B”) are issued to those participants in respect of and in proportion to (or as nearly as may be in proportion to) their relevant holdings in scheme A, and

• (ii) the units in scheme A comprised in relevant holdings are retained by those participants or are cancelled or otherwise extinguished.

• (2) Where this section applies—

• (a) those participants are treated as exchanging their relevant holdings in scheme A for the units held by them in consequence of the arrangement, and

• (b) sections 127 to 131 (share reorganisations etc) apply with the necessary adaptations as if scheme A and scheme B were the same company and the exchange were a reorganisation of its share capital.

For this purpose units in scheme A comprised in relevant holdings that are retained are treated as if they had been cancelled and replaced by a new issue.

• (3) Where a reorganisation within case 2 of section 103F(1) of the units in scheme A is carried out for the purposes of the scheme of reconstruction, the provisions of subsections (1) and (2) apply in relation to the position after the reorganisation.

• (4) In this section, references to “relevant holdings” of units are—

• (a) where there is only one class of units in scheme A, to holdings of units in the scheme, and

• (b) where there are different classes of units in scheme A, to holdings of a class of units that is involved in the scheme of reconstruction (within the meaning of paragraph 3 of Schedule 5AZA).

• (5) This section has effect subject to section 103K (anti-avoidance).

Scheme of reconstruction involving conversion scheme

103I

• (1) This section applies where—

• (a) a scheme of reconstruction is entered into and given effect to, and

• (b) for the purposes of, or in connection with, the scheme of reconstruction, units in a collective investment scheme (“the conversion scheme”) are issued to participants in another collective investment scheme (“scheme C”) in exchange for and in proportion to (or as nearly as may be in proportion to) their conversion holdings in accordance with regulation 12(1)(b) of the Undertakings for Collective Investment in Transferable Securities Regulations 2011 (S.I. 2011/1613).

• (2) Where this section applies sections 127 to 131 apply with the necessary adaptations as if scheme C and the conversion scheme were the same company and the exchange were a reorganisation of its share capital.

• (3) In this section “conversion holdings” means the units in scheme C to be converted in accordance with regulation 12(1)(b) of the Undertakings for Collective Investment in Transferable Securities Regulations 2011 into units in the conversion scheme for the purposes of, or in connection with, the scheme of reconstruction.

• (4) This section has effect subject to section 103K (anti-avoidance).

Supplementary provisions

103J

In sections 103H and 103I—

• (a) “feeder fund” has the meaning given by paragraph 3(2) of Schedule 5AZA to this Act;

• (b) “scheme of reconstruction” has the meaning given by paragraph 1 of Schedule 5AZA;

• (c) “original collective investment scheme” and “successor collective investment scheme” must be construed in accordance with paragraph 2(2) of Schedule 5AZA; and

• (d) references to units being retained include their being retained with altered rights or in an altered form, whether as the result of reduction, consolidation, division or otherwise .

Restriction on application of sections 103G, 103H and 103I : anti-avoidance

103K

• (1) This section applies in respect of arrangements relating to an exchange or scheme of reconstruction as regards which section 103G, 103H or 103I applies if the main purpose, or one of the main purposes, of the arrangements is to reduce or avoid liability to capital gains tax, corporation tax or income tax.

• (1A) Any such reduction or avoidance that would (in the absence of this section) arise from such arrangements is to be counteracted by the making of such adjustments as are just and reasonable (in light of the reduction or avoidance).

• (1B) This includes, in an appropriate case, disapplying section 103G, 103H or 103I insofar as is required to counteract the reduction or avoidance.

• (1C) Any adjustments required to be made under this section (whether or not by an officer of Revenue and Customs) may be made by way of—

• (a) an assessment, or

• (b) the modification of an assessment.

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• (4) If any tax assessed on a participant (“the chargeable participant”) by virtue of this section is not paid within 6 months from the date determined under subsection (5) below, any other participant who—

• (a) holds all or any part of the units that were issued to the chargeable participant as part of the exchange or scheme of reconstruction, and

• (b) has acquired them without there having been, since their acquisition by the chargeable participant, any disposal of them not falling within section 58(1) or 171,

may, at any time within 2 years from that date, be assessed and charged (in the name of the chargeable participant) to all or, as the case may be, a corresponding part of the unpaid tax; and a participant paying any amount of tax under this subsection shall be entitled to recover from the chargeable participant a sum equal to that amount together with any interest paid by him under section 87A of the Management Act on that amount.

• (5) The date referred to in subsection (4) above is whichever is the later of—

• (a) the date when the tax becomes due and payable by the chargeable participant; and

• (b) the date when the assessment was made on the chargeable participant.

• (6) Section 138 (procedure for clearance in advance) applies to this section as it applies to section 137 (with any necessary modifications).

• (7) In this section, “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

Chapter 5 — Carried interest

Carried interest

103KA

• (1) This section applies where—

• (a) an individual performs investment management services directly or indirectly in respect of an investment scheme under any arrangements, and

• (b) the individual is entitled to carried interest under the arrangements.

• (2) Any gain or loss accruing to the individual by virtue of the individual’s entitlement to carried interest is treated as not accruing.

• (3) In this section “arrangements”, “carried interest”, “investment scheme” and “investment management services” have the same meaning as in section 23I of ITTOIA 2005 (see section 23R of and Part 1 of Schedule A1 to that Act).

Carried interest: consideration on disposal etc of right

103KB

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

Carried interest: foreign chargeable gains

103KC

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

Carried interest: anti-avoidance

103KD

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

Carried interest: avoidance of double taxation

103KE

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

Relief for external investors on disposal of partnership asset

103KF

• (1) If—

• (a) a chargeable gain accrues to an external investor in an investment scheme on the disposal of one or more partnership assets, and

• (b) the external investor makes a claim for relief under this section,

then subsection (2) applies in relation to the disposal.

• (2) The amount of the chargeable gain is to be reduced by an amount equal to—

$$I − C$where—I is an amount equal to such part of the sum invested in the fund by the external investor which on a just and reasonable basis is referable to the asset or assets disposed of, andC is the amount deducted under section 38(1)(a) in respect of consideration given wholly and exclusively for the acquisition of the asset or assets.$

• (3) In this section, “external investor” and “investment scheme” have the same meaning as in section 23I of ITTOIA 2005 (see section 23R of that Act).

Election for carried interest gains to be chargeable as scheme profits arise

103KFA

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

Election in relation to scheme to apply to associated schemes

103KFB

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

Interaction with other charges

103KFC

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

Deemed accrual of loss where carried interest never arises

103KFD

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

Anti-avoidance

103KFE

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

Meaning of “arise” in Chapter 5

103KG

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

Interpretation of Chapter 5

103KH

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

Part IV — Shares, securities, options etc.

Chapter I — General

Share pooling, identification of securities, and indexation

Share pooling: general interpretative provisions.

104

• (1) Any number of securities of the same class acquired by the same person in the same capacity shall for the purposes of this Act (subject to express provision to the contrary) be regarded as indistinguishable parts of a single asset growing or diminishing on the occasions on which additional securities of the same class are acquired or some of the securities of that class are disposed of.

• (2) For the purposes of corporation tax, subsection (1) does not apply to any securities acquired by a company before 1 April 1982.

• (2A) See also sections 105 to 105B and—

• (a) section 106A in the case of capital gains tax, or

• (b) sections 107 to 114 in the case of corporation tax.

• (3) For the purposes of this section and sections 105, 107, 110 ... and 114—

• “a section 104 holding” is a holding of securities which, by virtue of subsection (1) above, is to be regarded as a single asset;

• “securities” does not include relevant securities as defined in section 108 but, subject to that, means—shares or securities of a company; andany other assets where they are of a nature to be dealt in without identifying the particular assets disposed of or acquired; and

• “relevant allowable expenditure” has the meaning assigned to it by section 53(2)(b) and (3);

but shares or securities of a company shall not be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange or would be so treated if dealt with on a recognised stock exchange.

• (3A) For the purposes of capital gains tax section 35(2) applies in relation to a section 104 holding as if the reference to an asset were to any of the securities constituting or forming part of the section 104 holding which were held by the person making the disposal on 31 March 1982.

• (4) For the purposes of this Chapter securities of a company which are held—

• (a) by a person who acquired them as an employee of the company or of any other person, and

• (b) on terms which for the time being restrict his right to dispose of them,

shall (notwithstanding that they would otherwise fall to be treated as of the same class) be treated as of a different class from any securities acquired by him otherwise than as an employee of the company or of any other person and also from any shares that are not held subject to restrictions, or the same restrictions, on disposal or in the case of which the restrictions are no longer in force.

• (4A) For the purposes of this Chapter, securities of a company which are held by the trustees of a settlement, having been last acquired or deemed to be acquired by them in circumstances where section 236H or 236Q applied, shall (notwithstanding that they would otherwise fall to be treated as of the same class) be treated as of a different class from any other securities of the company acquired by those trustees.

• (5) Nothing in this section or sections 110 ... and 114 shall be taken as affecting the manner in which the market value of any securities is to be ascertained.

• (6) Without prejudice to the generality of subsections (1) and (2) above, a disposal of securities in a section 104 holding, other than a disposal of the whole of it, is a disposal of part of an asset and the provisions of this Act relating to the computation of a gain accruing on a disposal of part of an asset shall apply accordingly.

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

105

• (1) Paragraphs (a) and (b) below shall apply where securities of the same class are acquired or disposed of by the same person on the same day and in the same capacity—

• (a) all the securities so acquired shall be treated as acquired by a single transaction and all the securities so disposed of shall be treated as disposed of by a single transaction, and

• (b) all the securities so acquired shall, so far as their quantity does not exceed that of the securities so disposed of, be identified with those securities.

• (2) Where the quantity of securities disposed of by any person exceeds the aggregate quantity of—

• (a) the securities (if any) which are required by subsection (1) above to be identified with securities acquired on the day of the disposal,

• (b) the securities (if any) which are required by section 106A(5) to be identified with securities acquired after the day of the disposal, and

• (c) the securities (if any) which are required by any of the provisions of sections 104, ... 106A or 107, or of Schedule 2, to be identified with securities acquired before the day of the disposal,

the disposal shall be treated as diminishing a quantity of securities subsequently acquired, and as so diminishing any quantity so acquired at an earlier date, rather than one so acquired at a later date.

• (3) None of the securities which, by virtue of this section, are identified with other securities shall be regarded as forming part of an existing section 104 holding or as constituting a section 104 holding.

• (4) Subsection (5) applies if an individual—

• (a) acquires shares (“the relevant shares”) of the same class, on the same day and in the same capacity, and

• (b) some of the relevant shares are relevant EMI shares (as defined by section 169I(7C) to (7G)).

• (5) This section has effect as if—

• (a) paragraph (a) of subsection (1) required the relevant EMI shares to be treated as acquired by the individual by a single transaction separate from the remainder of the relevant shares (which are also to be treated by virtue of that paragraph as acquired by the individual by a single transaction), and

• (b) subsection (1) required the relevant EMI shares to be treated as disposed of after the remainder of the relevant shares.

Shares acquired on same day: election for alternative treatment

105A

• (1) Subsection (2) below applies where an individual—

• (a) acquires shares (“the relevant shares”) of the same class, on the same day and in the same capacity, and

• (b) some of the relevant shares (“the tax-advantaged-scheme shares”) are shares acquired by him as a result of—

• (i) the exercise of a qualifying option within the meaning given by section 527(4) of ITEPA 2003 (enterprise management incentives) in circumstances where section 530 or 531 of that Act (exercise of option to acquire shares) applies, or

• (ii) the exercise of an option to which Chapter 7 or 8 of Part 7 of that Act (... share option schemes) applies in circumstances where section 519(1) or 524(1) of that Act applies.

• (2) Where the individual first makes a disposal of any of the relevant shares, he may elect for subsections (3) to (5) below to have effect in relation to that disposal and all subsequent disposals of any of those shares.

• (3) In circumstances where section 105 applies, that section shall have effect as if—

• (a) paragraph (a) of subsection (1) of that section required the tax-advantaged-scheme shares to be treated as acquired by the individual by a single transaction separate from the remainder of the relevant shares (which shall also be treated by virtue of that paragraph as acquired by the individual by a single transaction), and

• (b) subsection (1) of that section required the tax-advantaged-scheme shares to be treated as disposed of after the remainder of the relevant shares.

• (4) If the relevant shares include shares to which relief under Chapter 3 of Part 7 of the Taxes Act, relief under Part 5 of ITA 2007 or deferral relief (within the meaning of Schedule 5B to this Act) is attributable—

• (a) paragraph 4(4) of that Schedule has effect as if it required the tax-advantaged-scheme shares falling within paragraph (a), (b), (c) or (d) of that provision to be treated as disposed of after the remainder of the relevant shares falling within the paragraph in question, and

• (b) section 299 of the Taxes Act or section 246 of ITA 2007 has effect for the purposes of section 150A(4) below as if it required—

• (i) the tax-advantaged-scheme shares falling within paragraph (a), (b), (c) or (d) of subsection (6A) of section 299 of the Taxes Act or subsection (3) of section 246 of ITA 2007 to be treated as disposed of after the remainder of the relevant shares falling within the paragraph in question, and

• (ii) the tax-advantaged-scheme shares to which subsection (6B) of section 299 of the Taxes Act or subsection (4) of section 246 of ITA 2007 applies to be treated as disposed of after the remainder of the relevant shares to which that subsection applies.

• (5) Where section 127 applies in relation to any of the relevant shares (“the reorganisation shares”), that section shall apply separately to such of those shares as are tax-advantaged-scheme shares and to the remainder of the reorganisation shares (so that those tax-advantaged-scheme shares and the remainder of the reorganisation shares are treated as comprised in separate holdings of original shares and identified with separate new holdings).

• (6) In subsection (5)—

• (a) the reference to section 127 includes a reference to that section as it is applied by virtue of any enactment relating to chargeable gains, and

• (b) “original shares” and “new holding” have the same meaning as in section 127 or (as the case may be) that section as applied by virtue of the enactment in question.

• (7) For the purposes of subsection (1) above—

• (a) any shares to which relief under Chapter 3 of Part 7 of the Taxes Act or relief under Part 5 of ITA 2007 is attributable and which were transferred to an individual as mentioned in section 304 of the Taxes Act or section 245 of ITA 2007, and

• (b) any shares to which deferral relief (within the meaning of Schedule 5B to this Act), but not relief under that Chapter or relief under that Part, is attributable and which were acquired by an individual on a disposal to which section 58 above applies,

shall be treated as acquired by the individual on the day on which they were issued.

• (8) In this section the references to Chapter 3 of Part 7, section 299 and section 304 of the Taxes Act shall be read as references to those provisions as they apply to shares issued after 31st December 1993 (enterprise investment scheme).

• (9) In this section references to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.

Provision supplementary to section 105A

105B