Capital Gains Tax Act 1979 (repealed 6.3.1992)

PART I — General

Capital gains tax and corporation tax

Taxation of capital gains

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

• (2) In the circumstances prescribed by the provisions of Part XI of the Taxes Act (taxation of companies and certain other bodies and associations) the tax shall be chargeable in accordance with those provisions, and all the provisions of this Act have effect subject to those provisions.

• (3) Subject to the said provisions, capital gains tax shall be charged for all years of assessment in accordance with the following provisions of this Act.

Capital gains tax

Persons chargeable

2

• (1) Subject to any exceptions provided by this Act, a person shall be chargeable to capital gains tax in respect of chargeable gains accruing to him in a year of assessment during any part of which he is resident in the United Kingdom, or during which he is ordinarily resident in the United Kingdom.

• (2) This section is without prejudice to the provisions of section 12 below (non-resident with UK branch or agency), and of section 38 of the Finance Act 1973 (territorial sea of the United Kingdom).

Rate of tax

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The rate of capital gains tax shall be 30 per cent.

Gains chargeable to tax

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

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

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

• (2) In the case of a woman who in a year of assessment is a married woman living with her husband any allowable loss which, under subsection (1) above, would be deductible from the chargeable gains accruing in that year of assessment to the one but for an insufficiency of chargeable gains shall, for the purposes of that subsection, be deductible from chargeable gains accruing in that year of assessment to the other:

Provided that this subsection shall not apply in relation to losses accruing in a year of assessment to either if, before 6th July in the year next following that year of assessment, an application is made by the man or the wife to the inspector in such form and manner as the Board may prescribe.

Relief for gains less than £9,500

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• (1) An individual shall not be chargeable to capital gains tax for a year of assessment if his taxable amount for that year does not exceed £1,000.

• (2) If an individual's taxable amount for a year of assessment exceeds £1,000 but does not exceed £5,000, the amount of capital gains tax to which he is chargeable for that year shall be 15 per cent. of the excess over £1,000.

• (3) If an individual's taxable amount for a year of assessment exceeds £5,000, the amount of capital gains tax to which he is chargeable for that year shall not exceed £600 plus one-half of the excess over £5,000.

• (4) For the purposes of this section an individual's taxable amount for a year of assessment is the amount on which he is chargeable under section 4(1) above for that year but—

• (a) where the amount of chargeable gains less allowable losses accruing to an individual in any year of assessment does not exceed £1,000, no deduction from that amount shall be made for that year in respect of allowable losses carried forward from a previous year or carried back from a subsequent year in which the individual dies, and

• (b) where the amount of chargeable gains less allowable losses accruing to an individual in any year of assessment exceeds £1,000, the deduction from that amount for that year in respect of allowable losses carried forward from a previous year or carried back from a subsequent year in which the individual dies shall not be greater than the excess.

• (5) Where in a year of assessment—

• (a) the amount of chargeable gains accruing to an individual does not exceed £1,000, and

• (b) the aggregate amount or value of the consideration for all the disposals of assets made by him (other than disposals gains accruing on which are not chargeable gains) does not exceed £5,000,

a statement to the effect of paragraphs (a) and (b) above shall, unless the inspector otherwise requires, be sufficient compliance with any notice under section 8 of the Taxes Management Act 1970 requiring the individual to make a return of the chargeable gains accruing to him in that year.

• (6) Schedule 1 to this Act shall have effect as respects the application of this section to husbands and wives, personal representatives and trustees.

Small gifts

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A gain accruing to an individual on a disposal by way of gift of an asset the market value of which does not exceed £100 shall not be a chargeable gain, but this section shall not apply to gifts made by the same individual in the same year of assessment the total value of which exceeds £100.

Time for payment of tax

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

Postponement of payment of tax

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• (1) Where the whole or part of any assets falling within subsection (3) below—

• (a) is disposed of by way of gift, or

• (b) is under section 54(1) or 55(1) below (settled property) deemed to be disposed of,

the capital gains tax chargeable on a gain accruing on the disposal may, at the option of the person liable to pay it, be paid by eight equal yearly instalments or sixteen half-yearly instalments.

• (2) Payment of capital gains tax in accordance with subsection (1) above shall be subject to the payment of interest under Part IX (except sections 87 and 88) of the Taxes Management Act 1970 except as provided by section 9 below.

• (3) The assets referred to in subsection (1) above are—

• (a) land or an estate or interest in land,

• (b) any shares or securities of a company which, immediately before the disposal, gave control of the company to the person by whom the disposal was made or deemed to be made,

• (c) any shares or securities of a company not falling under paragraph (b) above and not quoted on a recognised stock exchange in the United Kingdom or elsewhere, and

• (d) any assets used exclusively for the purposes of a trade, profession or vocation which, immediately before the disposal, was carried on (whether alone or in partnership) by the person by whom the disposal was made or deemed to be made.

• (4) Where tax is payable by instalments by virtue of this section the first instalment shall be due at the expiration of twelve months from the time of the disposal, and subject to section 9 below, the interest on the unpaid portion of the tax shall be added to each instalment and paid accordingly; but the tax for the time being unpaid, with interest to the date of payment, may be paid at any time, and shall become due and payable forthwith if—

• (a) the disposal was by way of gift to a person connected with the donor, or was deemed to be made under section 54(1) or 55(1) below, and

• (b) the assets are disposed of for valuable consideration under a subsequent disposal (whether or not the subsequent disposal is made by the person who acquired them under the first disposal).

Postponement of payment of tax: further provisions

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• (1) Subject to the following provisions of this section, where capital gains tax is payable—

• (a) by instalments under section 8 above, and

• (b) in respect of the disposal of assets falling within paragraph (b), (c) or (d) of subsection (3) of that section,

the tax shall, for the purpose of any interest to be added to each instalment, be treated as carrying interest from the date at which the instalment is payable.

• (2) Subsection (1) above does not apply to tax payable in respect of the disposal of shares or securities of a company falling within paragraph (a) of subsection (3) below unless it also falls within paragraph (b) or (c) of that subsection.

• (3) The companies referred to in subsection (2) above are—

• (a) any company whose business consists wholly or mainly of one or more of the following, that is to say, dealing in shares or securities, land or buildings, or making or holding investments,

• (b) any company whose business consists wholly or mainly in being a holding company (within the meaning of section 154 of the Companies Act 1948) of one or more companies not falling within paragraph (a) above and

• (c) any company whose business is that of a jobber (as defined in section 477 of the Taxes Act) or discount house and is carried on in the United Kingdom.

• (4) Subsection (1) above applies only to the extent to which—

• (a) the market value of the assets in respect of the disposal of which the tax concerned is payable, plus

• (b) the market value of any assets which the same person has or is deemed to have previously disposed of and in respect of the disposal of which the tax also fell within that subsection,

does not exceed £250,000.

The foreign element

Double taxation relief

10

• (1) For the purpose of giving relief from double taxation in relation to capital gains tax and tax on chargeable gains charged under the law of any country outside the United Kingdom, in Chapters I and II of Part XVIII of the Taxes Act, as they apply for the purposes of income tax, for references to income there shall be substituted references to capital gains and for references to income tax there shall be substituted references to capital gains tax meaning, as the context may require, tax charged under the law of the United Kingdom or tax charged under the law of a country outside the United Kingdom.

• (2) Any arrangements set out in an order made under section 347 of the Income Tax Act 1952 before 5th August 1965 (the date of the passing of the Finance Act 1965) shall so far as they provide (in whatever terms) for relief from tax chargeable in the United Kingdom on capital gains have effect in relation to capital gains tax.

• (3) So far as by virtue of this section capital gains tax charged under the law of a country outside the United Kingdom may be brought into account under the said Chapters I and II as applied by this section, that tax, whether relief is given by virtue of this section in respect of it or not, shall not be taken into account for the purposes of those Chapters as they apply apart from this section.

• (4) Section 518 of the Taxes Act (disclosure of information for purposes of double taxation) shall apply in relation to capital gains tax as it applies in relation to income tax.

Allowance for foreign tax

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Subject to section 10 above, the tax chargeable under the law of any country outside the United Kingdom on the disposal of an asset which is borne by the person making the disposal shall be allowable as a deduction in the computation under Chapter II of Part II of this Act.

Non-resident with United Kingdom branch or agency

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

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

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

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

• (3) In this Act, unless the context otherwise requires, “branch or agency” means any factorship, agency, receivership, branch or management, but does not include any person within the exemptions in section 82 of the Taxes Management Act 1970 (general agents and brokers).

Foreign assets: delayed remittances

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

• (a) chargeable gains accrue from the disposal of assets situated outside the United Kingdom, and

• (b) the person charged or chargeable makes a claim and shows that the conditions set out in subsection (3) below are, so far as applicable, satisfied as respects those gains (“the qualifying gains ”).

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

• (a) the amount of the qualifying gains shall be deducted from the amounts on which the claimant is assessed to capital gains tax for the year in which the qualifying gains accrued to the claimant, but

• (b) the amount so deducted shall be assessed to capital gains tax on the claimant (or his personal representatives) as if it were an amount of chargeable gains accruing in the year of assessment in which the conditions set out in subsection (3) below cease to be satisfied.

• (3) The said conditions are—

• (a) that the claimant was unable to transfer the qualifying gains to the United Kingdom, and

• (b) that that inability was due to the laws of the territory where the income arose, or to the executive action of its government, or to the impossibility of obtaining foreign currency in that territory, and

• (c) that the inability was not due to any want of reasonable endeavours on the part of the claimant.

• (4) Where under an agreement entered into under arrangements made by the Secretary of State in pursuance of section 1 of the Overseas Investment and Export Guarantees Act 1972 or section 11 of the Export Guarantees and Overseas Investment Act 1978 any payment is made by the Exports Credits Guarantee Department in respect of any gains which cannot be transferred to the United Kingdom, then, to the extent of the payment, the gains shall be treated as gains with respect to which the conditions mentioned in subsection (3) above are not satisfied (and accordingly cannot cease to be satisfied).

• (5) No claim under this section shall be made in respect of any chargeable gain more than six years after the end of the year of assessment in which that gain accrues.

• (6) The personal representatives of a deceased person may make any claim which he might have made under this section if he had not died.

Foreign assets of person with foreign domicile

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

• (2) For the purposes of this section there shall be treated as received in the United Kingdom in respect of any gain all amounts paid, used or enjoyed in or in any manner or form transmitted or brought to the United Kingdom, and subsections (4) to (7) of section 122 of the Taxes Act (under which income applied outside the United Kingdom in payment of debts is, in certain cases, treated as received in the United Kingdom) shall apply as they would apply for the purposes of subsection (3) of the said section 122 if the gain were income arising from possessions out of the United Kingdom.

Non-resident company

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

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

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

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

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

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

• (5) This section shall not apply in relation to—

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

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

• (c) a chargeable gain accruing on the disposal of currency or of a debt within section 135(1) below (foreign currency bank accounts), where the currency or debt is or represents money in use for the purposes of a trade carried on by the company wholly outside the United Kingdom, or

• (d) to a chargeable gain in respect of which the company is chargeable to tax by virtue of section 246(2)(b) of the Taxes Act (gains corresponding to those charged under section 12 above).