Finance Act 2019

(1) (1) Capital gains tax is charged for a tax year on chargeable gains accruing in the year to a person on the disposal of assets. (2) As a result of section 4 of CTA 2009, capital gains tax is not charged on gains accruing to a company, but corporation tax is chargeable instead in accordance with— (a) section 2 of CTA 2009, (b) Chapter 2 of this Part, and (c) other relevant provisions of the Corporation Tax Acts. (3) Capital gains tax is charged on the total amount of chargeable gains accruing to a person in a tax year after deducting— (a) any allowable losses accruing to the person in the tax year, and (b) so far as not previously deducted under this subsection, any allowable losses accruing to the person in any previous tax year. (1A) (1) A person who is UK resident for a tax year is chargeable to capital gains tax on chargeable gains accruing to the person in the tax year on the disposal of assets wherever situated. (2) In the case of individuals who are UK resident for a tax year, see also— (a) Schedule 1 (foreign gains accruing to individuals to whom the remittance basis applies), (b) section 1G (cases where the tax year is a split year), (c) sections 1M and 1N (temporary periods of non-residence), (d) Chapter 3 (gains of non-UK resident close companies attributed to individuals), and (e) sections 86, 87, 87K, 87L and 89(2) (gains of non-UK resident trustees attributed to individuals). (3) A person who is not UK resident for a tax year is chargeable to capital gains tax on chargeable gains accruing to the person in the tax year on the disposal of— (a) assets situated in the United Kingdom that have a relevant connection to the person's UK branch or agency and are disposed of at a time when the person has that branch or agency (see section 1B), (b) assets not within paragraph (a) that are interests in UK land (see section 1C), and (c) assets (wherever situated) not within paragraph (a) or (b) that derive at least 75% of their value from UK land where the person has a substantial indirect interest in that land (see section 1D and Schedule 1A). (4) For the purposes of this Chapter a person is “UK resident” for a tax year if the person is resident in the United Kingdom during any part of the tax year. (5) For the relevant residence rules— (a) in the case of individuals, see Schedule 45 to the Finance Act 2013 (which provides that individuals meeting the applicable tests for a tax year are taken to be resident for the whole of the year), (b) in the case of the personal representatives of deceased individuals, see section 62(3), and (c) in the case of trustees of settlements, see section 69. (1B) (1) For the purposes of section 1A(3)(a) a person has a UK branch or agency at any time if, at that time, the person carries on a trade, profession or vocation in the United Kingdom through a branch or agency there. (2) For the purposes of section 1A(3)(a) an asset has a relevant connection to a person's UK branch or agency if— (a) it is, or was, used in or for the purposes of the trade, profession or vocation at or before the time of the disposal, (b) it is, or was, used or held for the purposes of the branch or agency at or before that time, or (c) it is acquired for use by or for the purposes of the branch or agency. (3) Section 1A(3)(a) does not apply to a person who, as a result of Part 2 of TIOPA 2010 (double taxation arrangements), is exempt from income tax for the tax year in respect of the profits or gains of the branch or agency. (4) In the case of a profession or vocation carried on by a person, an asset does not have a relevant connection to the person's UK branch or agency if— (a) the asset was only used in or for the purposes of the profession or vocation before 14 March 1989, or (b) the asset was only used or held for the purposes of the branch or agency before that date. (5) In this Act, unless the context otherwise requires, “branch or agency”— (a) means any factorship, agency, receivership, branch or management, but (b) does not include any person within any of the exemptions under sections 835G to 835K of ITA 2007 (persons who are not UK representatives). (1C) (1) For the purposes of section 1A(3)(b) an “interest in UK land” means— (a) an estate, interest, right or power in or over land in the United Kingdom, or (b) the benefit of an obligation, restriction or condition affecting the value of an estate, interest, right or power in or over land in the United Kingdom, other than an excluded interest. (2) The following interests are “excluded interests”— (a) any interest or right held for securing the payment of money or the performance of any other obligation, (b) a licence to use or occupy land, (c) in England and Wales or Northern Ireland, a tenancy at will or an advowson, franchise or manor, and (d) such other descriptions of interest or right in relation to land in the United Kingdom as may be specified in regulations made by the Treasury. (3) An interest or right is not within subsection (2)(a) if it is— (a) a rentcharge, or (b) in Scotland, a feu duty or a payment mentioned in section 56(1) of the Abolition of Feudal Tenure etc (Scotland) Act 2000. (4) The grant of an option by a person binding the person to dispose of an interest in UK land is (so far as it would not otherwise be the case) regarded as a disposal of an interest in UK land by the person for the purposes of section 1A(3)(b). (5) This does not affect the operation of section 144 in relation to the grant of the option (or otherwise). (6) In this section— - “franchise” means a grant from the Crown such as the right to hold a market or fair, or the right to take tolls, and - “land” includes— 1. buildings and structures, and 2. land under the sea or otherwise covered by water. (1D) (1) For the purposes of section 1A(3)(c) the following questions are determined in accordance with the provision made by Schedule 1A— (a) whether the asset being disposed of derives at least 75% of its value from UK land, and (b) whether the person making the disposal has a substantial indirect interest in the UK land at the time of the disposal. (2) The provision made by Schedule 1A is not to be taken as affecting the meaning of “substantial” in other contexts. (1E) (1) A loss is not an allowable loss if it accrues in a tax year at a time when, had a gain accrued instead, the gain would not have been chargeable to capital gains tax under this Act for the tax year (and see also sections 16(2) and 16A). (2) In addition, the only allowable losses that qualify for deduction from chargeable gains under section 1A(3) (non-UK residents) are those accruing to the person on disposals of assets within that subsection. (3) An allowable loss counts for the purposes of subsection (2) even if it accrues in a tax year in which the person was UK resident. (4) No allowable losses may be deducted from chargeable gains treated as accruing to an individual as a result of section 87, 87K, 87L or 89(2) (read, where appropriate, with section 1M). (5) If— (a) amounts (or elements of amounts) treated as accruing to an individual as a result of section 86 relate to different settlements, and (b) the deduction of allowable losses does not reduce the amounts or elements to nil, the deduction applicable to each amount is the proportion that the amount concerned bears to the total of the amounts. (6) The deduction of allowable losses also has effect subject to Schedule 1 (UK resident individuals not domiciled in UK). (7) For the only case in which an allowable loss accruing in a tax year may be carried back to an earlier tax year, see section 62 (death). (1F) (1) Allowable losses may (subject to express provision to the contrary) be deducted from gains in whichever way is most beneficial to a person chargeable to capital gains tax. (2) Accordingly, an allowable loss may be deducted from a chargeable gain irrespective of the rate of tax at which the gain would otherwise have been charged. (3) Allowable losses that are deducted from gains may not be deducted any further than is necessary to eliminate the gains. (4) No part of an allowable loss may be relieved under this Act more than once. (5) So far as an amount has been relieved under the Income Tax Acts, it may not be further relieved under this Act. (1G) (1) If, as respects any individual, a tax year is a split year, sections 1A(1) and 1E have effect subject to the modifications made by this section. (2) Gains accruing to the individual in the overseas part of the tax year are chargeable to capital gains tax only if they accrue on the disposal of assets within section 1A(3). (3) Losses are deductible from gains accruing to the individual in the overseas part of the tax year on the disposal of assets within section 1A(3)(b) or (c) only if the losses accrue to the individual on the disposal of— (a) assets that are within section 1A(3)(b) or (c), or (b) assets that would be within section 1A(3)(b) or (c) if they did not have a relevant connection to the individual's UK branch or agency. (4) But losses accruing in the overseas part of the tax year on disposals of assets within section 1A(3)(b) or (c) are (so far as not deducted as mentioned in subsection (3)) deductible from gains accruing in the UK part of the tax year. (1H) (1) This section makes provision about the rates at which capital gains tax is charged but has effect subject to— (a) section 169N (entrepreneurs' relief: rate of 10%), and (b) section 169VC (investors' relief: rate of 10%). (2) Chargeable gains accruing in a tax year to an individual that are— (a) residential property gains (see Schedule 1B), or (b) carried interest gains (see subsections (9) to (11)), are charged to capital gains tax at a rate of 18% or 28%. (3) Other chargeable gains accruing in a tax year to an individual are charged to capital gains tax at a rate of 10% or 20%. (4) The question as to which of the rates applies to the gains concerned is determined by section 1I (income taxed at higher rates or gains exceeding unused basic rate band). (5) Chargeable gains accruing in a tax year to the personal representatives of a deceased individual that are— (a) residential property gains, or (b) carried interest gains, are charged to capital gains tax at a rate of 28%. (6) Other chargeable gains accruing in a tax year to the personal representatives of a deceased individual are charged to capital gains tax at a rate of 20%. (7) Residential property gains accruing in a tax year to the trustees of a settlement are charged to capital gains tax at a rate of 28%. (8) Other chargeable gains accruing in a tax year to the trustees of a settlement are charged to capital gains tax at a rate of 20%. (9) For the purposes of this section chargeable gains are “carried interest gains” if they accrue to an individual (“X”)— (a) under section 103KA(2) or (3) (investment management services), or (b) as a result of carried interest arising to X under arrangements not involving a partnership under which X performs investment management services directly or indirectly in respect of an investment scheme. (10) A gain is not a carried interest gain under subsection (9)(b) if the carried interest constitutes a co-investment repayment or return. (11) Expressions used in subsection (9) or (10) have the same meaning as they have in Chapter 5 of Part 3. (1I) (1) If any of an individual's income for a tax year is chargeable to income tax at a higher income tax rate, gains accruing to the individual in the tax year are charged— (a) at the rate of 28%(if they are residential property gains or carried interest gains), or (b) at the rate of 20% (if they are other kinds of gains). (2) If— (a) none of an individual's income for a tax year is chargeable to income tax at a higher income tax rate, but (b) the individual is chargeable to capital gains tax for the tax year on an amount that exceeds the unused part of the individual's basic rate band, the excess (“the higher rate excess”) is charged at the rate of 28%(so far as comprising residential property gains or carried interest gains) or at the rate of 20% (so far as comprising other kinds of gains). (3) The remainder of this section sets out special rules which apply depending on the nature of the gains within subsection (2)(b). (4) If— (a) the gains consist of or include gains (“entrepreneur or investor gains”) chargeable at the rate of 10% under section 169N(3) or 169VC(2), and (b) the total amount of the entrepreneur or investor gains exceeds the unused part of the individual's basic rate band, that unused part is used fully against those gains. (5) The effect of so doing is that other gains comprised in the higher rate excess are then charged— (a) at the rate of 28%(if they are residential property gains or carried interest gains), or (b) at the rate of 20% (if they are other kinds of gains). (6) If the total amount of the entrepreneur or investor gains does not exceed the unused part of the individual's basic rate band— (a) so much of that unused part as is equal to that total amount is used against those gains, and (b) accordingly, the higher rate excess consists only of gains other than entrepreneur or investor gains. (7) The individual may allocate so much of the unused part of the individual's basic rate band as then remains to— (a) any residential property gains or carried interest gains, or (b) any other gains. (8) The effect of the allocation is that the gains to which the allocation is made are charged— (a) at the rate of 18%(if they are residential property gains or carried interest gains), or (b) at the rate of 10% (if they are other kinds of gains). (9) Any gains to which no allocation is made are charged— (a) at the rate of 28%(if they are residential property gains or carried interest gains), or (b) at the rate of 20% (if they are other kinds of gains). (1J) (1) For the purposes of section 1I— - a “higher income tax rate” means— 1. the higher rate or the default higher rate, 2. the savings higher rate, or 3. the dividend upper rate, and - “the unused part of the individual's basic rate band” means the amount by which the basic rate limit exceeds the individual's Step 3 income. (2) If an individual is entitled to relief for a tax year under section 539 of ITTOIA 2005 (contracts for life insurance) by reference to the amount of a deficiency, the individual's Step 3 income for the tax year is treated for the purposes of this section as reduced by the amount of the deficiency. (3) If, as a result of section 669(1) and (2) of ITTOIA 2005 (inheritance tax on accrued income), there is a reduction in the residuary income of an estate for a tax year that reduces an individual's income by any amount, the individual's Step 3 income for the tax year is treated for the purposes of this section as reduced by the amount of that reduction in the individual's income. (4) If an individual has life insurance gains for a tax year, the individual's Step 3 income for the tax year is treated for the purposes of this section as if the amount of those gains were limited to— (a) the annual equivalent within the meaning of section 536(1) of ITTOIA 2005, or (b) the total annual equivalent within the meaning of section 537 of that Act, as the case may be. (5) If— (a) an individual has life insurance gains for a tax year, (b) relief is given under section 535 of ITTOIA 2005 for the tax year, and (c) the calculation under section 536(1) or 537 of that Act for the tax year does not involve the higher rate, the individual is treated for the purposes of section 1I as if none of the individual's income were chargeable to income tax at the higher rate, the default higher rate or the dividend upper rate. (6) In the application of section 1I in the case of any individual it is to be assumed that the individual is not a Scottish or Welsh taxpayer. (7) In this section— - “the individual's Step 3 income” means so much of the individual's total income for the tax year as is left after taking Step 3 under section 23 of ITA 2007 (income tax liability calculation), and - “life insurance gains”, in relation to an individual, means the amount or amounts treated as the individual's income as a result of section 465 of ITTOIA 2005 (gains from contracts for life insurance). (8) Expressions used in this section which have a meaning when used in the Income Tax Acts have the same meaning in this section. (1K) (1) If an individual is (or, apart from this section, would be) chargeable to capital gains tax for a tax year on chargeable gains, the annual exempt amount for the year is to be deducted from those gains (but no further than necessary to eliminate them). (2) The annual exempt amount for a tax year is £12,000. (3) The annual exempt amount may not be deducted from chargeable gains to which paragraph 2 of Schedule 1 applies (foreign gains of non-UK domiciled individuals accruing in one year and remitted in later year). (4) The deduction of the annual exempt amount— (a) is made after the deduction of allowable losses accruing in the tax year, but (b) is made before the deduction of allowable losses accruing in a previous tax year or, if section 62 applies, in a subsequent tax year. (5) The annual exempt amount may be deducted from gains in whatever way is most beneficial to a person chargeable to capital gains tax (irrespective of the rate of tax at which the gains would otherwise have been charged). (6) An individual is not entitled to an annual exempt amount for a tax year if section 809B of ITA 2007 (claim for remittance basis) applies to the individual for the year. (7) For the tax year in which an individual dies and for the next two tax years, this section applies to the individual's personal representatives as if references to the individual were to those personal representatives. (8) This section applies in relation to trustees in accordance with the provision made by Schedule 1C. (1L) (1) If the consumer prices index for the September before the start of a tax year is higher than it was for the previous September— (a) the annual exempt amount is increased by the same percentage as the rise in that index (rounded up to the nearest £100), and (b) section 1K(2) has effect for the tax year (and subsequent tax years) as if it referred to the increased amount. (2) If, as a result of this section, the annual exempt amount for a tax year increases, the Treasury must before the start of the tax year make an order showing the increased amount. (1M) (1) If, in the case of the disposal of an asset by an individual who is temporarily non-resident— (a) a gain or loss accrues to the individual in the temporary period of non-residence, and (b) the asset is not excluded from this subsection by section 1N (certain assets acquired in that period), the gain or loss is treated instead as accruing to the individual in the period of return. (2) If— (a) a gain is, as a result of subsection (1), treated as accruing to an individual in a tax year for which the remittance basis applies to the individual, (b) the tax year consists of or includes the period of return, and (c) the gain was remitted to the United Kingdom in the temporary period of non-residence, the gain is treated instead as remitted to the United Kingdom in the period of return. (3) If— (a) an individual is temporarily non-resident, and (b) a gain would, as a result of section 86, have accrued to the individual in a tax year falling wholly or partly in the temporary period of non-residence if the individual had been resident in the United Kingdom for that year, the gain is treated instead as accruing to the individual in the period of return (but see also section 86A). (4) Nothing in any double taxation arrangements prevents a charge to capital gains tax arising as a result of this section. (5) Nothing in this section is to affect a gain or loss which, apart from this section, would be chargeable to capital gains tax or would be an allowable loss. (6) For the purposes of this section each of the following expressions has the meaning given by Part 4 of Schedule 45 to the Finance Act 2013 (statutory residence test: anti-avoidance)— - “the period of return” - “temporarily non-resident” - “the temporary period of non-residence”. (7) In this section the 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. (1N) (1) An asset is excluded from section 1M(1) if— (a) it was acquired by the individual in the temporary period of non-residence, (b) the acquisition was otherwise than by means of a disqualifying no gain/no loss disposal, (c) there is no reduction in the consideration for the acquisition under section 23(4)(b) or (5)(b), 152(1)(b), 153(1)(b), 162(3)(b) or 247(2)(b) or (3)(b) by reference to a UK resident disposal, and (d) the asset is not an interest created by or arising under a settlement. (2) This exclusion does not apply in the case of an asset (“the new asset”) if— (a) on a disposal of the new asset a gain or loss is treated as a result of 116(10) or (11), 134 or 154(2) or (4) as accruing (ignoring section 1M), (b) the gain or loss is calculated by reference to another asset (“the old asset”), and (c) the new asset is one that meets the conditions for exclusion but the old asset does not. (3) For the purposes of this section “a UK resident disposal” means a disposal by a person (“P”) of an asset which was acquired by P at a time when— (a) P was resident in the United Kingdom, and (b) P was not Treaty non-resident. (4) For the purposes of this section “a disqualifying no gain/no loss disposal” means a UK resident disposal to which section 58, 73 or 258(4) applies. (1O) In this Chapter any reference to a person who is, or is not, “UK resident” is to be read in accordance with section 1A(4). (2) (1) As a result of section 2(1) and (2) of CTA 2009, corporation tax is charged on chargeable gains accruing to a company on the disposal of assets. (2) The charge to corporation tax on chargeable gains has effect in accordance with this Act and all other relevant provisions of the Corporation Tax Acts. (2A) (1) The amount of chargeable gains to be included in a company's total profits for an accounting period is the total amount of chargeable gains accruing to the company in the period after deducting— (a) any allowable losses accruing to the company in the period, and (b) so far as not previously deducted under this subsection, any allowable losses previously accruing to the company while it was within the charge to corporation tax. (2) For the purposes of corporation tax on gains “allowable loss” does not include a loss accruing to a company if, had a gain accrued, the company would not have been chargeable to corporation tax on the gain. (2B) (1) A company which is resident in the United Kingdom in an accounting period is chargeable to corporation tax on chargeable gains accruing to the company in the period on the disposal of assets wherever situated. (2) This is subject to Chapter 3A of Part 2 of CTA 2009 (exemption from charge in respect of profits of foreign permanent establishments). (3) A company which is not resident in the United Kingdom is chargeable to corporation tax on chargeable gains that— (a) accrue to the company on the disposal of assets situated in the United Kingdom that have a relevant connection to the company's UK permanent establishment (see section 2C), (b) accrue at a time when it has that permanent establishment, and (c) are, in accordance with sections 20 to 32 of CTA 2009, attributable to that permanent establishment. (4) In addition, a company which is not resident in the United Kingdom is chargeable to corporation tax on chargeable gains accruing to the company on the disposal of assets not within subsection (3) that are— (a) interests in UK land, or (b) assets (wherever situated) not within paragraph (a) that derive at least 75% of their value from UK land where the company has a substantial indirect interest in that land. (5) Section 1C applies for the purposes of subsection (4)(a) as it applies for the purposes of section 1A(3)(b) (disposing of interests in UK land). (6) The reference in subsection (4)(b) to assets deriving at least 75% of their value from UK land where the company has a substantial indirect interest in that land is to be read in accordance with Schedule 1A. (2C) (1) For the purposes of section 2B(3) a company has a UK permanent establishment at any time if, at that time, the company carries on a trade in the United Kingdom through a permanent establishment there. (2) For the purposes of section 2B(3) an asset has a relevant connection to a company's UK permanent establishment if— (a) it is, or was, used in or for the purposes of the trade at or before the time of the disposal, (b) it is, or was, used or held for the purposes of the permanent establishment at or before that time, or (c) it is acquired for use by or for the purposes of the permanent establishment. (3) Section 2B(3) does not apply to a company which, as a result of Part 2 of TIOPA 2010 (double taxation arrangements), is exempt from corporation tax for the accounting period in respect of the profits of the permanent establishment. (4) In the case of the long-term business of an overseas life insurance company, subsection (2) has effect as if for paragraph (b) there were substituted— (b) it is, or was, used or held for the purposes of the permanent establishment at or before that time (irrespective of where it is situated at that time), (5) In this section references to a trade include an office and references to carrying on a trade include holding an office. (2D) (1) The total amount of chargeable gains to be included in a company's total profits for an accounting period is calculated for corporation tax purposes in accordance with capital gains tax principles. (2) All of the following questions are determined in accordance with the enactments relating to capital gains tax as if accounting periods were tax years— (a) any question as to the amounts to be, or not to be, taken into account as chargeable gains or allowable losses, (b) any question as to the amounts to be, or not to be, taken into account in calculating gains or losses, (c) any question as to the amounts charged to tax as a company's gains, and (d) any question as to the time when any amount is treated as accruing. (3) This section is subject to any provision made elsewhere by the Corporation Tax Acts. (2E) (1) If the CGT enactments contain any reference to— (a) income tax, or (b) the Income Tax Acts, the reference is, in relation to a company, to be read as a reference to corporation tax or the Corporation Tax Acts. (2) But— (a) this does not affect references to income tax in section 39(2), and (b) so far as the CGT enactments operate by reference to matters of any specified description, account is to be taken for corporation tax purposes of matters of that description confined to companies but not of any confined to individuals. (3) In this section “the CGT enactments” means the enactments relating to capital gains tax. (2F) (1) This Act as it has effect in accordance with this Chapter is not to be affected in its operation by the fact that capital gains tax and corporation tax are distinct taxes. (2) But this Act is, so far as it is consistent with the Corporation Tax Acts, to apply in relation to capital gains tax and corporation tax on gains as if they were one tax. (3) Accordingly, a matter which in a case involving two individuals is relevant to both of them in relation to capital gains tax is in a similar case involving an individual and a company— (a) relevant to the individual in relation to capital gains tax, and (b) relevant to the company in relation to corporation tax. (2G) (1) If assets of a company are vested in a liquidator— (a) this Chapter, and (b) the enactments applied by this Chapter, apply as if the assets were vested in the company and as if the acts of the liquidator in relation to the assets were the company's acts. (2) Accordingly, acquisitions from or disposals to the liquidator by the company are ignored. (3) The assets may be vested in the liquidator under section 145 of the Insolvency Act 1986 or Article 123 of the Insolvency (Northern Ireland) Order 1989 or otherwise. (3) (1) This section applies if— (a) a chargeable gain accrues at any time to a non-UK resident close company, (b) the gain is connected to avoidance (see section 3A), (c) the gain is not connected to a foreign trade or other economically significant foreign activities (see section 3A), and (d) apart from this section, some or all of the gain would not be chargeable to corporation tax on the company. (2) So much of the gain as would not otherwise be so chargeable is apportioned among participators, or indirect participators, in the company— (a) who are resident in the United Kingdom at that time, or (b) who are trustees of a settlement and are not resident in the United Kingdom at that time. (3) The proportion of the amount of the gain to be apportioned to each person corresponds to the extent of the person's interest in the company as a participator or indirect participator. (4) The amount apportioned to each person is treated as a chargeable gain accruing to the person. (5) No apportionment of any part of a gain is made to an individual if— (a) the gain accrues in a tax year which, as respects the individual, is a split year, and (b) the gain accrues in the overseas part of the year. (6) No apportionment of any part of a gain is made to a person if the total amount that would, apart from this subsection, be apportioned to— (a) the person, and (b) persons connected to the person, is 25% or less of the amount of the gain falling to be apportioned. (7) A person (“P”) is an “indirect participator” in a company (“A”) if— (a) another company (“B”) which is a non-UK resident close company is a participator in A, and (b) P is a participator in B or P is a participator in a third non-UK resident close company which is participator in B, and so on through any number of non-UK resident close companies that are participators in other non-UK resident close companies. (8) P's interest as an indirect participator in A in the case of any gain is determined by— (a) apportioning the gain among the participators in A according to the extent of their respective interests as participators, and (b) then further apportioning the gain apportioned to B among the participators in B according to the extent of their respective interests as participators, and so on through other companies. (9) So far as it would go to reduce or extinguish chargeable gains accruing, as a result of this section, to a person in a chargeable period, this section applies to a loss accruing to the company on the disposal of an asset in that period as it would apply if there had been a gain. (10) But— (a) this only applies in relation to that person, and (b) this section does not otherwise apply in relation to losses accruing to the company. (11) In this section “a non-UK resident close company” means a company— (a) which is not resident in the United Kingdom, and (b) which would be a close company if it were resident in the United Kingdom. (3A) (1) A gain accruing to a company on the disposal of an asset is taken to be “connected to avoidance” unless it is shown that neither— (a) the disposal of the asset by the company, nor (b) the acquisition or holding of the asset by the company, formed part of a scheme or arrangements of which the main purpose, or one of the main purposes, was avoidance of liability to capital gains tax or corporation tax. (2) A gain is “connected to a foreign trade” if it accrues on the disposal of an asset used only— (a) for the purposes of a trade carried on by the company wholly outside the United Kingdom, or (b) for the purposes of the foreign part of a trade carried on by the company partly within, and partly outside, the United Kingdom, and the reference here to the foreign part of a trade is to the part of the trade carried on outside the United Kingdom. (3) For this purpose an asset is to be regarded as used only for the purposes of a trade carried on by the company wholly outside the United Kingdom if— (a) the asset is accommodation, or an interest or right in accommodation, situated outside the United Kingdom, and (b) the accommodation has for each relevant period been furnished holiday accommodation of which a person has made a commercial letting. (4) Each of the following is a “relevant period”— (a) the period of 12 months ending with the date of the disposal and each of the two preceding periods of 12 months, or (b) if the company has beneficially owned the accommodation (or interest or right) for more than 36 months, the period of 12 months ending with the date of the disposal and each of the preceding periods of 12 months throughout which the company had that beneficial ownership. (5) The reference in this section to the commercial letting of furnished holiday accommodation is to be read in accordance with Chapter 6 of Part 4 of CTA 2009, but as if— (a) sections 266, 268 and 268A were omitted, and (b) the reference to an accounting period in section 267(1) were to a relevant period. (6) A gain accruing on the disposal of an asset is “connected to other economically significant foreign activities” if— (a) the asset is used only for the purposes of activities carried on by the company wholly or mainly outside the United Kingdom, (b) the activities consist of the provision of goods or services on a commercial basis, and (c) the activities also satisfy the staff, premises and economic value test. (7) Activities satisfy the staff, premises and economic value test if they involve— (a) the use of employees, agents or contractors of the company in numbers, and with competence and authority, commensurate with the size and nature of the activities, (b) the use of premises and equipment commensurate with the size and nature of the activities, and (c) the addition of economic value by the company to the persons to whom the goods or services are provided commensurate with the size and nature of the activities. (8) This section applies for the purposes of section 3(1)(b) and (c). (3B) (1) “Participator” has the meaning given by section 454 of CTA 2010. (2) Any reference to a person's interest as a participator in a company is to the interest in it represented by all the factors by reference to which the person is a participator. (3) Any reference to the extent of a person's interest as a participator in a company is to such proportion of the interests as participators of all of the company's participators as, on a just and reasonable basis, is represented by that interest. (4) If— (a) the interest of a person in a company is wholly or partly represented by an interest under a settlement (“the beneficial interest”), and (b) the beneficial interest is the factor (or one of them) by reference to which the person would, apart from this subsection, have an interest as a participator in the company, that interest as a participator is, so far as represented by the beneficial interest, to be treated instead as the interest of the trustees of the settlement. (5) If— (a) exempt assets of a pension scheme are taken into account in ascertaining a person's interest as a participator in a company, and (b) if those assets were ignored, an amount in respect of a gain accruing to the company would not be apportioned to the person as a result of section 3, no amount in the respect of the gain is to be apportioned to the person as a result of that section. (6) For this purpose— (a) “assets of a pension scheme” means assets held for the purposes of a fund or scheme to which section 271(1)(c) or (1A) applies, and (b) those assets are “exempt” if, at the time when the gain accrues, a disposal of those assets would be exempt from tax as a result of either of those provisions. (7) This section applies for the purposes of section 3. (3C) (1) If— (a) an amount of tax is paid by a person as a result of section 3 in respect of a gain, and (b) there is a distribution of an amount in respect of the gain before the end of the relevant period, the amount of tax is applied so as to reduce or extinguish any liability of the person to tax in respect of the distribution. (2) For the purposes of subsection (1)— (a) the distribution is one made by way of dividend or distribution of capital or on the dissolution of the company, (b) the tax in respect of the distribution is income tax, corporation tax or capital gains tax, and (c) in determining the liability to tax of any individual in respect of any distribution for a tax year it is to be assumed that the distribution is the highest part of the individual's income for the year. (3) For the purposes of subsection (1) “the relevant period” means the period of 3 years from the end of whichever of the following periods is earlier— (a) the period of account of the company in which the gain accrued, and (b) the period of 12 months beginning with the date on which the gain accrued. (4) The amount of tax paid by a person as a result of section 3 is allowable as a deduction in calculating a chargeable gain accruing on the disposal by the person of any asset representing the person's interest as a participator in the company. (5) An amount of tax— (a) is not to be used more than once under this section (whether to reduce or extinguish a liability or as a deduction or a combination of those things), and (b) is not to be applied if it is reimbursed by the company. (3D) (1) This section applies if, as a result of section 3, an amount in respect of a gain accruing to a company in a tax year is apportioned to an individual who is not domiciled in the United Kingdom in that year. (2) The apportioned amount is regarded for the purposes of paragraph 1 of Schedule 1 as accruing on a disposal of a foreign asset if the asset disposed of by the company is a foreign asset (but not otherwise). (3) For the purposes of Chapter A1 of Part 14 of ITA 2007 (remittance basis)— (a) treat any consideration obtained by the company on the disposal of the asset as deriving from the apportioned amount, and (b) if that consideration is less than the market value of the asset, treat the asset as deriving from the apportioned amount. (4) The apportioned amount may not be reduced or extinguished by a loss under section 3 if— (a) the apportioned amount is regarded for the purposes of paragraph 1 of Schedule 1 as accruing on a disposal of a foreign asset, (b) the remittance basis applies to the individual for the tax year in question, and (c) any of the apportioned amount is remitted to the United Kingdom in a subsequent tax year. (5) Paragraph 5 of Schedule 1 applies for the purposes of this section as it applies for the purposes of that Schedule. (3E) (1) This section applies if— (a) an individual is temporarily non-resident, and (b) a gain or loss accrues to a company in a tax year falling wholly or partly in the temporary period of non-residence. (2) So much of the gain as would, as a result of section 3, have been treated as accruing to the individual in the tax year if the residence assumption were made is to be treated as accruing to the individual in the period of return. (3) But if— (a) the remittance basis applies to the individual for the tax year that comprises or includes the period of return, and (b) any part of the gain has not been remitted to the United Kingdom before the period of the return, subsection (2) has effect subject to the further application of Schedule 1 (as read with section 3D) in relation to that part of the gain. (4) Paragraph 5 of Schedule 1 applies for the purposes of subsection (3) as it applies for the purposes of that Schedule. (5) So much of the loss accruing in the tax year as would, in accordance with section 3(9), have reduced or extinguished a gain treated as accruing to the individual in that year as a result of section 3 if the residence assumption were made is to be treated as accruing to the individual in the period of return. (6) For the purposes of this section the “residence assumption” is— (a) that the individual was resident in the United Kingdom for the tax year in which the gain or loss accrued to the company, and (b) that the tax year was not a split year as respects the individual. (7) Nothing in any double taxation arrangements prevents a charge to capital gains tax arising as a result of this section. (8) For the purposes of this section each of the following expressions has the meaning given by Part 4 of Schedule 45 to the Finance Act 2013 (statutory residence test: anti-avoidance)— - “the period of return” - “temporarily non-resident” - “the temporary period of non-residence”. (3F) (1) This section applies, for the purposes of section 3, certain provisions of this Act (modified as mentioned below) in relation to non-resident companies which are members of a non-resident group of companies. (2) The applied provisions are— (a) section 41(8), (b) section 171 but as if subsections (1)(b) and (1A) were omitted, (c) section 173 but as if “to which this section applies” in subsections (1)(a) and (2)(a) were omitted, as if “such” in subsections (1)(c) and (2)(c) were omitted and as if subsection (3) were omitted, (d) section 174(4) but as if “at a time when both were members of the group” were substituted for “ in a transfer to which section 171(1) applied ”, (e) section 175(1) but as if “to which this section applies” were omitted, and (f) section 179 but as if subsections (1)(b) and (1A) were omitted, as if for any reference to a group of companies there were substituted a reference to a non-resident group of companies and as if for any reference to a company there were substituted a reference to a non-resident company. (3) In this section— - “non-resident company” means a company which is not resident in the United Kingdom, - “non-resident group of companies”— 1. in the case of a group none of whose members are resident in the United Kingdom, means that group, and 2. in the case of a group some of whose members are not resident in the United Kingdom, means the members which are not resident in the United Kingdom, and - “group” is to be read in accordance with section 170. (3G) (1) If tax payable by a person (“P”) as a result of section 3 is paid by— (a) the company (“C”) to which the gain accrues, or (b) a company by reference to which P is regarded as an indirect participator in C, the amount paid is not a payment to P for tax purposes. (2) The reference here to tax purposes is to the purposes of income tax, capital gains tax or corporation tax. (3) For the purposes of section 3 the amount of a gain or loss accruing to a company is calculated as if the company were a company resident in the United Kingdom chargeable to corporation tax on the gain.

3

Omit sections 16ZB to 16ZD (losses of non-UK domiciled individuals).

4

After section 36 insert—

(36A) Schedule 4AA makes provision for the re-basing of assets where— (a) the assets are held on 5 April 2019, (b) there is a disposal after that date, and (c) the disposal is a direct or indirect disposal of UK land (within the meaning of that Schedule).

5

Omit Chapter 5 of Part 2 (computation of gains and losses: relevant high value disposals).

6

Omit Chapter 6 of Part 2 (computation of gains and losses: non-resident CGT disposals).

7

Omit Chapter 7 of Part 2 (computation of gains and losses: disposals of residential property interests).

8

After section 103DA insert—

(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.

9

After section 271 insert—

(271ZA) (1) This section applies for the purposes of capital gains tax if section 833 of ITA 2007 (visiting forces and staff of designated allied headquarters) applies to an individual throughout a period. (2) The period is not a period of residence in the United Kingdom. (3) The period does not create a change of the individual's residence or domicile. (271ZB) (1) An individual who is entitled to immunity from income tax as a result of section 841 of ITA 2007 (official agents of Commonwealth countries or Republic of Ireland etc) is entitled to the same immunity from capital gains tax as that to which a member of the staff of a mission is entitled under the Diplomatic Privileges Act 1964. (2) The reference here to a member of the staff of a mission is to be read in accordance with the Diplomatic Privileges Act 1964.

10

Omit Schedule B1 (disposals of UK residential property interests).

11

Omit Schedule BA1 (disposals of non-UK residential property interests).

12

Omit Schedule C1 (section 14F: meaning of “closely-held company” and “widely-marketed scheme”).

13

For Schedule 1 substitute—

SCHEDULE 1 (1) (1) This paragraph applies in the case of an individual to whom the remittance basis applies 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. (2) (1) This paragraph applies if— (a) gains are treated as accruing to an individual in a tax year as a result of paragraph 1, (b) the tax year is later than the one (“the actual year of accrual”) in which those gains actually accrued to the individual, and (c) an election under section 16ZA (election for foreign losses to be allowable losses) has effect for both the tax year and the actual year of accrual. (2) No allowable losses may be deducted under section 1 from the gains. (3) This prohibition— (a) applies regardless of whether or not the allowable losses accrue on disposals of foreign assets, but (b) does not prevent the prior application of paragraph 3(3) in relation to the gains (which contains a rule for reducing the amount of the gains by reference to losses). (3) (1) This paragraph applies in the case of an individual for a tax year if— (a) the remittance basis applies to the individual for the tax year, and (b) an election under section 16ZA has effect for the tax year. (2) Allowable losses accruing to the individual must be matched to chargeable gains accruing to the individual in accordance with paragraph 4. (3) If allowable losses are matched to chargeable gains accruing on disposals of foreign assets— (a) which actually accrue in the tax year, but (b) which are, as a result of paragraph 1, treated as not accruing in the tax year, the amount of those gains is reduced by the matched amount (and the allowable losses are reduced accordingly). (4) So far as allowable losses are matched to other chargeable gains, they are deducted from chargeable gains accruing to the individual in the tax year. (5) This is subject to— (a) paragraph 2 (no use of allowable losses against foreign gains remitted in later year), and (b) section 1E(4) (prohibition of deduction of losses from gains treated as accruing under section 87, 87K, 87L or 89(2)). (4) (1) This paragraph explains how, for the purposes of paragraph 3, allowable losses are matched to chargeable gains in the case of an individual to whom that paragraph applies for a tax year. (2) The losses are matched to the gains in the following order— - first, gains actually accruing to the individual in the tax year on the disposal of foreign assets so far as they are remitted to the United Kingdom in the tax year; - second, gains actually accruing to the individual in the tax year on the disposal of foreign assets so far as they are not remitted to the United Kingdom in the tax year; - third, any other gains accruing to the individual in the tax year. (3) If the tax year is a split year, the matching under the first and second steps is to be done by reference to the extent to which the gains are, or are not, remitted in the UK part of the year. (4) If there are losses to be matched to gains under the second step but the losses are insufficient to eliminate the gains— (a) the losses are to be matched against gains accruing on the most recent day first (and then the next most recent day and so on until none of the losses remain), and (b) if losses cannot be matched fully against gains accruing on a particular day, the appropriate portion of the losses is matched against each of the gains. (5) “The appropriate portion” means the amount of each gain accruing on the day divided by the total amount of all of the gains accruing on the day. (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.

14

After Schedule 1 insert—

SCHEDULE 1A (1) This Schedule makes provision, for the purposes of section 1A(3)(c) or 2B(4)(b), 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). (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). (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). (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. (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. (7) For the purposes of this Part of this Schedule “interest in UK land” has the meaning given by section 1C. (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). (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). (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. (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— 1. relief or increased relief from tax, 2. repayment or increased repayment of tax, 3. avoidance or reduction of a charge to tax or an assessment to tax, 4. avoidance of a possible assessment to tax, 5. deferral of a payment of tax or advancement of a repayment of tax, and 6. avoidance 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).

15

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

16

After Schedule 1B insert—

SCHEDULE 1C (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 who is resident and domiciled in the United Kingdom for the year. (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. (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). (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. (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.

17

After Schedule 4 insert—

SCHEDULE 4AA (1) (1) Part 2, 3 or 4 of this Schedule applies on the first occasion on which a person disposes of an asset that the person held on 5 April 2019 where— (a) the disposal is either a direct or indirect disposal of UK land, and (b) the disposal is made by a non-resident or a UK resident in the overseas part of a tax year. (2) See also paragraph 16 (non-UK resident company holding UK land becoming resident in UK after 5 April 2019). (3) For the purposes of this Schedule— (a) a disposal is a “direct disposal of UK land” if it is a disposal of an interest in UK land, and (b) a disposal by a person is an “indirect disposal of UK land” if it is a disposal of an asset (other than an interest in UK land) deriving at least 75% of its value from UK land where the person has a substantial indirect interest in that land. (4) For the purposes of this paragraph, the disposal is made by a non-resident or a UK resident in the overseas part of a tax year if it is— (a) a disposal on which a gain accrues that falls to be dealt with by section 1A(3) because the asset disposed of is within paragraph (b) or (c) of that subsection, (b) a disposal on which a gain accrues that falls to be dealt with by section 1A(1) in accordance with section 1G(2) because the asset disposed of is within section 1A(3)(b) or (c), (c) a disposal on which a gain accrues that falls to be dealt with by section 2B(4), or (d) a disposal of an asset on which a gain does not accrue but which, had a gain accrued, would fall to be dealt with as mentioned in any of the preceding paragraphs of this sub-paragraph. (2) (1) This Part of this Schedule applies to— (a) all indirect disposals of UK land, (b) direct disposals of UK land that were not fully residential before 6 April 2019, and (c) direct disposals of UK land by persons who were not chargeable before 6 April 2019. (2) For the purposes of this paragraph a direct disposal of UK land made by a person was “not fully residential before 6 April 2019” if in the period— (a) beginning with the day on which the person acquired the interest in land being disposed of or, if later, 6 April 2015, and (b) ending with 5 April 2019, there was no day on which the land to which the disposal relates consisted of or included a dwelling. (3) If the disposal is of an interest in land subsisting under a contract for the acquisition of land that, at any time before 6 April 2019, consisted of or included a building to be constructed or adapted for use as a dwelling, the disposal is taken to be fully residential before that date. (4) For the purposes of this paragraph, a disposal is made by a person who was not chargeable before 6 April 2019 if, immediately before that date, the person was— (a) a company which was not a closely-held company (see sub-paragraph (5)), (b) a widely-marketed scheme (see sub-paragraph (6)), or (c) a company carrying on life assurance business (as defined in section 56 of the Finance Act 2012) where the interest in UK land was, immediately before that date, held for the purpose of providing benefits to policyholders in the course of that business. (5) The question as to whether a company is “a closely-held company” is determined in accordance with Part 1 of Schedule C1; but if— (a) the company is a divided company within the meaning of section 14G, and (b) the company would not otherwise be regarded as a closely-held company, the company is to be so regarded if the conditions in subsection (3) of that section are met. (6) A person is a “widely-marketed scheme” if— (a) the person is a scheme within the meaning of section 14F, and (b) condition A or B in that section is met, reading the reference in subsection (8)(a) of that section to the non-resident CGT disposal as a reference to the disposal mentioned in paragraph 1(1). (7) In determining for the purposes of this paragraph whether or not— (a) a person is a closely-held company, or (b) a person is a widely-marketed scheme, arrangements are to be ignored if the main purpose of, or one of the main purposes of, them is to secure a tax advantage as a result of the person not being a closely-held company or the person being a widely-marketed scheme. (8) In this paragraph— (a) “arrangements” and “tax advantage” have the same meaning as in section 16A, and (b) any reference to section 14F, 14G or Schedule C1 are to those provisions as they had effect on 5 April 2019 (before their repeal by Schedule 1 to the Finance Act 2019). (3) (1) In calculating the gain or loss accruing on the disposal it is be assumed that the asset was on 5 April 2019 sold by the person, and immediately reacquired by the person, at its market value on that date. (2) This paragraph has effect subject to any election made by the person under paragraph 4 (retrospective basis of calculation). (4) (1) The person may make an election under this paragraph for the assumption that the asset is sold and reacquired as mentioned in paragraph 3 not to apply. (2) If, in the case of an indirect disposal of UK land— (a) a person makes an election under this paragraph, and (b) a loss accrues on the disposal, the loss is not an allowable loss. (5) (1) This paragraph applies if— (a) a person makes an election under paragraph 4 in respect of a disposal on which a gain accrues, and (b) it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain. (2) Paragraph 2 of Schedule 1B has effect as if— (a) sub-paragraphs (5) and (6) of that paragraph were omitted, and (b) in that paragraph, “the applicable period” had the definition given by the next sub-paragraph. (3) “The applicable period” means the period— (a) beginning with the day on which the person acquired the interest in land being disposed of or, if later, 31 March 1982, and (b) ending with the day before the day on which the disposal is made. (6) (1) This Part of this Schedule applies to any direct disposal of UK land if— (a) the person held the interest in UK land being disposed of throughout the period beginning with 6 April 2015 and ending with the disposal, and (b) the disposal was fully residential before 6 April 2019. (2) For this purpose a direct disposal of UK land made by a person is “fully residential before 6 April 2019” if in the period— (a) beginning with 6 April 2015, and (b) ending with 5 April 2019, every day on which the land to which the disposal relates consisted of a dwelling. (3) If the disposal is of an interest in land subsisting under a contract for the acquisition of land that, at any time in that period, did not consist of a building to be constructed or adapted for use as a dwelling, the disposal is taken to be not fully residential before 6 April 2019. (4) This Part of this Schedule does not apply to a direct disposal of UK land made by a person who was not chargeable before 6 April 2019, as determined for the purposes of paragraph 2. (7) (1) In calculating the gain or loss accruing on the disposal it is be assumed that the asset was on 5 April 2015 sold by the person, and immediately reacquired by the person, at its market value on that date. (2) This paragraph has effect subject to any election made by the person under either— (a) paragraph 8 (retrospective basis of calculation), or (b) paragraph 9 (straight-line time apportionment), (and an election may be made under only one of those paragraphs). (8) The person may make an election under this paragraph for the assumption that the asset is sold and reacquired as mentioned in paragraph 7 not to apply. (9) (1) The person may make an election under this paragraph— (a) for the assumption that the asset is sold and reacquired as mentioned in paragraph 7 not to apply, and (b) for the gain or loss accruing on the disposal to be apportioned so that only the post-5 April 2015 proportion of it is treated as accruing on the disposal. (2) The “post-5 April 2015 proportion” is the proportion that the days in the post-5 April 2015 period bear to the days in the ownership period. (3) For this purpose— - “the post-5 April 2015 period” means the day beginning with 6 April 2015 and ending with the day on which the disposal is made, and - “the ownership period” means the period beginning with the day on which the person acquired the interest disposed of or, if later, 31 March 1982 and ending with the day on which the disposal is made. (10) (1) This paragraph applies if— (a) a person makes an election under paragraph 8 in respect of a disposal on which a gain accrues, and (b) it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain. (2) Paragraph 2 of Schedule 1B has effect as if— (a) sub-paragraphs (5) and (6) of that paragraph were omitted, and (b) in that paragraph, “the applicable period” had the definition given by the next sub-paragraph. (3) “The applicable period” means the period— (a) beginning with the day on which the person acquired the interest in land being disposed of or, if later, 31 March 1982, and (b) ending with the day before the day on which the disposal is made. (11) (1) This paragraph applies if— (a) a person makes an election under paragraph 9 in respect of a disposal on which a gain accrues, and (b) it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain. (2) Paragraph 2 of Schedule 1B has effect as if— (a) sub-paragraphs (5) and (6) of that paragraph were omitted, and (b) in that paragraph, “the applicable period” had the definition given by the next sub-paragraph. (3) “The applicable period” means the period— (a) beginning with 6 April 2015, and (b) ending with the day before the day on which the disposal is made. (12) (1) This Part of this Schedule applies to any direct disposal of UK land if— (a) neither Part 2 nor Part 3 of this Schedule applies to the disposal, and (b) the interest in UK land being disposed of was not a post-April 2015 asset that was fully residential before 6 April 2019. (2) For this purpose— (a) the interest in UK land being disposed of is a “post-April 2015 asset” if it was acquired by the person after 5 April 2015, and (b) the asset “was fully residential before 6 April 2019” if, in the period beginning with the day on which it was acquired and ending with 5 April 2019, every day on which the land to which the disposal relates consisted of a dwelling. (3) If the disposal is of an interest in land subsisting under a contract for the acquisition of land that, at any time in that period, did not consist of a building to be constructed or adapted for use as a dwelling, the disposal is taken to be not fully residential before 6 April 2019. (13) (1) In calculating the gain or loss accruing on the disposal (“the actual disposal”) it is be assumed that— (a) the asset was on 5 April 2015 sold by the person, and immediately reacquired by the person, at its market value on that date (but see sub-paragraph (3)), and (b) in addition, the asset was on 5 April 2019 sold by the person, and immediately reacquired by the person, at its market value on that date. (2) In the case of the assumed sale on 5 April 2019, the gain or loss accruing on that sale is treated as accruing on the actual disposal (in addition to the gain or loss that actually accrues on the actual disposal). (3) If the asset was acquired by the person after 5 April 2015, the assumption that it is sold, and immediately reacquired, on 5 April 2015 is not to apply. (4) This paragraph has effect subject to any election made by the person under paragraph 14 (retrospective basis of calculation). (14) The person may make an election under this paragraph for the assumptions that the asset is sold and reacquired as mentioned in paragraph 13 not to apply. (15) (1) This paragraph applies if— (a) a person makes an election under paragraph 14 in respect of a disposal on which a gain accrues, and (b) it is necessary to determine, in accordance with Schedule 1B, how much of the gain is a residential property gain. (2) Paragraph 2 of Schedule 1B has effect as if— (a) sub-paragraphs (5) and (6) of that paragraph were omitted, and (b) in that paragraph, “the applicable period” had the definition given by the next sub-paragraph. (3) “The applicable period” means the period— (a) beginning with the day on which the person acquired the interest in land being disposed of or, if later, 31 March 1982, and (b) ending with the day before the day on which the disposal is made. (16) (1) This paragraph applies in any case where— (a) a company becomes resident in the United Kingdom after 5 April 2019, (b) the company makes a direct or indirect disposal of UK land after that date, and (c) (ignoring this paragraph) Part 2, 3 or 4 of this Schedule would have applied to the disposal but for the fact that it is made at a time when the company is resident in the United Kingdom. (2) In that case, Part 2, 3 or 4 of this Schedule applies in relation to the disposal (regardless of paragraph 1(1)(b)). (17) (1) This paragraph applies in any case where— (a) the trustees of a settlement cease to be resident in the United Kingdom after 5 April 2019, (b) after that date the trustees dispose of an asset held by them on that date, and (c) the disposal is a direct or indirect disposal of UK land. (2) Nothing in Part 2, 3 or 4 of this Schedule applies to the disposal. (3) The asset that is disposed of is excepted from the application of section 80(2) (deemed disposal of assets on trustees ceasing to be resident in UK). (18) (1) This paragraph applies in any case where— (a) a company ceases to be resident in the United Kingdom after 5 April 2019, (b) after that date the company disposes of an asset held by it on that date, and (c) the disposal is a direct or indirect disposal of UK land. (2) Nothing in Part 2, 3 or 4 of this Schedule applies to the disposal. (3) The asset that is disposed of is excepted from the application of section 185(2) and (3) (deemed disposal of assets on company ceasing to be resident in UK). (19) (1) This paragraph applies if, in calculating a gain or loss accruing to a person in a case where paragraph 3, 7 or 13 is applicable, it is necessary to make a wasting asset determination in relation to the asset disposed of. (2) The assumption that the asset was acquired on a date mentioned in paragraph 3, 7 or 13 (as the case may be) is to be ignored in making that determination. (3) In this paragraph “a wasting asset determination” means a determination whether or not an asset is a wasting asset, as defined for the purposes of Chapter 2 of Part 2 of this Act. (20) (1) This paragraph applies if, in calculating a gain or loss accruing to a person in a case where paragraph 3, 7 or 13 is applicable, it is to be assumed that the asset disposed of was acquired on a particular date for a consideration equal to its market value on that date. (2) For the purposes of that calculation— (a) section 41 (restriction of losses by reference to capital allowances and renewals allowances), and (b) section 47 (wasting assets qualifying for capital allowances), are to apply in relation to any allowance made in respect of the expenditure actually incurred in acquiring or providing the asset as if it were made in respect of the expenditure assumed to have been incurred. (3) In this paragraph “allowance” means any capital allowance or renewals allowance. (21) (1) An election under any provision of this Schedule must (regardless of section 42(2) of the Management Act) be made by being included in a relevant return relating to the disposal. (2) For the purposes of this paragraph a “relevant return” means— (a) an ordinary tax return, or (b) a return under Schedule 2 to the Finance Act 2019. (3) An election under any provision of this Schedule which is made by being included in a return under Schedule 2 to the Finance Act 2019 may be subsequently revoked by provision included in an ordinary tax return which is delivered on or before the filing date for the ordinary tax return. (4) Subject to that, an election under any provision of this Schedule is irrevocable. (5) All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election under any provision of this Schedule. (6) For the purposes of this paragraph, in the case of a person other than a company— - “ordinary tax return” means a return under section 8 or 8A of the Management Act, and - “the filing date”, in relation to that return, has the meaning given by section 9A(6) of that Act. (7) For the purposes of this paragraph, in the case of a company— - “ordinary tax return” means a company tax return under Schedule 18 to the Finance Act 1998, and - “the filing date”, in relation to that return, has the meaning given by paragraph 14 of that Schedule. (8) For the purposes of this paragraph— (a) the reference to an election being included in a relevant return includes its being included as a result of an amendment of the return, and (b) the reference to the revocation of an election being included in an ordinary tax return includes its being included as a result of an amendment of the return. (22) (1) In this Schedule— (a) any reference to an interest in UK land is to be read in accordance with section 1C (and any reference to land is to be read in accordance with that section), and (b) any reference to an asset (other than an interest in UK land) deriving at least 75% of its value from UK land where a person has a substantial indirect interest in that land is to be read in accordance with Schedule 1A. (2) If an interest in UK land disposed of by a person results from interests in UK land acquired by the person at different times, the person is regarded for the purposes of this Schedule as having acquired the interest disposed of at the time of the first acquisition. (3) For the purposes of this Schedule, whether a building is a dwelling is determined in accordance with Schedule 1B.

18

Omit Schedule 4ZZA (relevant high value disposals: gains and losses).

19

Omit Schedule 4ZZB (non-resident CGT disposals: gains and losses).

20

Omit Schedule 4ZZC (disposals of residential property interests: gains and losses).

21

After Schedule 5A insert—