Legalize / United Kingdom / Taxation of Chargeable Gains Act 1992 / History

Reform history

Taxation of Chargeable Gains Act 1992

100 versions · 1992-03-06

2025-03-20

Taxation of Chargeable Gains Act 1992

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Changes on 2025-03-20

@@ -197,6 +197,10 @@

- (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).

#### Disposals and acquisitions treated as made at market value

@@ -1414,7 +1418,7 @@

- (2A) Amounts deductible from chargeable gains for any year in accordance with subsection (2) above shall not be so deductible from any such gains so far as they are—

- (a) gains that are treated as accruing by virtue of section 87, 87K, 87L or 89(2) (read, where appropriate, with section 1M), or

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

- (b) relevant non-resident gains (see subsection (11)).

@@ -1422,7 +1426,7 @@

- (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (3) In relation to property forming part of the estate of a deceased person the personal representatives shall for the purposes of this Act be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the personal representatives), and that body shall be treated as having the deceased’s residence ... and domicile at the date of death.

- (3) In relation to property forming part of the estate of a deceased person the personal representatives shall for the purposes of this Act be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the personal representatives), and that body shall be treated as UK resident if the deceased was UK resident or a long-term UK resident within the meaning of IHTA 1984 at the date of death.

- (4) On a person acquiring any asset as legatee (as defined in section 64)—

@@ -1607,7 +1611,7 @@

- (b) at least one is not resident in the United Kingdom, and

- (c) a settlor in relation to the settlement was resident ... or domiciled in the United Kingdom at a time which is a relevant time in relation to him.

- (c) a settlor in relation to the settlement was resident ... ... in the United Kingdom at a time which is a relevant time in relation to him.

- (2C) In subsection (2B)(c) “*relevant time*” in relation to a settlor—

@@ -1617,6 +1621,14 @@

and, in the case of a transfer of property from Settlement 1 to Settlement 2 in relation to which section 68B applies, “*relevant time*” in relation to a settlor of the transferred property in respect of Settlement 2 includes any time which, immediately before the time of the disposal by the trustees of Settlement 1, was a relevant time in relation to that settlor in respect of Settlement 1.

- (2CA) In relation to a settlement—

- (a) that arose before 6 April 2025 on the settlor’s death, or

- (b) that the settlor made (or was treated for the purposes of this Act as making) before 6 April 2025,

subsection (2B)(c) has effect as if after “resident” there were inserted “or domiciled”.

- (2D) A trustee who is not resident in the United Kingdom shall be treated for the purposes of subsections (2A) and (2B) as if he were resident in the United Kingdom at any time when he acts as trustee in the course of a business which he carries on in the United Kingdom through a branch, agency or permanent establishment there.

- (2DA) A trustee who is resident in the United Kingdom for a tax year is to be treated for the purposes of subsections (2A) and (2B) as if he or she were not resident in the United Kingdom for that year if—

@@ -1633,7 +1645,7 @@

- (2E) If the deemed person referred to in subsection (1) is not treated for the purposes of this Act as resident in the United Kingdom, then for the purposes of this Act it is treated as being not resident in the United Kingdom.

- (2F) Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of subsection (2B)(c).

- (2F) Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of subsection (2CA).

- (3) For the purposes of this section, and of sections 71(1) and 72(1), where part of the property comprised in a settlement is vested in one trustee or set of trustees and part in another (and in particular where settled land within the meaning of the Settled Land Act 1925 is vested in the tenant for life and investments representing capital money are vested in the trustees of the settlement), they shall be treated as together constituting and, in so far as they act separately, as acting on behalf of a single body of trustees.

@@ -2077,7 +2089,7 @@

- (b) the trustees of the settlement fulfil the condition as to residence specified in subsection (2) below;

- (c) a person who is a settlor in relation to the settlement (“*the settlor*”) is domiciled in the United Kingdom at some time in the year and is resident in the United Kingdom for the year;

- (c) a person who is a settlor in relation to the settlement (“*the settlor*”) ... is resident in the United Kingdom for the year;

- (d) at any time during the year the settlor has an interest in the settlement;

@@ -2093,13 +2105,13 @@

- (3) Where subsection (2)(a) above applies, the assumption as to residence is that the trustees are resident ... in the United Kingdom throughout the year; and where subsection (2)(b) above applies, the assumption as to residence is that the double taxation relief arrangements do not apply.

- (3A) Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of subsection (1)(c).

- (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (4) Where this section applies—

- (a) chargeable gains of an amount equal to that referred to in subsection (1)(e) above shall be treated as accruing to the settlor in the year or if, as respects the settlor, the year is a split year, in the UK part of that year, and

- (b) those gains shall be treated as forming the highest part of the amount on which he is chargeable to capital gains tax for the year.

- (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (4ZA) Where (apart from this subsection) the amount mentioned in subsection (1)(e) would include a chargeable gain or allowable loss to which section 1A(3)(b) or (c) applies (disposals by non-UK residents within the charge to capital gains tax), so much of the gain or loss as would be so included is to be disregarded for the purposes of subsection (1)(e).

@@ -2109,6 +2121,8 @@

- (5) Schedule 5 (which contains provisions supplementary to this section) shall have effect.

- (6) See also paragraph 3 of Schedule D1 (foreign gain claims: foreign gains and losses of the trustees ignored for the purposes of subsection (1)(e)).

#### Attribution of gains to beneficiaries

##### 87

@@ -2141,6 +2155,8 @@

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

- (8) See also [paragraph 4](#p04570) of [Schedule D1](#p04474) (foreign gain claims: capital payments ignored for the purposes of this section and Schedule 4C).

#### Gains of dual resident settlements

##### 88

@@ -2243,7 +2259,7 @@

- (1) This section applies if—

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

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

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

@@ -2367,7 +2383,7 @@

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

- (ii) chargeable to income tax on another person under any of sections 643A, 643J and 643L of ITTOIA 2005 and sections 733A, 733C and 733E of ITA 2007,

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

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

@@ -2375,7 +2391,7 @@

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

- (3) The fact that the whole or part of a benefit is by virtue of section 643A or 643J or 643L of ITTOIA 2005, or sections 731 to 733E of ITA 2007, treated as an individual's income for a year of assessment after that in which it is received—

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

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

@@ -6626,7 +6642,7 @@

- (a) does not include any period before 31 March 1982, and

- (b) where the whole or part of the gain to which section 222 applies is a residential property gain (as defined by Schedule 1B) which is chargeable to capital gains tax because of section 1A(3)(b), does not include any period before 6 April 2015 (but see subsection (7A)).

- (b) where the whole or part of the gain to which section 222 applies is a gain which is chargeable to capital gains tax because of section 1A(3)(b), does not include any period before 6 April 2015 (but see subsection (7A)).

- (7A) Paragraph (b) of the definition of “period of ownership” does not apply in a case where paragraph 8 or 14 of Schedule 4AA applies (the individual has made an election for the retrospective basis of computation to apply).

@@ -7218,1420 +7234,1372 @@

##### 241

- (1) The following provisions of this section shall have effect with respect to the treatment for the purposes of tax on chargeable gains of the commercial letting of furnished holiday accommodation in the United Kingdom.

- (2) For the purposes of this section as it applies to capital gains tax the “*commercial letting of furnished holiday accommodation*” has the same meaning as it has for the purposes of Chapter 6 of Part 3 of ITTOIA 2005.

For the purposes of this section as it applies to corporation tax in respect of chargeable gains the “*commercial letting of furnished holiday accommodation*” has the same meaning as it has for the purposes of Chapter 6 of Part 4 of CTA 2009.

- (3) Subject to subsections (4) to (8) below, for the purposes of the provisions mentioned in subsection (3A) below—

- (a) any UK property business ... which consists of, or so far as it consists of, the commercial letting of furnished holiday accommodation shall be treated as a trade, and

- (b) all such lettings made by a particular person or partnership or body of persons shall be treated as one trade.

- (3A) The provisions referred to in subsection (3) above are—

- sections 152 to 157 (roll-over relief on replacement of business asset),

- section 165 (gifts relief),

- section 169S(1) (business asset disposal relief),

- Section 253 (relief for loans to traders),

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

### Part disposals

#### Small part disposals

##### 242

- (1) This section applies to a transfer of land forming part only of a holding of land, where—

- (a) the amount or value of the consideration for the transfer does not exceed one-fifth of the market value of the holding as it subsisted immediately before the transfer, and

- (b) the transfer is not one which, by virtue of section 58 or 171(1), is treated as giving rise to neither a gain nor a loss.

- (2) Subject to subsection (3) below, if the transferor so claims, the transfer shall not be treated for the purposes of this Act as a disposal, but all sums which, if it had been so treated, would 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 Part II as a deduction in computing a gain on any subsequent disposal of the holding.

- (2A) A claim under subsection (2) above shall be made—

- (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made;

- (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

- (3) This section shall not apply—

- (a) if the amount or value of the consideration for the transfer exceeds £20,000, or

- (b) where in the year of assessment in which the transfer is made, the transferor made any other disposal of land, if the total amount or value of the consideration for all disposals of land made by the transferor in that year exceeds £20,000.

- (4) No account shall be taken under subsection (3) above of any transfer of land to which section 243 applies.

- (5) In relation to a transfer which is not for full consideration in money or money’s worth “*the amount or value of the consideration*” in this section shall mean the market value of the land transferred.

- (6) For the purposes of this section the holding of land shall comprise only the land in respect of which the expenditure allowable under paragraphs (a) and (b) of section 38(1) would be apportioned under section 42 if the transfer had been treated as a disposal (that is, as a part disposal of the holding).

- (7) In this section references to a holding of land include references to any estate or interest in a holding of land, not being an estate or interest which is a wasting asset, and references to part of a holding shall be construed accordingly.

#### Part disposal to authority with compulsory powers

##### 243

- (1) This section applies to a transfer of land forming part only of a holding of land to an authority exercising or having compulsory powers where—

- (a) the amount or value of the consideration for the transfer, or if the transfer is not for full consideration in money or money’s worth, the market value of the land transferred, is small, as compared with the market value of the holding as it subsisted immediately before the transfer, and

- (b) the transferor had not taken any steps by advertising or otherwise to dispose of any part of the holding or to make his willingness to dispose of it known to the authority or others.

- (2) If the transferor so claims, the transfer shall not be treated for the purposes of this Act as a disposal, but all sums which, if it had been so treated, would 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 Part II as a deduction in computing a gain on any subsequent disposal of the holding.

- (2A) A claim under subsection (2) above shall be made—

- (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made;

- (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

- (3) For the purposes of this section the holding of land shall comprise only the land in respect of which the expenditure allowable under paragraphs (a) and (b) of section 38(1) would be apportioned under section 42 if the transfer had been treated as a disposal (that is, as a part disposal of the holding).

- (4) In this section references to a holding of land include references to an estate or interest in a holding of land, not being an estate or interest which is a wasting asset, and references to part of a holding shall be construed accordingly.

- (5) In this section “*authority exercising or having compulsory powers*” means, in relation to the land transferred, a person or body of persons acquiring it compulsorily or who has or have been, or could be, authorised to acquire it compulsorily for the purposes for which it is acquired, or for whom another person or body of persons has or have been, or could be, authorised so to acquire it.

#### Part disposal: consideration exceeding allowable expenditure

##### 244

- (1) The provisions of sections 242(2) and 243(2) shall have effect subject to this section.

- (2) Where the allowable expenditure is less than the consideration for the part disposal (or is nil)—

- (a) the said provisions shall not apply, and

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

- (i) the consideration for the part 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 part disposal or on any subsequent occasion.

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

- (3) An election under subsection (2)(b) above shall be made—

- (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the part disposal is made;

- (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the part disposal is made.

### Compulsory acquisition

#### Compensation paid on compulsory acquisition

##### 245

- (1) Where land or an interest in or right over land is acquired and the acquisition is, or could have been, made under compulsory powers, then in considering whether, under section 52(4), the purchase price or compensation or other consideration for the acquisition should be apportioned and treated in part as a capital sum within section 22(1)(a), whether as compensation for loss of goodwill or for disturbance or otherwise, or should be apportioned in any other way, the fact that the acquisition is or could have been made compulsorily, and any statutory provision treating the purchase price or compensation or other consideration as exclusively paid in respect of the land itself, shall be disregarded.

- (2) In any case where land or an interest in land is acquired as mentioned in subsection (1) above from any person and the compensation or purchase price includes an amount in respect of severance of the land comprised in the acquisition or sale from other land in which that person is entitled in the same capacity to an interest, or in respect of that other land as being injuriously affected, there shall be deemed for the purposes of this Act to be a part disposal of that other land.

#### Time of disposal and acquisition

##### 246

Where an interest in land is acquired, otherwise than under a contract, by an authority possessing compulsory purchase powers, the time at which the disposal and acquisition is made is the time at which the compensation for the acquisition is agreed or otherwise determined (variations on appeal being disregarded for this purpose) ... .

#### Roll-over relief on compulsory acquisition

##### 247

- (1) This section applies where—

- (a) land (“*the old land*”) is disposed of by any person (“*the landowner*”) to an authority exercising or having compulsory powers; and

- (b) the landowner did not take any steps, by advertising or otherwise, to dispose of the old land or to make his willingness to dispose of it known to the authority or others; and

- (c) the consideration for the disposal is applied by the landowner in acquiring other land (“*the new land*”) not being land excluded from this paragraph by section 248.

- (2) Subject to section 248, in a case where the whole of the consideration for the disposal was applied as mentioned in subsection (1)(c) above, the landowner, on making a claim as respects the consideration so applied, shall be treated for the purposes of this Act—

- (a) as if the consideration for the disposal of the old land were (if otherwise of a greater amount or value) of such amount as would secure that on the disposal neither a gain nor a loss accrues to him; and

- (b) as if the amount or value of the consideration for the acquisition of the new land were reduced by the excess of the amount or value of the actual consideration for the disposal of the old land over the amount of the consideration which he is treated as receiving under paragraph (a) above.

- (3) If part only of the consideration for the disposal of the old land was applied as mentioned in subsection (1)(c) above, then, subject to section 248, if the part of the consideration which was not so applied (“*the unexpended consideration*”) is less than the amount of the gain (whether all chargeable gain or not) accruing on the disposal of the old land, the landowner, on making a claim as respects the consideration which was so applied, shall be treated for the purposes of this Act—

- (a) as if the amount of the gain so accruing were reduced to the amount of the unexpended consideration (and, if not all chargeable gain, with a proportionate reduction in the amount of the chargeable gain); and

- (b) as if the amount or value of the consideration for the acquisition of the new land were reduced by the amount by which the gain is reduced (or, as the case may be, the amount by which the chargeable gain is proportionately reduced) under paragraph (a) above.

- (4) Nothing in subsection (2) or subsection (3) above affects the treatment for the purposes of this Act of the authority by whom the old land was acquired or of the other party to the transaction involving the acquisition of the new land.

- (5) For the purposes of this section—

- (a) subsection (2) of section 152 shall apply in relation to subsection (2)(a) and subsection (2)(b) above as it applies in relation to subsection (1)(a) and subsection (1)(b) of that section; and

- (b) subsections (3) and (4) of that section shall apply as if any reference to the new assets were a reference to the new land, any reference to the old assets were a reference to the old land and any reference to that section were a reference to this.

- (5A) Subsections (2A) and (2C) of section 175 shall apply in relation to this section as they apply in relation to section 152 (but as if the reference in subsection (2C) to the new assets were a reference to the new land).

- (6) Where this section applies, any such amount as is referred to in subsection (2) of section 245 shall be treated as forming part of the consideration for the disposal of the old land and, accordingly, so much of that subsection as provides for a deemed disposal of other land shall not apply.

- (7) The provisions of this Act fixing the amount of the consideration deemed to be given for the acquisition or disposal of assets shall be applied before this section is applied.

- (8) In this section—

- “*land*” includes any interest in or right over land; and

- “*authority exercising or having compulsory powers*” shall be construed in accordance with section 243(5).

#### Provisions supplementary to section 247

##### 248

- (1) Land is excluded from paragraph (c) of subsection (1) of section 247 if—

- (a) it is a dwelling-house or part of a dwelling-house (or an interest in or right over a dwelling-house), and

- (b) by virtue of, or of any claim under, any provision of sections 222 to 226 the whole or any part of a gain accruing on a disposal of it by the landowner at a material time would not be a chargeable gain;

and for the purposes of this subsection “*a material time*” means any time during the period of 6 years beginning on the date of the acquisition referred to in the said paragraph (c).

- (2) If, at any time during the period of 6 years referred to in subsection (1) above, land which at the beginning of that period was not excluded from section 247(1)(c) by virtue of that subsection becomes so excluded, the amount of any chargeable gain accruing on the disposal of the old land shall be redetermined without regard to any relief previously given under section 247 by reference to the amount or value of the consideration for the acquisition of that land; and all such adjustments of capital gains tax, whether by way of assessment or otherwise, may be made at any time, notwithstanding anything in section 34 of the Management Act (time limit for assessments).

This subsection also applies where the period of 6 years referred to above began before the commencement of this section (and accordingly the references to section 247 include references to section 111A of the 1979 Act).

- (3) Where the new land is a depreciating asset, within the meaning of section 154, that section has effect as if—

- (a) any reference in subsection (1) or subsection (4) to section 152 or 153 were a reference to subsection (2) or subsection (3) respectively of section 247; and

- (b) paragraph (b) of subsection (2) were omitted; and

- (c) the reference in subsection (5) to section 152(3) were a reference to that provision as applied by section 247(5).

- (4) No claim may be made under section 243 in relation to a transfer which constitutes a disposal in respect of which a claim is made under section 247.

- (5) Expressions used in this section have the same meaning as in section 247.

### Woodlands

#### Grants for giving up agricultural land

##### 249

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

#### Woodlands

##### 250

- (1) Consideration for the disposal of trees standing or felled or cut on woodlands managed by the occupier on a commercial basis and with a view to the realisation of profits shall be excluded from the computation of the gain if the person making the disposal is the occupier.

- (2) Capital sums received under a policy of insurance in respect of the destruction of or damage or injury to trees by fire or other hazard on such woodlands shall be excluded from the computation of the gain if the person making the disposal is the occupier.

- (3) Subsection (2) above has effect notwithstanding section 22(1).

- (4) In the computation of the gain so much of the cost of woodland in the United Kingdom shall be disregarded as is attributable to trees growing on the land.

- (5) In the computation of the gain accruing on a disposal of woodland in the United Kingdom so much of the consideration for the disposal as is attributable to trees growing on the land shall be excluded.

- (6) References in this section to trees include references to saleable underwood.

### Debts

#### General provisions

##### 251

- (1) Where a person incurs a debt to another, whether in sterling or in some other currency, no chargeable gain shall accrue to that (that is the original) creditor or his personal representative or legatee on a disposal of the debt, except in the case of the debt on a security (as defined in section 132).

- (2) Subject to the provisions of sections 132, 135 and 136 and subject to subsection (1) above, the satisfaction of a debt or part of it (including a debt on a security as defined in section 132) shall be treated as a disposal of the debt or of that part by the creditor made at the time when the debt or that part is satisfied.

- (3) Where property is acquired by a creditor in satisfaction of his debt or part of it, then subject to the provisions of sections 132, 135 and 136 the property shall not be treated as disposed of by the debtor or acquired by the creditor for a consideration greater than its market value at the time of the creditor’s acquisition of it; but if under subsection (1) above (and in a case not falling within section 132, 135 or 136) no chargeable gain is to accrue on a disposal of the debt by the creditor (that is the original creditor), and a chargeable gain accrues to him on a disposal by him of the property, the amount of the chargeable gain shall (where necessary) be reduced so as not to exceed the chargeable gain which would have accrued if he had acquired the property for a consideration equal to the amount of the debt or that part of it.

- (4) A loss accruing on the disposal of a debt acquired by the person making the disposal from the original creditor or his personal representative or legatee at a time when the creditor or his personal representative or legatee is a person connected with the person making the disposal, and so acquired either directly or by one or more purchases through persons all of whom are connected with the person making the disposal, shall not be an allowable loss.

- (5) Where the trustees of a settlement are the original creditor, subsections (1) and (4) above shall apply as if for the references to the original creditor’s personal representative or legatee there were substituted references to any person becoming absolutely entitled, as against the trustees, to the debt on its ceasing to be settled property, and to that person’s personal representative or legatee.

- (5A) References in this section to the disposal of a debt include the disposal of an interest in a debt (and, in the case of an interest in a debt, the reference in subsection (3) to the amount of the debt is to the amount of the person's interest in the debt).

- (6) For the purposes of this section a debenture issued by any company on or after 16th March 1993 shall be deemed to be a security (as defined in section 132) if—

- (a) it is issued on a reorganisation (as defined in section 126(1)) or in pursuance of its allotment on any such reorganisation;

- (b) it is issued in exchange for shares in or debentures of another company and in a case to which section 135 applies and which is unaffected by section 137(1);

- (c) it is issued under any such arrangements as are mentioned in subsection (1)(a) of section 136 and in a case unaffected by section 137 where section 136 requires shares or debentures in another company to be treated as exchanged for, or for anything that includes, that debenture; or

- (d) it is issued in pursuance of rights attached to any debenture issued on or after 16th March 1993 and falling within paragraph (a), (b) or (c) above

and any debenture which results from a conversion of securities within the meaning of section 132, or is issued in pursuance of rights attached to such a debenture, shall be deemed for the purposes of this section to be a security (as defined in that section).

- (7) Where any instrument specified in subsection (8) below is not a security (as defined in section 132), that instrument shall be deemed to be such a security for the purposes of this section, other than the purposes of determining what is or is not an allowable loss in any case.

- (8) The instruments mentioned in subsection (7) above are—

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

- (b) any instrument which ... is not a loan relationship of a company but which would be a deeply discounted security for the purposes of Chapter 8 of Part 4 of ITTOIA 2005 if section 432(2) of that Act (excluded indexed securities) were omitted.

#### Foreign currency bank accounts

##### 252

- (1) Section 251(1) does not apply in relation to a gain accruing to a person on a disposal of a foreign currency debt (or an interest in such a debt) unless that person is—

- (a) an individual,

- (b) the trustees of a settlement, or

- (c) the personal representatives of a deceased person.

- (2) A “foreign currency debt” is a debt—

- (a) owed by a bank in a currency other than sterling, and

- (b) represented by a sum standing to the credit of an account-holder in an account in that bank.

#### Relief for loans to traders

##### 253

- (1) In this section “*a qualifying loan*” means a loan in the case of which—

- (a) the money lent is used by the borrower wholly for the purposes of a trade carried on by him, not being a trade which consists of or includes the lending of money, and

- (b) if the loan is made before 24 January 2019, the borrower is resident in the United Kingdom, and

- (c) the borrower’s debt is not a debt on a security as defined in section 132;

and for the purposes of paragraph (a) above money used by the borrower for setting up a trade which is subsequently carried on by him shall be treated as used for the purposes of that trade.

- (2) In subsection (1) above references to a trade include references to a profession or vocation; and where money lent to a company is lent by it to another company in the same group, being a trading company, that subsection shall apply to the money lent to the first-mentioned company as if it had used it for any purpose for which it is used by the other company while a member of the group.

- (3) Where a person who has made a qualifying loan makes a claim and at that time—

- (a) any outstanding amount of the principal of the loan has become irrecoverable, and

- (b) the claimant has not assigned his right to recover that amount, and

- (c) the claimant and the borrower were not each other’s spouses or civil partners, or companies in the same group, when the loan was made or at any subsequent time,

then, to the extent that that amount is not an amount which, in the case of the claimant, falls to be brought into account as a debit given for the purposes of Part 5 of CTA 2009 (loan relationships), this Act shall have effect as if an allowable loss equal to that amount had accrued to the claimant at the time of the claim or (subject to subsection (3A) below) any earlier time specified in the claim.

- (3A) For the purposes of subsection (3) above, an earlier time may be specified in the claim if:

- (a) the amount to which that subsection applies was also irrecoverable at the earlier time; and either

- (b) for capital gains tax purposes the earlier time falls not more than two years before the beginning of the year of assessment in which the claim is made; or

- (c) for corporation tax purposes the earlier time falls on or after the first day of the earliest accounting period ending not more than two years before the time of the claim.

- (4) Where a person who has guaranteed the repayment of a loan which is, or but for subsection (1)(c) above would be, a qualifying loan makes a claim and at that time—

- (a) any outstanding amount of, or of interest in respect of, the principal of the loan has become irrecoverable from the borrower, and

- (b) the claimant has made a payment under the guarantee (whether to the lender or a co-guarantor) in respect of that amount, and

- (c) the claimant has not assigned any right to recover that amount which has accrued to him (whether by operation of law or otherwise) in consequence of his having made the payment, and

- (d) the lender and the borrower were not each other’s spouses or civil partners, or companies in the same group, when the loan was made or at any subsequent time and the claimant and the borrower were not each other’s spouses or civil partners, and the claimant and the lender were not companies in the same group, when the guarantee was given or at any subsequent time,

this Act shall have effect as if an allowable loss had accrued to the claimant when the payment was made; and the loss shall be equal to the payment made by him in respect of the amount mentioned in paragraph (a) above less any contribution payable to him by any co-guarantor in respect of the payment so made.

- (4A) A claim under subsection (4) above shall be made—

- (a) for the purposes of capital gains tax, not more than 4 years after the end of the year of assessment in which the payment was made;

- (b) for the purposes of corporation tax, within 4 years after the end of the accounting period in which the payment was made.

- (5) Where an allowable loss has been treated under subsection (3) or (4) above as accruing to any person and the whole or any part of the outstanding amount mentioned in subsection (3)(a) or, as the case may be, subsection (4)(a) is at any time recovered by him, this Act shall have effect as if there had accrued to him at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

- (6) Where—

- (a) an allowable loss has been treated under subsection (4) above as accruing to any person, and

- (b) the whole or any part of the amount of the payment mentioned in subsection (4)(b) is at any time recovered by him,

this Act shall have effect as if there had accrued to him at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

- (7) Where—

- (a) an allowable loss has been treated under subsection (3) above as accruing to a company (“*the first company*”), and

- (b) the whole or any part of the outstanding amount mentioned in subsection (3)(a) is at any time recovered by a company (“*the second company*”) in the same group as the first company,

this Act shall have effect as if there had accrued to the second company at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

- (8) Where—

- (a) an allowable loss has been treated under subsection (4) above as accruing to a company (“*the first company*”), and

- (b) the whole or any part of the outstanding amount mentioned in subsection (4)(a), or the whole or any part of the amount of the payment mentioned in subsection (4)(b), is at any time recovered by a company (“*the second company*”) in the same group as the first company,

this Act shall have effect as if there had accrued to the second company at that time a chargeable gain equal to so much of the allowable loss as corresponds to the amount recovered.

- (9) For the purposes of subsections (5) to (8) above, a person shall be treated as recovering an amount if he (or any other person by his direction) receives any money or money’s worth in satisfaction of his right to recover that amount or in consideration of his assignment of the right to recover it; and where a person assigns such a right otherwise than by way of a bargain made at arm’s length he shall be treated as receiving money or money’s worth equal to the market value of the right at the time of the assignment.

- (10) No amount shall be treated under this section as giving rise to an allowable loss or chargeable gain in the case of any person if it falls to be taken into account in computing his income for the purposes of income tax or corporation tax.

- (11) Where an allowable loss has been treated as accruing to a person under subsection (4) above by virtue of a payment made by him at any time under a guarantee—

- (a) no chargeable gain shall accrue to him otherwise than under subsection (5) above, and

- (b) no allowable loss shall accrue to him under this Act,

on his disposal of any rights that have accrued to him (whether by operation of law or otherwise) in consequence of his having made any payment under the guarantee at or after that time.

- (12) References in this section to an amount having become irrecoverable do not include references to cases where the amount has become irrecoverable in consequence of the terms of the loan, of any arrangements of which the loan forms part, or of any act or omission by the lender or, in a case within subsection (4) above, the guarantor.

- (13) For the purposes of subsections (7) and (8) above, 2 companies are in the same group if they were in the same group when the loan was made or have been in the same group at any subsequent time.

- (14) In this section—

- (a) “*spouses*” means spouses who are living together (construed in accordance with section 288(3)),

- (aa) “civil partners” means civil partners who are living together (construed in accordance with section 288(3)),

- (b) “*trading company*” has the same meaning as in section 165 (see section 165A), and

- (c) “*group*” shall be construed in accordance with section 170.

- (15) Subsection (3) above does not apply where the loan was made before 12th April 1978 and subsection (4) above does not apply where the guarantee was given before that date.

#### Relief for debts on qualifying corporate bonds

##### 254

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

#### Provisions supplementary to section 254

##### 255

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

### Charities and gifts of non-business assets etc.

#### Charities

##### 256

- (1) Subject to ... the following provisions of this section, a gain shall not be a chargeable gain if it accrues to a charity and is applicable and applied for charitable purposes.

- (2) If property held on charitable trusts ceases to be subject to charitable trusts—

- (a) the trustees shall be treated as if they had disposed of, and immediately reacquired, the property for a consideration equal to its market value, any gain on the disposal being treated as not accruing to a charity, and

- (b) if and so far as any of that property represents, directly or indirectly, the consideration for the disposal of assets by the trustees, any gain accruing on that disposal shall be treated as not having accrued to a charity,

and an assessment to capital gains tax chargeable by virtue of paragraph (b) above may be made at any time not more than 3 years after the end of the year of assessment in which the property ceases to be subject to charitable trusts.

- (3) Subsection (4) below applies if a charitable trust has a non-exempt amount under section 540 of ITA 2007 for a year of assessment.

- (3A) Subsection (4) below also applies if a charitable company has a non-exempt amount under section 493 of CTA 2010 for an accounting period.

- (4) Gains accruing—

- (a) to the charitable trust in the year of assessment, or

- (b) to the charitable company in the accounting period,

are treated as being, and always having been, chargeable gains so far as they are attributed to the non-exempt amount under section 256A (in the case of a charitable trust) or section 256C (in the case of a charitable company).

- (5) For restrictions on exemptions under Part 10 of ITA 2007 (special rules about charitable trusts etc) see section 539 of that Act.

- (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (7) For restrictions on exemptions under Part 11 of CTA 2010 (charitable companies etc) see section 492 of that Act.

- (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

#### Gifts to charities etc

##### 257

- (1) Subsection (2) below shall apply where a disposal of an asset is made otherwise than under a bargain at arm’s length—

- (a) to a charity or a registered club, or

- (b) to any bodies mentioned in Schedule 3 to the Inheritance Tax Act 1984 (gifts for national purposes, etc)

and the disposal is not one in relation to which section 151A(1) has effect.

- (2) Sections 17(1) and 258(3) shall not apply; but if the disposal is by way of gift (including a gift in settlement) or for a consideration not exceeding the sums allowable as a deduction under section 38, then—

- (a) the disposal and acquisition shall be treated for the purposes of this Act as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal, and

- (b) where, after the disposal, the asset is disposed of by the person who acquired it under the disposal, its acquisition by the person making the earlier disposal shall be treated for the purposes of this Act as the acquisition of the person making the later disposal.

- (2A) Subsection (2B) applies if relief is available under Chapter 3 of Part 8 of ITA 2007 or as a result of Chapter 3 of Part 6 of CTA 2010 (gifts of shares, securities and real property to charities) in relation to the disposal of a qualifying investment to a charity (whether or not a claim for relief is actually made).

- (2B) The consideration for which the charity's acquisition of the qualifying investment is treated by virtue of subsection (2) above as having been made—

- (a) is reduced by the relievable amount within the meaning of Chapter 3 of Part 8 of ITA 2007 if relief in relation to the disposal is available only under that Chapter,

- (b) is reduced by the relievable amount within the meaning of Chapter 3 of Part 6 of CTA 2010 if relief in relation to the disposal is available only as a result of that Chapter,

- (c) is reduced by the relievable amount within the meaning of Chapter 3 of Part 8 of ITA 2007 if relief in relation to the disposal is available both under that Chapter and as a result of Chapter 3 of Part 6 of CTA 2010 because of section 442 of ITA 2007 and section 214 of CTA 2010, or

- (d) is reduced to nil if that consideration is less than the amount referred to in paragraph (a), (b) or (c) (as the case may be).

- (2C) In subsections (2A) and (2B)—

- “*qualifying investment*” has the same meaning as in Chapter 3 of Part 8 of ITA 2007 (see section 432 of that Act),

- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., and

- Schedule 7AC (exemptions for disposals by companies with substantial shareholding).

- (4) Subject to subsection (5) below, for the purposes of the provisions mentioned in subsection (3A) above as they apply by virtue of this section, where in any chargeable period a person makes a commercial letting of furnished holiday accommodation in the United Kingdom—

- (a) the accommodation shall be taken to be used in that period only for the purposes of the trade of making such lettings; and

- (b) that trade shall be taken to be carried on throughout that period.

- (5) Subsection (4) above does not apply to any part of a chargeable period during which the accommodation is neither let commercially nor available to be so let unless it is prevented from being so let or available by any works of construction or repair.

- (6) Where—

- (a) a gain to which section 222 applies accrues to any individual on the disposal of an asset; and

- (b) by virtue of subsection (3) above the amount or value of the consideration for the acquisition of the asset is treated as reduced under section 152 or 153,

the gain to which section 222 applies shall be reduced by the amount of the reduction mentioned in paragraph (b) above.

- (7) Where there is a letting of accommodation only part of which is holiday accommodation such apportionments shall be made for the purposes of this section as are just and reasonable.

- (8) Where a person has been charged to tax in respect of chargeable gains otherwise than in accordance with the provisions of this section, such assessment, reduction or discharge of an assessment or, where a claim for repayment is made, such repayment, shall be made as may be necessary to give effect to those provisions.

### Part disposals

#### Small part disposals

##### 242

- (1) This section applies to a transfer of land forming part only of a holding of land, where—

- (a) the amount or value of the consideration for the transfer does not exceed one-fifth of the market value of the holding as it subsisted immediately before the transfer, and

- (b) the transfer is not one which, by virtue of section 58 or 171(1), is treated as giving rise to neither a gain nor a loss.

- (2A) A claim under subsection (2) above shall be made—

- (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made;

- (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

- (3) This section shall not apply—

- (a) if the amount or value of the consideration for the transfer exceeds £20,000, or

- (4) No account shall be taken under subsection (3) above of any transfer of land to which section 243 applies.

#### Part disposal to authority with compulsory powers

##### 243

- (1) This section applies to a transfer of land forming part only of a holding of land to an authority exercising or having compulsory powers where—

- (b) the transferor had not taken any steps by advertising or otherwise to dispose of any part of the holding or to make his willingness to dispose of it known to the authority or others.

- (2A) A claim under subsection (2) above shall be made—

- (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the transfer is made;

- (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the transfer is made.

#### Part disposal: consideration exceeding allowable expenditure

##### 244

- (1) The provisions of sections 242(2) and 243(2) shall have effect subject to this section.

- (2) Where the allowable expenditure is less than the consideration for the part disposal (or is nil)—

- (a) the said provisions shall not apply, and

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

- (i) the consideration for the part 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 part disposal or on any subsequent occasion.

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

- (3) An election under subsection (2)(b) above shall be made—

- (a) for the purposes of capital gains tax, on or before the first anniversary of the 31st January next following the year of assessment in which the part disposal is made;

- (b) for the purposes of corporation tax, within 2 years after the end of the accounting period in which the part disposal is made.

### Compulsory acquisition

#### Compensation paid on compulsory acquisition

##### 245

#### Time of disposal and acquisition

##### 246

#### Roll-over relief on compulsory acquisition

##### 247

- (1) This section applies where—

- (a) land (“*the old land*”) is disposed of by any person (“*the landowner*”) to an authority exercising or having compulsory powers; and

- (b) the landowner did not take any steps, by advertising or otherwise, to dispose of the old land or to make his willingness to dispose of it known to the authority or others; and

- (c) the consideration for the disposal is applied by the landowner in acquiring other land (“*the new land*”) not being land excluded from this paragraph by section 248.

- (5) For the purposes of this section—

- (a) subsection (2) of section 152 shall apply in relation to subsection (2)(a) and subsection (2)(b) above as it applies in relation to subsection (1)(a) and subsection (1)(b) of that section; and

- (7) The provisions of this Act fixing the amount of the consideration deemed to be given for the acquisition or disposal of assets shall be applied before this section is applied.

- (8) In this section—

- “*land*” includes any interest in or right over land; and

- “*authority exercising or having compulsory powers*” shall be construed in accordance with section 243(5).

#### Provisions supplementary to section 247

##### 248

- (1) Land is excluded from paragraph (c) of subsection (1) of section 247 if—

- (a) it is a dwelling-house or part of a dwelling-house (or an interest in or right over a dwelling-house), and

and for the purposes of this subsection “*a material time*” means any time during the period of 6 years beginning on the date of the acquisition referred to in the said paragraph (c).

- (3) Where the new land is a depreciating asset, within the meaning of section 154, that section has effect as if—

- (a) any reference in subsection (1) or subsection (4) to section 152 or 153 were a reference to subsection (2) or subsection (3) respectively of section 247; and

- (b) paragraph (b) of subsection (2) were omitted; and

- (c) the reference in subsection (5) to section 152(3) were a reference to that provision as applied by section 247(5).

- (4) No claim may be made under section 243 in relation to a transfer which constitutes a disposal in respect of which a claim is made under section 247.

- (5) Expressions used in this section have the same meaning as in section 247.

### Woodlands

#### Grants for giving up agricultural land

##### 249

- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (3) Where—

- (a) otherwise than on the termination of a life interest (within the meaning of section 72) by the death of the person entitled thereto, any assets or parts of any assets forming part of settled property are, under section 71, deemed to be disposed of and reacquired by the trustee, and

- (b) the person becoming entitled as mentioned in section 71(1) is a charity, a registered club or a body mentioned in Schedule 3 to the Inheritance Tax Act 1984 (gifts for national purposes, etc),

then, if no consideration is received by any person for or in connection with any transaction by virtue of which the charity, registered club or other body becomes so entitled, the disposal and reacquisition of the assets to which the charity, registered club or other body becomes so entitled shall, notwithstanding section 71, be treated for the purposes of this Act as made for such consideration as to secure that neither a gain nor a loss accrues on the disposal.

- (4) In subsection (2)(b) above the first reference to a disposal includes a disposal to which section 146(2) of the 1979 Act applied where the person who acquired the asset on that disposal disposes of the asset after the coming into force of this section.

- (5) For the purposes of this section “*registered club*” has the same meaning as in Chapter 9 of Part 13 of CTA 2010.

#### Works of art etc

##### 258

- (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (1A) A gain is not a chargeable gain if it accrues on a disposal made in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to the nation).

- (2) A gain shall not be a chargeable gain if it accrues on the disposal of an asset which is property which has been or could be designated under section 31 of the Inheritance Tax Act 1984 (“the 1984 Act”) (designation and undertakings) and—

- (a) the disposal is by way of sale by private treaty to a body mentioned in Schedule 3 to the 1984 Act (museums, etc.), or is to such a body otherwise than by sale, or

- (b) the disposal is to the Board in pursuance of section 230 of the 1984 Act ... (acceptance of property in satisfaction of tax).

- (3) Subsection (4) below shall have effect in respect of the disposal of any asset which is property which has been or could be designated under section 31 of the 1984 Act, being—

- (a) a disposal by way of gift, including a gift in settlement, or

- (b) a disposal of settled property by the trustee on an occasion when, under section 71(1), the trustee is deemed to dispose of and immediately reacquire settled property (other than any disposal on which by virtue of section 73 no chargeable gain or allowable loss accrues to the trustee),

if the requisite undertaking described in section 31 of the 1984 Act (maintenance, preservation and access) is given by such person as the Board think appropriate in the circumstances of the case.

- (4) The person making a disposal to which subsection (3) above applies and the person acquiring the asset on the disposal shall be treated for all the purposes of this Act as if the asset was acquired from the one making the disposal for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss would accrue to the one making the disposal.

- (5) If—

- (a) there is a sale of the asset and inheritance tax is chargeable under section 32 of the 1984 Act (or would be chargeable if an inheritance tax undertaking as well as an undertaking under this section had been given), or

- (b) the Board are satisfied that at any time during the period for which any such undertaking was given it has not been observed in a material respect,

the person selling that asset or, as the case may be, the owner of the asset shall be treated for the purposes of this Act as having sold the asset for a consideration equal to its market value, and, in the case of a failure to comply with the undertaking, having immediately reacquired it for a consideration equal to its market value.

- (6) The period for which an undertaking under this section is given shall be until the person beneficially entitled to the asset dies or it is disposed of, whether by sale or gift or otherwise; and if the asset subject to the undertaking is disposed of—

- (a) otherwise than on sale, and

- (b) without a further undertaking being given under this section,

subsection (5) above shall apply as if the asset had been sold to an individual.

References in this subsection to a disposal shall be construed without regard to any provision of this Act under which an asset is deemed to be disposed of.

- (7) Where under subsection (5) above a person is treated as having sold for a consideration equal to its market value any asset within section 31(1)(c), (d) or (e) of the 1984 Act, he shall also be treated as having sold and immediately reacquired for a consideration equal to its market value any asset associated with it; but the Board may direct that the preceding provisions of this subsection shall not have effect in any case in which it appears to them that the entity consisting of the asset and any assets associated with it has not been materially affected.

For the purposes of this subsection 2 or more assets are associated with each other if one of them is a building falling within section 31(1)(c) of the 1984 Act and the other or others such land or objects as, in relation to that building, fall within section 31(1)(d) or (e) of the 1984 Act.

- (8) If in pursuance of subsection (5) above a person is treated as having on any occasion sold an asset and inheritance tax becomes chargeable on the same occasion, then, in determining the value of the asset for the purposes of that tax, an allowance shall be made for the capital gains tax chargeable on any chargeable gain accruing on that occasion.

- (8A) Section 35A of the 1984 Act (variation of undertakings) shall have effect in relation to an undertaking given under this section as it has effect in relation to an undertaking given under section 30 of that Act.

- (9) In this section “*inheritance tax undertaking*” means an undertaking under Chapter II of Part II or section 78 of, or Schedule 5 to, the 1984 Act.

#### Gifts to housing associations

##### 259

- (1) Subsection (2) below shall apply where—

- (a) a disposal of an estate or interest in land in the United Kingdom is made to a relevant housing provider otherwise than under a bargain at arm’s length, and

- (b) a claim for relief under this section is made by the transferor and the relevant housing provider.

- (2) Section 17(1) shall not apply; but if the disposal is by way of gift or for a consideration not exceeding the sums allowable as a deduction under section 38, then—

- (a) the disposal and acquisition shall be treated for the purposes of this Act as being made for such consideration as to secure that neither a gain nor a loss accrues on the disposal, and

- (b) where, after the disposal, the estate or interest is disposed of by the relevant housing provider, its acquisition by the person making the earlier disposal shall be treated for the purposes of this Act as the acquisition of the relevant housing provider.

- (3) In this section “*relevant housing provider*” means—

- (a) a non-profit registered provider of social housing,

- (b) a registered social landlord within the meaning of Part 1 of the Housing Act 1996,

- (c) a body registered in the register maintained under section 20(1) of the Housing (Scotland) Act 2010, or

- (d) a registered housing association within the meaning of Part 2 of the Housing (Northern Ireland) Order 1992.

- (4) In subsection (2)(b) above the first reference to a disposal includes a disposal to which section 146A(2) of the 1979 Act applied where the association which acquired the estate or interest in land on that disposal disposes of it after the coming into force of this section.

#### Gifts on which inheritance tax is chargeable etc

##### 260

- (1) If—

- (a) an individual or the trustees of a settlement (“*the transferor*”) make a disposal within subsection (2) below of an asset,

- (b) the asset is acquired by an individual or the trustees of a settlement (“*the transferee*”), and

- (c) a claim for relief under this section is made by the transferor and the transferee or, where the trustees of a settlement are the transferee, by the transferor alone,

then, subject to subsection (6) below and sections 169, 169B, 169C, 261 and 261ZA, subsection (3) below shall apply in relation to the disposal.

- (2) A disposal is within this subsection if it is made otherwise than under a bargain at arm’s length and—

- (a) is a chargeable transfer within the meaning of the Inheritance Tax Act 1984 (or would be but for section 19 of that Act) and is not a potentially exempt transfer (within the meaning of that Act),

- (b) is an exempt transfer by virtue of—

- (i) section 24 of that Act (transfers to political parties),

- (ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (iii) section 27 of that Act (transfers to maintenance funds for historic buildings etc.), or

- (iv) section 30 of that Act (transfers of designated property),

- (c) is a disposition to which section 57A of that Act applies and by which the property disposed of becomes held on trusts of the kind referred to in subsection (1)(b) of that section (maintenance funds for historic buildings etc.),

- (d) by virtue of subsection (4) of section 71 of that Act (accumulation and maintenance trusts) does not constitute an occasion on which inheritance tax is chargeable under that section,

- (da) by virtue of subsection (2) of section 71B of that Act (trusts for bereaved minors) does not constitute an occasion on which inheritance tax is chargeable under that section,

- (db) by virtue of subsection (2) of section 71E of that Act (age 18-to-25 trusts) does not constitute an occasion on which inheritance tax is charged under that section,

- (e) by virtue of section 78(1) of that Act (transfers of works of art etc.) does not constitute an occasion on which tax is chargeable under Chapter III of Part III of that Act, or

- (f) is a disposal of an asset comprised in a settlement where, as a result of the asset or part of it becoming comprised in another settlement, there is no charge, or a reduced charge, to inheritance tax by virtue of paragraph 9, 16 or 17 of Schedule 4 to that Act (transfers to maintenance funds for historic buildings etc.).

- (3) Where this subsection applies in relation to a disposal—

- (a) the amount of any chargeable gain which, apart from this section, would accrue to the transferor on the disposal, and

- (b) the amount of the consideration for which, apart from this section, the transferee would be regarded for the purposes of capital gains tax as having acquired the asset in question,

shall each be reduced by an amount equal to the held-over gain on the disposal.

- (4) Subject to subsection (5) below, the reference in subsection (3) above to the held-over gain on a disposal is a reference to the chargeable gain which would have accrued on that disposal apart from this section.

- (5) In any case where—

- (a) there is actual consideration (as opposed to the consideration equal to the market value which is deemed to be given by virtue of any provision of this Act) for a disposal in respect of which a claim for relief is made under this section, and

- (b) that actual consideration exceeds the sums allowable as a deduction under section 38,

the held-over gain on the disposal shall be reduced by the excess referred to in paragraph (b) above ... .

- (6) Subsection (3) above does not apply in relation to a disposal of assets within section 115(1) on which a gain is deemed to accrue by virtue of section 116(10)(b).

- (6ZA) Subsections (6ZB) and (6ZC) apply in any case where—

- (a) the disposal is a direct or indirect disposal of UK land which meets the non-residence condition, and

- (b) the transferee is resident in the United Kingdom.

- (6ZB) Subsections (3) and (4) have effect in relation to the disposal as if the reference to “chargeable gain” were a reference to “so much of any gain accruing on the disposal as falls to be dealt with as mentioned in subsection (6ZD)(a) or (b)”.

- (6ZC) Subsection (5) has effect in relation to the disposal as if the reference to “the excess referred to in paragraph (b) above” were a reference to “so much of the gain mentioned in subsection (6ZB) which, ignoring this section and section 17(1), would accrue to the transferor on the disposal”.

- (6ZD) For the purposes of subsections (6ZA) to (6ZC) a disposal is a “direct or indirect disposal of UK land which meets the non-residence condition” 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, or

- (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).

- (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (6B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (7) In the case of a disposal within subsection (2)(a) above (whether or not subsection (3) above applies in relation to it) there shall be allowed as a deduction in computing the chargeable gain accruing to the transferee on the disposal of the asset in question an amount equal to whichever is the lesser of—

- (a) the inheritance tax attributable to the value of the asset; and

- (b) the amount of the chargeable gain as computed apart from this subsection.

- (8) Where an amount of inheritance tax is varied after it has been taken into account under subsection (7) above, all necessary adjustments shall be made, whether by the making of an assessment to capital gains tax or by the discharge or repayment of such tax.

- (9) Where subsection (3) above applies in relation to a disposal which is deemed to occur by virtue of section 71(1) or 72(1), subsection (5) above shall not apply.

- (10) Where a disposal is partly within subsection (2) above, or is a disposal within paragraph (f) of that subsection on which there is a reduced charge such as is mentioned in that paragraph, the preceding provisions of this section shall have effect in relation to an appropriate part of the disposal.

#### Section 260 relief: gifts to non-residents

##### 261

- (1) Subject to section 261ZA, section 260(3) shall not apply where the transferee is not resident in the United Kingdom.

- (2) Section 260(3) shall not apply where the transferee is an individual who—

- (a) though resident ... in the United Kingdom, is regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom, and

- (b) by virtue of the arrangements would not be liable in the United Kingdom to tax on a gain arising on a disposal of the asset occurring immediately after its acquisition.

### Miscellaneous reliefs and exemptions

#### Chattel exemption

##### 262

- (1) Subject to this section a gain accruing on a disposal of an asset which is tangible movable property shall not be a chargeable gain if the amount or value of the consideration for the disposal does not exceed £6,000.

- (2) Where the amount or value of the consideration for the disposal of an asset which is tangible movable property exceeds £6,000, there shall be excluded from any chargeable gain accruing on the disposal so much of it as exceeds five-thirds of the difference between—

- (a) the amount or value of the consideration, and

- (b) £6,000.

- (3) Subsections (1) and (2) above shall not affect the amount of an allowable loss accruing on the disposal of an asset, but for the purposes of computing under this Act the amount of a loss accruing on the disposal of tangible movable property the consideration for the disposal shall, if less than £6,000, be deemed to be £6,000 and the losses which are allowable losses shall be restricted accordingly.

- (4) If 2 or more assets which have formed part of a set of articles of any description all owned at one time by one person are disposed of by that person, and—

- (a) to the same person, or

- (b) to persons who are acting in concert or who are connected persons,

whether on the same or different occasions, the 2 or more transactions shall be treated as a single transaction disposing of a single asset, but with any necessary apportionments of the reductions in chargeable gains, and in allowable losses, under subsections (2) and (3) above.

- (5) If the disposal is of a right or interest in or over tangible movable property—

- (a) in the first instance subsections (1), (2) and (3) above shall be applied in relation to the asset as a whole, taking the consideration as including the market value of what remains undisposed of, in addition to the actual consideration,

- (b) where the sum of the actual consideration and that market value exceeds £6,000, the part of any chargeable gain that is excluded from it under subsection (2) above shall be so much of the gain as exceeds five-thirds of the difference between that sum and £6,000 multiplied by the fraction equal to the actual consideration divided by the said sum, and

- (c) where that sum is less than £6,000 any loss shall be restricted under subsection (3) above by deeming the consideration to be the actual consideration plus the said fraction of the difference between the said sum and £6,000.

- (6) This section shall not apply—

- (a) in relation to a disposal of commodities of any description by a person dealing on a terminal market or dealing with or through a person ordinarily engaged in dealing on a terminal market, or

- (b) in relation to a disposal of currency of any description.

#### Passenger vehicles

##### 263

A mechanically propelled road vehicle constructed or adapted for the carriage of passengers, except for a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used, shall not be a chargeable asset; and accordingly no chargeable gain or allowable loss shall accrue on its disposal.

#### Relief for local constituency associations of political parties on reorganisation of constituencies

##### 264

- (1) In this section “*relevant date*” means the date of coming into operation of an Order in Council under the Parliamentary Constituencies Act 1986 (orders specifying new parliamentary constituencies) and, in relation to any relevant date—

- (a) “*former parliamentary constituency*” means an area which, for the purposes of parliamentary elections, was a constituency immediately before that date but is no longer such a constituency after that date; and

- (b) “*new parliamentary constituency*” means an area which, for the purposes of parliamentary elections, is a constituency immediately after that date but was not such a constituency before that date.

- (2) In this section “*local constituency association*” means an unincorporated association (whether described as an association, a branch or otherwise) whose primary purpose is to further the aims of a political party in an area which at any time is or was the same or substantially the same as the area of a parliamentary constituency or 2 or more parliamentary constituencies and, in relation to any relevant date—

- (a) “*existing association*” means a local constituency association whose area was the same, or substantially the same, as the area of a former parliamentary constituency or 2 or more such constituencies; and

- (b) “*new association*” means a local constituency association whose area is the same, or substantially the same, as the area of a new parliamentary constituency or 2 or more such constituencies.

- (3) For the purposes of this section, a new association is a successor to an existing association if any part of the existing association’s area is comprised in the new association’s area.

- (4) In any case where, before, on or after a relevant date—

- (a) an existing association disposes of land to a new association which is a successor to the existing association, or

- (b) an existing association disposes of land to a body (whether corporate or unincorporated) which is an organ of the political party concerned and, as soon as practicable thereafter, that body disposes of the land to a new association which is a successor to the existing association,

the parties to the disposal or, where paragraph (b) above applies, to each of the disposals, shall be treated for the purposes of tax on chargeable gains as if the land disposed of were acquired from the existing association or the body making the disposal for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss accrued to that association or body.

- (5) In a case falling within subsection (4) above, the new association shall be treated for the purposes of Schedule 2 as if the acquisition by the existing association of the land disposed of as mentioned in that subsection had been the new association’s acquisition of it.

- (6) In any case where—

- (a) before, on or after a relevant date, an existing association disposes of any land which was used and occupied by it for the purposes of its functions, and

- (b) the existing association transfers the whole or part of the proceeds of the disposal to a new association which is a successor to the existing association,

then, subject to subsection (7) below, this Act (and, in particular, the provisions of sections 152 to 158) shall have effect as if, since the time it was acquired by the existing association, the land disposed of had been the property of the new association and, accordingly, as if the disposal of it had been by the new association.

- (7) If, in a case falling within subsection (6) above, only part of the proceeds of the disposal is transferred to the new association, that subsection shall apply—

- (a) as if there existed in the land disposed of as mentioned in paragraph (a) of that subsection a separate asset in the form of a corresponding undivided share in that land, and subject to any necessary apportionments of consideration for an acquisition or disposal of, or of an interest in, that land; and

- (b) as if the references in that subsection (other than paragraph (a) thereof) to the land disposed of and the disposal of it were references respectively to the corresponding undivided share referred to in paragraph (a) above and the disposal of that share;

and for this purpose a corresponding undivided share in the land disposed of is a share which bears to the whole of that land the same proportion as the part of the proceeds transferred bears to the whole of those proceeds.

- (8) In this section “*political party*” means a political party which qualifies for exemption under section 24 of the Inheritance Tax Act 1984 (gifts to political parties).

#### Designated international organisations

##### 265

- (1) Where—

- (a) the United Kingdom or any of the Communities is a member of an international organisation; and

- (b) the agreement under which it became a member provides for exemption from tax, in relation to the organisation, of the kind for which provision is made by this section;

the Treasury may by order designate that organisation for the purposes of this section.

- (2) The Treasury may by order designate any of the Communities or the European Investment Bank for the purposes of this section.

- (3) Where an organisation has been designated for the purposes of this section, then any security issued by the organisation shall be taken, for the purposes of this Act, to be situated outside the United Kingdom.

#### Inter-American Development Bank

##### 266

A security issued by the Inter-American Development Bank shall be taken for the purposes of this Act to be situated outside the United Kingdom.

#### Sharing of transmission facilities

##### 267

- (1) This section applies to any agreement relating to the sharing of transmission facilities—

- (a) to which the parties are national broadcasting companies,

- (b) which is entered into on or after 25th July 1991 (the day on which the Finance Act 1991 was passed) and before 1st January 1992 or such later date as may be specified for the purposes of this paragraph by the Secretary of State, and

- (c) in relation to which the Secretary of State has certified that it is expedient that this section should apply.

- (2) Where under an agreement to which this section applies one party to the agreement disposes of an asset to another party to the agreement, both parties shall be treated for the purposes of corporation tax on chargeable gains as if the asset acquired by the party to whom the disposal is made were acquired for a consideration of such amount as would secure that on the other’s disposal neither a gain nor a loss would accrue to that other.

- (3) Where under an agreement to which this section applies one party to the agreement disposes of an asset to another party to the agreement and the asset is one which the party making the disposal acquired on a part disposal by the party to whom the disposal under the agreement is made, then in applying subsection (2) above—

- (a) section 42 shall be deemed to have had effect in relation to the part disposal with the omission of subsection (4),

- (b) the amount or value of the consideration for the part disposal shall be taken to have been nil, and

- (c) if the disposal under the agreement is one to which section 35(2) applies, the market value of the asset on 31st March 1982 shall be taken to have been nil.

- (4) In this section “*national broadcasting company*” means a body corporate engaged in the broadcasting for general reception by means of wireless telegraphy of radio or television services or both on a national basis.

#### Decorations for valour or gallant conduct

##### 268

A gain shall not be a chargeable gain if accruing on the disposal by any person of a decoration awarded for valour or gallant conduct which he acquired otherwise than for consideration in money or money’s worth.

#### Foreign currency for personal expenditure

##### 269

A gain shall not be a chargeable gain if accruing on the disposal by an individual of currency of any description acquired by him for the personal expenditure outside the United Kingdom of himself or his family or dependants (including expenditure on the provision or maintenance of any residence outside the United Kingdom).

#### Chevening Estate

##### 270

The enactments relating to capital gains tax (apart from this section) shall not apply in respect of property held on the trusts of the trust instrument set out in the Schedule to the Chevening Estate Act 1959.

#### Other miscellaneous exemptions

##### 271

- (1) The following gains shall not be chargeable gains—

- (a) gains accruing on the disposal of stock—

- (i) transferred, in pursuance of any Act of Parliament, to accounts in the books of the Bank of England in the name of the Treasury or the National Debt Commissioners;

- (ia) transferred, in pursuance of any Act of Parliament, to the Treasury or the National Debt Commissioners and in respect of which the Treasury or those Commissioners are entered as holder in the registers kept by the Registrar of Government Stock; or

- (ii) belonging to the Crown, in whatever name it may stand in the books of the Bank of England or in the registers kept by the Registrar of Government Stock;

- (b) any gain accruing to a person from his acquisition and disposal of assets held by him as part of the Fund mentioned in section 613(4) of the Taxes Act (House of Commons Members’ Fund);

- (c) any gain accruing to a person from his acquisition and disposal of assets held by him as part of a fund—

- (i) mentioned in section 614(2) of the Taxes Act,

- (ii) to which section 615(3) of the Taxes Act applies, or

- (iii) mentioned in section 648, 649, 650, 651 or 653 of ITEPA 2003;

- (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (e) any gain accruing on the disposal by the trustees of any settled property held on trusts in accordance with directions which are valid and effective under section 9 of the Superannuation and Trust Funds (Validation) Act 1927 (trust funds for the reduction of the National Debt);

- (ea) any gain accruing on the disposal by the trustees of an asbestos compensation settlement of any property comprised in the settlement;

- (f) any gain accruing to a consular officer or employee, within the meaning of section 771 of ITTOIA 2005, of any foreign state to which that section applies on the disposal of assets which at the time of the disposal were situated outside the United Kingdom;

- (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

- (j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .