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Taxation of Chargeable Gains Act 1992

Type Public General Act

Publication 1992-03-06

Last updated 2026-09-19

State In force

Department Statute Law Database

Source legislation.gov.uk

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An Act to consolidate certain enactments relating to the taxation of chargeable gains.

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Part 1 — Capital gains tax and corporation tax on chargeable gains

Chapter 1 — Capital gains tax

Charge to capital gains tax

Capital gains tax

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

(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.

Territorial scope of charge

Territorial scope

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—

(za) Schedule D1 (relief for new residents on foreign gains),

(a) Schedule 1 (foreign gains accruing to individuals to whom the remittance basis applied),

(b) section 1G (cases where the tax year is a split year),

(d) Chapter 3 (gains of non-UK resident close companies attributed to individuals), and

(e) sections 86, 87, ... 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

Non-UK residents: UK branch or agency

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

(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).

Non-UK residents: disposing of an “interest in UK land”

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,

(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—buildings and structures, andland under the sea or otherwise covered by water.

Non-UK residents: assets deriving 75% of value from UK land etc

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.

Deduction of allowable losses

Losses deductible only when within scope of tax etc

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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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 paragraph 5 of Schedule D1 (relief for new residents on foreign gains).

(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).

Allowable losses to be used in most beneficial way etc

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.

UK resident individuals with split tax years

Gains accruing to UK resident individuals in split years

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.

Rates of CGT

The main rates of CGT

1H

(1) This section makes provision about the rates at which capital gains tax is charged but has effect subject to—

(a) section 169N (business asset disposal relief: rate of 18%), and

(b) section 169VC (investors' relief: rate of 18%).

(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(3) Chargeable gains ... accruing in a tax year to an individual are charged to capital gains tax at a rate of 18% or 24%.

(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).

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

(6) ... 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 24%.

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

(8) ... Chargeable gains accruing in a tax year to the trustees of a settlement are charged to capital gains tax at a rate of 24%.

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income taxed at higher rates or gains exceeding unused basic rate band

1I

(A1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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 at the rate of 24%.

(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 24%.

(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 18% 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 at the rate of 24%.

(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 gains other than entrepreneur or investor gains.

(8) The effect of the allocation is that the gains to which the allocation is made are charged at the rate of 18%.

(9) Any gains to which no allocation is made are charged at the rate of 24%.

Section 1I: definitions and other supplementary provision

1J

(1) For the purposes of section 1I—

a “higher income tax rate” means—the higher rate or the default higher rate,the property higher rate,the savings higher rate, orthe 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

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 , the property higher rate, the savings 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.

Annual exempt amount

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 £3,000.

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

(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

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

(b) the individual makes a foreign gain claim, a foreign income claim or a foreign employment election for that tax 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.

Increasing annual exempt amount to reflect increases in CPI

1L

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

Temporary periods of non-residence

Temporary non-residents

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.

(1A) Subsection (1) does not apply to a gain that accrues to an individual who was temporarily non-resident in tax year 2025-26 or an earlier tax year under section 103KA(2) or (3) of TCGA 1992 (as it then had effect).

But see section 23M of ITTOIA 2005 which charges the amount of the gain to income tax 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

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.

Section 1M(1): assets acquired in temporary period of non-residence

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

(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.

Interpretation

Definitions used in Chapter

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).

Chapter 2 — Corporation tax on chargeable gains

Corporation tax on chargeable gains: the general scheme

Corporation tax on chargeable gains

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.

Company's total profits to include chargeable gains

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.

(3) Subsection (4) applies if—

(a) a company has two or more accounting periods that fall wholly within the same financial year,

(b) the company is chargeable to corporation tax for each of those accounting periods only because of a chargeable gain accruing to the company on the disposal of asset, and

(c) in the period (if any) between each of those accounting periods, the company is not within the charge to corporation tax.

(4) For the purposes of determining the amount of chargeable gains to be included in the company’s total profits for each of the accounting periods by reference to which this subsection applies, subsection (1) has effect as if after paragraph (a) (before the “and”) there were inserted—

(aa) so far as not otherwise deducted under this section, any allowable losses accruing to the company in another accounting period that falls wholly within the same financial year as the period mentioned in paragraph (a),

Territorial scope

Territorial scope of charge to corporation tax on chargeable gains

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 ...,

(b) accrue at a time when it has a UK permanent establishment (see section 2C), and

(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.

Non-UK resident company with UK permanent establishment

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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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.

Application of CGT principles etc

Application of CGT principles in calculating gains and losses

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,

(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.

References to income tax or Income Tax Acts in case of companies

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.

Interaction of capital gains tax and corporation 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.

Supplementary

Assets of a company vested in a liquidator

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.

Chapter 3 — Attribution of gains of non-UK resident close companies

Gains of non-UK resident companies not otherwise chargeable

Gains attributed to UK resident individuals etc

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.

Gains connected to avoidance or foreign activities etc

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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

(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

(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).

Participators and their interests

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.

Prevention of multiple charges

Prevention of double UK taxation

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.

Individuals who were non-UK domiciled and temporary non-residents

Individuals who were non-UK domiciled

3D

(1) This section applies if, as a result of section 3, an amount in respect of a gain accruing to a company in tax year 2024-25 or an earlier tax year was apportioned to an individual who was 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

(5) Paragraph 5 of Schedule 1 applies for the purposes of this section as it applies for the purposes of that Schedule.

Temporary non-residents

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”.

Application to groups

Non-resident groups of companies

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”—in the case of a group none of whose members are resident in the United Kingdom, means that group, andin 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.

Supplementary

Supplementary provisions

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.

Capital gains tax

Rates of capital gains tax

4

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

Section 4: special cases

4A

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

Deduction of losses etc in most beneficial way

4B

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

Rates, and use of unused basic rate band, in certain cases

4BA

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

Residential property gain or loss

4BB

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

Accumulation and discretionary settlements.

5

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

Other special cases.

6

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

Time for payment of tax.

7

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

Corporation tax

Company’s total profits to include chargeable gains.

8

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

Residence etc.

Residence, including temporary residence.

9

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

Non-resident with United Kingdom branch or agency.

10

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

Temporary non-residents.

10A

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

Section 10A: supplementary

10AA

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

Non-resident company with United Kingdom permanent establishment

10B

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

Visiting forces and official agents

11

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

Non-UK domiciled individuals to whom remittance basis applies

12

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

Attribution of gains to members of non-resident companies.

13

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

Section 13(5): interpretation

13A

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

Non-resident groups of companies.

14

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

Section 13: non-UK domiciled individuals

14A

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

CommentaryRef Ref="key-8f1b51e533ff9b07068f2c9150edcf5f"/>UK residential property: non-resident CGT

Meaning of “non-resident CGT disposal”

14B

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

Meaning of “disposal of a UK residential property interest”

14C

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

Persons chargeable to capital gains tax on NRCGT gains

14D

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

Further provision about use of NRCGT losses

14E

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

Persons not chargeable under section 14D if a claim is made

14F

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

Section 14F: divided companies

14G

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

Section 14F: arrangements for avoiding tax

14H

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

Part II — General Provisions relating to computation of gains and acquisitions and disposals of assets

Chapter I — Introductory

Computation of gains.

15

(1) The amount of the gains accruing on the disposal of assets shall be computed in accordance with this Part, subject to the other provisions of this Act.

(2) Every gain shall, except as otherwise expressly provided, be a chargeable gain.

Computation of losses.

16

(1) Subject to sections 261B, 261D and 263ZA and except as otherwise expressly provided, the amount of a loss accruing on a disposal of an asset shall be computed in the same way as the amount of a gain accruing on a disposal is computed.

(2) Except as otherwise expressly provided, all the provisions of this Act which distinguish gains which are chargeable gains from those which are not, or which make part of a gain a chargeable gain, and part not, shall apply also to distinguish losses which are allowable losses from those which are not, and to make part of a loss an allowable loss, and part not; and references in this Act to an allowable loss shall be construed accordingly.

(2A) A loss accruing to a person in a year of assessment shall not be an allowable loss for the purposes of this Act unless, in relation to that year, he gives a notice to an officer of the Board quantifying the amount of that loss; and sections 42 and 43 of the Management Act shall apply in relation to such a notice as if it were a claim for relief.

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

(3A) If the person is an individual and the year is a split year as respects that individual, subsection (3) also applies to a loss accruing to the individual in the overseas part of that year.

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

(4) A qualifying foreign loss accruing to an individual in a tax year is not an allowable loss if a foreign gain claim, a foreign income claim or a foreign employment election has effect in relation to the individual for that tax year.

(5) In subsection (4), “qualifying foreign loss” has the same meaning as in Schedule D1 (see paragraph 6 of that Schedule).

Losses: non-UK domiciled individuals

16ZA

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

Individual who has made election under section 16ZA: foreign chargeable gains remitted in tax year after tax year in which accrue

16ZB

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

Individual who has made election under section 16ZA and to whom remittance basis applies

16ZC

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

Section 16ZC: supplementary

16ZD

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

Restrictions on allowable losses

16A

(1) For the purposes of this Act, “allowable loss” does not include a loss accruing to a person if—

(a) it accrues to the person directly or indirectly in consequence of, or otherwise in connection with, any arrangements, and

(b) the main purpose, or one of the main purposes, of the arrangements is to secure a tax advantage.

(2) For the purposes of subsection (1)—

“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and

“tax advantage” means—relief or increased relief from tax,repayment or increased repayment of tax,the avoidance or reduction of a charge to tax or an assessment to tax, orthe avoidance of a possible assessment to tax,and for the purposes of this definition “tax” means capital gains tax, corporation tax or income tax.

(3) For the purposes of subsection (1) it does not matter—

(a) whether the loss accrues at a time when there are no chargeable gains from which it could otherwise have been deducted, or

(b) whether the tax advantage is secured for the person to whom the loss accrues or for any other person.

Disposals and acquisitions treated as made at market value.

17

(1) Subject to the provisions of this Act, a person’s acquisition or disposal of an asset shall for the purposes of this Act be deemed to be for a consideration equal to the market value of the asset—

(a) where he acquires or, as the case may be, disposes of the asset otherwise than by way of a bargain made at arm’s length, and in particular where he acquires or disposes of it by way of gift or on a transfer into settlement by a settlor or by way of distribution from a company in respect of shares in the company, or

(b) where he acquires or, as the case may be, disposes of the asset wholly or partly for a consideration that cannot be valued, or in connection with his own or another’s loss of office or employment or diminution of emoluments, or otherwise in consideration for or recognition of his or another’s services or past services in any office or employment or of any other service rendered or to be rendered by him or another.

(2) Subsection (1) shall not apply to the acquisition of an asset if—

(a) there is no corresponding disposal of it, and

(b) there is no consideration in money or money’s worth or the consideration is of an amount or value lower than the market value of the asset.

Transactions between connected persons.

18

(1) This section shall apply where a person acquires an asset and the person making the disposal is connected with him.

(2) Without prejudice to the generality of section 17(1) the person acquiring the asset and the person making the disposal shall be treated as parties to a transaction otherwise than by way of a bargain made at arm’s length.

(3) Subject to subsection (4) below, if on the disposal a loss accrues to the person making the disposal, it shall not be deductible except from a chargeable gain accruing to him on some other disposal of an asset to the person acquiring the asset mentioned in subsection (1) above, being a disposal made at a time when they are connected persons.

(4) Subsection (3) above shall not apply to a disposal by way of gift in settlement if the gift and the income from it is wholly or primarily applicable for educational, cultural or recreational purposes, and the persons benefiting from the application for those purposes are confined to members of an association of persons for whose benefit the gift was made, not being persons all or most of whom are connected persons.

(5) Where the asset mentioned in subsection (1) above is an option to enter into a sale or other transaction given by the person making the disposal a loss accruing to the person acquiring the asset shall not be an allowable loss unless it accrues on a disposal of the option at arm’s length to a person who is not connected with him.

(6) Subject to subsection (7) below, in a case where the asset mentioned in subsection (1) above is subject to any right or restriction enforceable by the person making the disposal, or by a person connected with him, then (where the amount of the consideration for the acquisition is, in accordance with subsection (2) above, deemed to be equal to the market value of the asset) that market value shall be—

(a) what its market value would be if not subject to the right or restriction, minus—

(b) the market value of the right or restriction or the amount by which its extinction would enhance the value of the asset to its owner, whichever is the less.

(7) If the right or restriction is of such a nature that its enforcement would or might effectively destroy or substantially impair the value of the asset without bringing any countervailing advantage either to the person making the disposal or a person connected with him or is an option or other right to acquire the asset or, in the case of incorporeal property, is a right to extinguish the asset in the hands of the person giving the consideration by forfeiture or merger or otherwise, the market value of the asset shall be determined, and the amount of the gain accruing on the disposal shall be computed, as if the right or restriction did not exist.

(8) Subsections (6) and (7) above shall not apply to a right of forfeiture or other right exercisable on breach of a covenant contained in a lease of land or other property, and shall not apply to any right or restriction under a mortgage or other charge.

(9) If deductible clogged losses have accrued to a company, the company may make a claim in respect of an accounting period for—

(a) an amount of the deductible clogged losses to be treated, for the purposes of section 2A(1)(a), as allowable losses accruing in the accounting period, and

(b) the same amount of allowable losses accruing to the company in the period to be treated, for the purposes of section 2A(1)(b), as allowable losses previously accruing to the company while it was within the charge to corporation tax.

(10) The amount in respect of which the claim is made may not exceed the total amount of any allowable losses accruing to the company in the accounting period for which the claim is made.

(11) In subsection (9), “deductible clogged losses” means losses which would, apart from Part 7ZA of CTA 2010, be deductible under subsection (3) from chargeable gains accruing to the company in an accounting period.

(12) A claim under subsection (9) must be made by being included in the company’s tax return for the accounting period for which the claim is made.

Deemed consideration in certain cases where assets disposed of in a series of transactions.

19

(1) For the purposes of this Act, in any case where—

(a) by way of 2 or more material transactions which are linked (a series of linked transactions), one person disposes of assets to another person with whom he is connected or to 2 or more other persons with each of whom he is connected, and

(b) the original market value of the assets disposed of by any of the transactions in the series, as determined under section 20, is less than the appropriate portion of the aggregate market value of the assets disposed of by all the transactions in the series, as so determined,

then, subject to subsection (2) below, the disposal effected by any linked transaction in the series in respect of which the condition in paragraph (b) above is fulfilled shall be deemed to be for a consideration equal to the appropriate portion referred to in that paragraph.

(2) Where the disposal effected by a material transaction is one to which section 58 applies, nothing in subsection (1) above shall affect the amount which, for the purposes of this Act, is the consideration for that disposal.

(3) Subject to subsection (5) below, any reference in this section to a material transaction is a reference to a transaction by way of gift or otherwise; and, for the purposes of this section, 2 or more material transactions are linked if they occur within the period of 6 years ending on the date of the last of them.

(4) This section shall apply or, as the case may be, shall again apply—

(a) when a second material transaction causes a series of linked transactions to come into being; and

(b) whenever, on the occurrence of a further material transaction, an existing series is extended by the inclusion of that transaction (whether or not an earlier transaction ceases to form part of the series);

and all such assessments and adjustments of assessments shall be made as may be necessary to give effect to this section on each such occasion.

(5) Where a member of a group of companies disposes of an asset to another member of the group in circumstances such that, by virtue of section 171, both companies are treated, so far as relates to corporation tax on chargeable gains, as if the consideration for the disposal were of such an amount as would secure that neither a gain nor a loss would accrue, the transaction by which that disposal is effected is not a material transaction; and a disposal in these circumstances is in this section referred to as an “inter-group transfer”.

(6) In any case where—

(a) a company (“company A”) disposes of an asset by way of a material transaction, and

(b) company A acquired the asset after 19th March 1985 by way of an inter-group transfer, and

(c) the disposal by company A is to a person who is connected with another company (“company B”) which at some time after 19th March 1985 disposed of the asset by way of an inter-group transfer, and

(d) either the disposal by way of inter-group transfer which is referred to in paragraph (c) above was the occasion of the acquisition referred to in paragraph (b) above or, between that disposal and that acquisition, there has been no disposal of the asset which was not an inter-group transfer,

then, for the purpose of determining whether subsection (1) above applies in relation to a series of linked transactions, the disposal by company A shall be treated as having been made by company B; but any increase in the consideration for that disposal resulting from the application of subsection (1) above shall have effect with respect to company A.

Original market value and aggregate market value for purposes of section 19.

20

(1) This section has effect for determining the original market value of assets and the aggregate market value of assets as mentioned in subsection (1)(b) of section 19.

(2) Expressions used in this section have the same meaning as in that section.

(3) Where there is a series of linked transactions, the original market value of the assets disposed of by each transaction in the series shall be determined as follows—

(a) if at the time in question the transaction is the most recent in the series, the original market value of the assets disposed of by that transaction is the market value which, apart from section 19, would be deemed to be the consideration for that transaction for the purposes of this Act; and

(b) in the case of any other transaction in the series, the original market value of the assets disposed of by that transaction is the value which, prior to the occurrence of the most recent transaction in the series, was or would have been deemed for the purposes of this Act to be the consideration for the transaction concerned (whether by virtue of the previous operation of section 19, or by virtue of any other provision of this Act).

(4) Subject to subsections (6) to (9) below, in relation to any transaction in a series of linked transactions—

(a) any reference in this section or section 19 to the aggregate market value of the assets disposed of by all the transactions in the series is a reference to what would have been the market value of all those assets for the purposes of this Act if, considering all the assets together, they had been disposed of by one disposal occurring at the time of the transaction concerned; and

(b) any reference in section 19 to the appropriate portion of the aggregate market value of the assets disposed of by all the transactions in the series is a reference to that portion of the market value determined in accordance with paragraph (a) above which it is reasonable to apportion to those of the assets which were actually disposed of by the transaction concerned.

(5) The reference in subsection (4)(a) above to considering all the assets together includes a reference not only to considering them as a group or holding or collection of assets retaining their separate identities but also (if it gives a higher market value) to considering them as brought together, physically or in law, so as to constitute either a single asset or a number of assets which are distinct from those which were comprised in each of the transactions concerned.

(6) If any of the assets disposed of by all the transactions in a series of linked transactions were acquired after the time of the first of those transactions, then, in the application of subsections (4) and (5) above in relation to each of the transactions in the series—

(a) no account shall be taken of any assets which were acquired after the time of that transaction unless they were acquired by way of an inter-group transfer; and

(b) subject to subsection (7) below, the number of assets of which account is to be taken shall be limited to the maximum number which were held by the person making the disposal at any time in the period beginning immediately before the first of the transactions in the series and ending immediately before the last.

(7) If, before the first of the transactions referred to in paragraph (b) of subsection (6) above, the person concerned (being a company) disposed of any assets by way of an inter-group transfer, the maximum number of assets referred to in that paragraph shall be determined as if the inter-group transfer had occurred after that first transaction.

(8) In the application of subsection (6) above in a case where the assets disposed of are securities, the assets disposed of by any of the transactions in a series of linked transactions shall be identified with assets acquired on an earlier date rather than with assets acquired on a later date.

(9) In subsection (8) above “securities” includes any assets which are of a nature to be dealt in without identifying the particular assets disposed of or acquired.

Chapter II — Assets and disposals of assets

General provisions

Assets and disposals.

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(1) All forms of property shall be assets for the purposes of this Act, whether situated in the United Kingdom or not, including—

(a) options, debts and incorporeal property generally, and

(b) currency, with the exception (subject to express provision to the contrary) of sterling,

(2) For the purposes of this Act—

(a) references to a disposal of an asset include, except where the context otherwise requires, references to a part disposal of an asset, and

(b) there is a part disposal of an asset where an interest or right in or over the asset is created by the disposal, as well as where it subsists before the disposal, and generally, there is a part disposal of an asset where, on a person making a disposal, any description of property derived from the asset remains undisposed of.

Disposal where capital sums derived from assets.

22

(1) Subject to sections 23 and 26(1), and to any other exceptions in this Act, there is for the purposes of this Act a disposal of assets by their owner where any capital sum is derived from assets notwithstanding that no asset is acquired by the person paying the capital sum, and this subsection applies in particular to—

(a) capital sums received by way of compensation for any kind of damage or injury to assets or for the loss, destruction or dissipation of assets or for any depreciation or risk of depreciation of an asset,

(b) capital sums received under a policy of insurance of the risk of any kind of damage or injury to, or the loss or depreciation of, assets,

(d) capital sums received as consideration for use or exploitation of assets.

(2) In the case of a disposal within paragraph (a), (b), (c) or (d) of subsection (1) above, the time of the disposal shall be the time when the capital sum is received as described in that subsection.

(3) In this section “capital sum” means any money or money’s worth which is not excluded from the consideration taken into account in the computation of the gain.

(4) Subsection (1) does not apply where a company receives, or becomes entitled to receive—

(a) a capital distribution within the meaning of section 122 (see instead subsection (1) of that section), or

(b) a distribution to which the charge to corporation tax on income under Part 9A of CTA 2009 (company distributions) applies or would apply were the distribution not exempt for the purposes of that Part.

Receipt of compensation and insurance money not treated as a disposal.

23

(1) If the recipient so claims, receipt of a capital sum within paragraph (a), (b), (c) or (d) of section 22(1) derived from an asset which is not lost or destroyed shall not be treated for the purposes of this Act as a disposal of the asset if—

(a) the capital sum is wholly applied in restoring the asset, or

(b) (subject to subsection (2) below), the capital sum is applied in restoring the asset except for a part of the capital sum which is not reasonably required for the purpose and which is small as compared with the whole capital sum, or

but, if the receipt is not treated as a disposal, all sums which would, if the receipt had been so treated, have been brought into account as consideration for that disposal in the computation of the gain shall be deducted from any expenditure allowable under Chapter III of this Part as a deduction in computing a gain on the subsequent disposal of the asset.

(2) If the allowable expenditure is less than the consideration for the disposal constituted by the receipt of the capital sum (or is nil)—

(a) paragraphs (b) and (c) of subsection (1) above shall not apply, and

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

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

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

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

(3) If, in a case not falling within subsection (1)(b) above, a part of a capital sum within paragraph (a) or paragraph (b) of section 22(1) derived from an asset which is not lost or destroyed is applied in restoring the asset, then if the recipient so claims, that part of the capital sum shall not be treated as consideration for the disposal deemed to be effected on receipt of the capital sum but shall be deducted from any expenditure allowable under Chapter III of this Part as a deduction in computing a gain on the subsequent disposal of the asset.

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