Finance Act 1982

Part IIIU.K. Income Tax, Corporation Tax and Capital Gains Tax

Chapter IU.K. General

20—26.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F1U.K.

Textual Amendments

27 Termination of the option mortgage schemes.U.K.

(1)Subject to the provisions of this section, Part II of the 1967 Act (assistance for house purchase and improvement in Great Britain) and Part VIII of the 1981 Order (option mortgages in Northern Ireland) shall cease to have effect on 1st April 1983.

(2)Nothing in [F2this Act or the Taxes Act 1988] affects the continuing operation of—

(a)sections 24(2)(a) and 28 of the 1967 Act (entitlement to and calculation of subsidy) with respect to payments falling to be made by the Secretary of State and related to amounts due from the borrower before 1st April 1983 or treated as so due by virtue of section 28(1A) of that Act; or

(b)section 28A of the 1967 Act (recovery of subsidy in certain cases) in its application to any such payments; or

(c)Articles 142(2)(a) and 149 of the 1981 Order (entitlement to and calculation of subsidy) with respect to payments falling to be made by the Department of the Environment for Northern Ireland and related to amounts due from the borrower before 1st April 1983 or treated as so due by virtue of Article 149(2) of that Order; or

(d)Article 150 of the 1981 Order (recovery of subsidy in certain cases) in its application to any such payments.

(3)Nothing in [F2this Act or the Taxes Act 1988] affects the continuing operation of Part II of the 1967 Act in relation to a loan in respect of which an option notice is in force on 31st March 1983 if—

(a)on that date the residence condition in section 24B of that Act is not fulfilled ; and

(b)as a result either of the lender having first become aware of the fact on or before that date or of a notification having been given on or before that date, the option notice will (assuming the continuation in force of the said Part II) cease to have effect after that date by virtue of paragraph (ix) or paragraph (x) of subsection (3) of section 24 of that Act.

(4)Nothing in [F2this Act or the Taxes Act 1988] affects the continuing operation of Part VIII of the 1981 Order in relation to a loan in respect of which an option notice is in force on 31st March 1983 if—

(a)on that date the residence condition in Article 145 of that Order is not fulfilled; and

(b)as a result either of the lender having first become aware of that fact on or before that date or of a notification having been given on or before that date, the option notice will (assuming the continuation in force of the said Part VIII) cease to have effect after that date by virtue of sub-paragraph (i) or sub-paragraph (j) of paragraph (4) of Article 142 of that Order.

(5)In this section— “the 1967 Act” means the M1Housing Subsidies Act 1967; and “the 1981 Order” means the M2Housing (Northern Ireland) Order 1981.

Textual Amendments

Modifications etc. (not altering text)

Marginal Citations

28—67.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3U.K.

Textual Amendments

F3Ss. 28–67 repealed by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 844 and Sch. 31 (and see Finance Act 1988 (c. 39, SIF 63:1, 2), s. 148 and Sch. 14 Pt. VI for partial repeal of s. 41 in relation to acquisitions on or after 26 October 1987)

68 Postponement of recovery of tax. U.K.

(1)In section 55 of the M3Taxes Management Act 1970 (postponement of recovery of tax) in subsection (2) for the words “If no application is made under subsection (3) below” there shall be substituted the words “ Except as otherwise provided by the following provisions of this section ”.

(2)After subsection (3) of that section there shall be inserted the following subsection—

“(3A)An application under subsection (3) above may be made more than thirty days after the date of the issue of the notice of assessment if there is a change in the circumstances of the case as a result of which the appellant has grounds for believing that he is over-charged to tax by the assessment.”

(3)In subsection (6) of that section (determination of application) in paragraph (a) after the words “subsection (3) above” there shall be inserted the words “ other than an application made by virtue of subsection (3A) above ”.

(4)This section has effect in relation to notices of assessment to tax issued after the passing of this Act.

Modifications etc. (not altering text)

C2Part of the text of s. 68 is in the form in which it was originally enacted: it was not reproduced in Statutes in Force and does not reflect any amendments or repeals which may have been made prior to 1.2.1991

Marginal Citations

[F469

(1)In section 86 of the Taxes Management Act 1970 (interest on overdue tax) in subsection (3) (date when interest becomes payable)—

(a)the following paragraph shall be inserted after paragraph (a)—

“(aa)in relation to any tax payable in accordance with the determination of an appeal against an assessment but which had not been charged by the assessment, the date which if it had been charged would by virtue of paragraph (a) above have been the reckonable date; and”; and

(b)in paragraph (b) after the words “paragraph (a)” there shall be inserted the words “ or paragraph (aa) ”.

(2)This section has effect in relation to notices of assessment to tax issued after the passing of this Act.]

Textual Amendments

F4S. 69 repealed by Finance Act 1989 (c. 26), s. 187 and Sch. 17 Pt. VIII in relation to tax charged by any assessment notice of which is issued after 30 July 1982

Chapter IIU.K.

70–79. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F5U.K.

Textual Amendments

Chapter IIIU.K. Capital Gains

Modifications etc. (not altering text)

80 Increase and indexation of annual exempt amount.U.K.

(1)In section 5 of the Capital Gains Tax Act 1979 (exemption for first £3,000 of gains)—

(a)for “£3,000”, in each place where it occurs, there shall be substituted “ the exempt amount for the year ”; and

(b)for “£5,000”, where it occurs in subsection (5)(b), there shall be substituted “ an amount equal to twice the exempt amount for the year. ”

(2)After subsection (1) of that section there shall be inserted the following subsections—

“(1A)Subject to subsection (1B) below, the exempt amount for any year of assessment shall be £5,000.

(1B)If the retail prices index for the month of December preceding the year 1983–84 or any subsequent year of assessment is higher than it was for the previous December, then, unless Parliament otherwise determines, subsection (1A) above shall have effect for that year as if for the amount specified in that subsection as it applied for the previous year (whether by virtue of this subsection or otherwise) there were substituted an amount arrived at by increasing the amount for the previous year by the same percentage as the percentage increase in the retail prices index and, if the result is not a multiple of £100, rounding it up to the nearest amount which is such a multiple.

(1C)The Treasury shall, before the year 1983–84 and each subsequent year, make an order specifying the amount which by virtue of this section is the exempt amount for that year; and any such order shall be made by statutory instrument”.

(3)In Schedule 1 to that Act—

(a)the heading shall be changed to “ APPLICATION OF EXEMPT AMOUNT IN PARTICULAR CASES ”;

(b)for the words “the amount of £3,000”, where they occur in paragraphs . . . F65(1D), and for “£3,000” in every other place where it occurs, there shall be substituted the words “the exempt amount for the year”;

(c)for “£300”, where it occurs in paragraphs 5(1B) and 6(4), there shall be substituted the words “ one tenth of that exempt amount ”;

(d)for “£1,500”, in each place where it occurs in sub-paragraphs (2) and (4) of paragraph 6, and for “the amount of £1,500”, where it occurs in sub-paragraph (6) of that paragraph, there shall be substituted the words “ one half of the exempt amount for the year ”; and

(e)in sub-paragraph (3) of paragraph 6 for the words from “£5,000” onwards there shall be substituted the words “ “twice the exempt amount for the year” of “one half of the exempt amount for the year” and “the exempt amount for the year” respectively ”.

(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F7

(5)This section has effect for the year 1982–83 and subsequent years of assessment.

Textual Amendments

F6Words repealed by Finance Act 1988 (c. 39, SIF 107:2), s. 148, Sch. 14 Pt. VIII for 1990–91 and subsequent years

Modifications etc. (not altering text)

C4Part of the text of ss. 80(1)–(3), 83, 84 is in the form in which it was originally enacted: it was not reproduced in Statutes in Force and does not reflect any amendments or repeals which may have been made prior to 1.2.1991

[F881 Increase of chattel exemption.U.K.

(1)In the following enactments, namely,—

(a)section 128 of the Capital Gains Tax Act 1979 (chattel exemption by reference to consideration of £2,000),

(b)section 12(2)(b) of the M4Taxes Management Act 1970 (information about assets acquired), and

(c)section 25(7) of that Act (information about assets disposed of),

for “£2,000”, in each case where it occurs, there shall be substituted “ £3,000 ”.

(2)This section applies to disposals on or after 6th April 1982 and, accordingly, in relation to subsection (1)(b) above, to assets acquired on or after that date.]

Textual Amendments

F8S. 81 repealed by Finance Act 1989 (c. 26), s. 187 and Sch. 17 Pt. VII in relation to disposals on or after 6 April 1989 (and s. 81(1)(b) repealed in relation to assets acquired on or after 6 April 1989)

Marginal Citations

[F982 Extension of general relief for gifts.U.K.

(1)Section 79 of the M5Finance Act 1980 (which gives relief for disposals between individuals and, by virtue of section 78 of the M6Finance Act 1981, disposals by individuals to trustees) shall have effect as if references to an individual included references to the trustees of a settlement; but a claim for relief under that section in respect of a disposal to the trustees of a settlement shall be made by the transferor alone (instead of by the transferor and the transferee).

(2)In subsection (4) of that section, the words from “or” onwards shall cease to have effect.

(3)In subsection (5) of that section—

(a)in paragraph (a), for the words from “chargeable” to “purposes” there shall be substituted the words “ attributable to the value of the asset ”; and

(b)the words from “and where” onwards shall cease to have effect.

(4)In section 78 of the Finance Act 1981 (subsections (1) and (3) of which are superseded by this section) in subsection (2) for the words “that section” there shall be substituted the words “ section 79 of the Finance Act 1980 ”.

(5)This section applies to disposals on or after 6th April 1982.]

Textual Amendments

F9S. 82 repealed by Finance Act 1989 (c. 26), s. 187 and Sch. 17 Pt. VII in relation to disposals on or after 14 March 1989 (except where relief given under Finance Act 1980 (c. 48) s. 79 in respect of a disposal made on or after that date)

Marginal Citations

83 Relief on compulsory purchase. U.K.

After section 111 of the M7Capital Gains Tax Act 1979 there shall be inserted the foIlowing sections—

“111A Rollover relief on compulsory acquisition.

(1)This section applies where—

(a)on or after 6th April 1982 land (in this section referred to as “the old land”) is disposed of by any person (in this section referred to as “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 (in this section referred to as “the new land”) not being land excluded from this paragraph by section 111B below.

(2)Subject to section 111B below, 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 111B below, if the part of the consideration which was not so applied (in this subsection referred to as “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 115 below 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)subsection (3) 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.

(6)Where this section applies, any such amount as is referred to in subsection (2) of section 110 above 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 108(5) above.

111B Provisions supplementary to section 111A.

(1)Land is excluded from paragraph (c) of subsection (1) of section 111A above 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 101 to 105 above (private residences) 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;

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

(2)If, at any time during the period of six years referred to in subsection (1) above, land which at the beginning of that period was not excluded from section 111A(1)(c) above 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 111A above 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 Taxes Management Act 1970 (time limit for assessments).

(3)Where the new land is a depreciating asset, within the meaning of section 117 below, that section has effect as if—

(a)any reference in subsection (1) or subsection (3) to section 115 or section 116 were a reference to subsection (2) or subsection (3) respectively of section 111A above; and

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

(c)the reference in subsection (4) to section 115(3) were a reference to that provision as applied by section 111A(5) above.

(4)No claim may be made under section 108 above in relation to a transfer which constitutes a disposal in respect of which a claim is made under section 111A above.

(5)Expressions used in this section have the same meaning as in section 111A above.”

Modifications etc. (not altering text)

C5Part of the text of ss. 80(1)–(3), 83, 84 is in the form in which it was originally enacted: it was not reproduced in Statutes in Force and does not reflect any amendments or repeals which may have been made prior to 1.2.1991

Marginal Citations

84 Termination of life interest etc. U.K.

(1)In section 55 of the M8Capital Gains Tax Act 1979, in subsection (1), for the words from the beginning to “market value of the asset” there shall be substituted—

“On the termination, on the death of the person entitled to it, of a life interest in possession in all or any part of settled property—

(a)the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property shall be deemed for the purposes of this Act at that time to be disposed of and immediately re-acquired by the trustee for a consideration equal to the whole or a corresponding part of the market value of the asset; but

(b)no chargeable gain shall accrue on that disposal.”;

and subsection (2) of that section shall cease to have effect.

(2)In section 56 of that Act, after subsection (1) there shall be inserted—

“(1A)Where the life interest referred to in subsection (1) above is an interest in part only of the settled property to which section 54 applies, subsection (1)(a) above shall not apply but any chargeable gain accruing on the disposal shall be reduced by a proportion corresponding to that represented by the part.

(1B)The last sentence of subsection (1) of section 55 above, and subsection (6) of that section, shall apply for the purposes of subsection (1A) above as they apply for the purposes of section 55(1).”;

and subsection (2) of section 56 shall cease to have effect.

(3)After section 56 of that Act there shall be inserted—

“56A Effect on sections 55 and 56 of relief under Finance Act 1980, section 79.

(1)This section applies where—

(a)a claim for relief was made under section 79 of the Finance Act 1980 in respect of the disposal of an asset to a trustee, and

(b)the trustee is deemed to have disposed of the asset, or part of it, by virtue of section 54(1) or 55(1)(a) above.

(2)Sections 56(1)(a) and 55(1)(b) shall not apply to the disposal of the asset or part by the trustee, but any chargeable gain accruing to the trustee on the disposal shall be restricted to the amount of the held-over gain (or a corresponding part of it) on the disposal of the asset to him.

(3)Subsection (2) above shall not have effect in a case within section 56(1A) above; but in such a case the reduction provided for by section 56(1A) above shall be diminished by an amount equal to the proportion there mentioned of the held-over gain.

(4)In this section “held-over gain” has the same meaning as in section 79(1) of the Finance Act 1980.”

(4)This section applies in relation to interests terminating on or after 6th April 1982.

Modifications etc. (not altering text)

C6Part of the text of ss. 80(1)–(3), 83, 84 is in the form in which it was originally enacted: it was not reproduced in Statutes in Force and does not reflect any amendments or repeals which may have been made prior to 1.2.1991

Marginal Citations

85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F10U.K.

Textual Amendments

F10S. 85 repealed by Finance Act 1984 (c. 43, SIF 40:1), s. 128(6), Sch. 23 Pt. VIII for disposals on or after 6 April 1984; Ss. 83-88 repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 20, 22, 26(2), 27)

86 Indexation allowance on certain disposals. U.K.

(1)This section applies to any disposal of an asset—

(a)which occurs on or after 6th April 1982, or, if the disposal is by a company, on or after 1st April 1982; [F11and]

[F11(b)which occurs after the expiry of the period of twelve months beginning on the date on which the asset in question was acquired or provided (which period is in the following provisions of this Chapter referred to, in relation to a disposal, as “the qualifying period”; and

(c)on which, disregarding the indexation allowance for which provision is made below, a gain would accrue (whether or not that gain would be wholly a chargeable gain)].

(2)In relation to a disposal to which this section applies—

[F12(a)“the unindexed gain or loss” means the amount of the gain or loss on the disposal computed in accordance with Chapter II of Part II of the Capital Gains Tax Act 1979 and, if there is neither a gain nor a loss on the disposal as so computed, the unindexed gain or loss shall be nil]; and

(b)“relevant allowable expenditure” means, subject to subsection (3) below, any sum which, in the computation of the [F13unindexed gain or loss], was taken into account by virtue of paragraph (a) or paragraph (b) of subsection (1) of section 32 of that Act.

(3)In determining what sum (if any) was taken into account as mentioned in subsection (2)(b) above, account shall be taken of any provision of any enactment which, for the purpose of the computation under the said Chapter II, increases, excludes or reduces the whole or any part of any item of expenditure falling within the said section 32 or provides for it to be written-down.

(4)The following provisions of this Chapter have effect to provide for an allowance (in those provisions referred to as “the indexation allowance”) which, on a disposal to which this section applies, is to be [F14set against the unindexed gain or, as the case may be, added to the unindexed loss so as to give the gain or loss for the purposes of the Capital Gains Tax Act 1979 as follows,—

(a)if there is an unindexed gain, the indexation allowance shall be deducted from the gain and, if the allowance exceeds the unindexed gain, the excess shall constitute a loss;

(b)if there is an unindexed loss, the indexation allowance shall be added to it so as to increase the loss; and

(c)if the unindexed gain or loss is nil, there shall be a loss equal to the indexation allowance];

and, accordingly, at the end of subsection (1) of section 28 of that Act (computation of gains accruing on the disposal of assets) there shall be added the words “and sections 86 and 87 of the Finance Act 1982”.

[F15(5)Notwithstanding anything in section 29 of the Capital Gains Tax Act 1979 (losses to be computed in like manner as gains)—

(a)this section does not apply to a disposal on which a loss accrues ; and

(b)in any case where, on a disposal to which this section does apply, the indexation allowance exceeds the gross gain, no loss shall result and, accordingly, the disposal shall be one on which, after taking account of the indexation allowance, neither a gain nor a loss accrues.]

(6)The provisions of Schedule 13 to this Act have effect for supplementing this section and the following provisions of this Chapter and the preceding provisions of this section have effect subject to the provisions of that Schedule.

Textual Amendments

F11S. 86(1)(b)(c) and the word preceding them repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

F12S. 86(2)(a) substituted by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

F13Words substituted by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

F14S. 86(4)(a)–c and the preceding words substituted for words by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

F15S. 86(5) repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

Modifications etc. (not altering text)

C7See Finance Act 1985 (c. 54), s. 68(3)(e) and Sch. 19 para. 23

C8See Finance Act 1983 (c. 28), s. 34 and Sch. 6 para. 3(6) for application of s. 86(1) where election for pooling under Sch. 6 of that Act

C9See—Finance Act 1988 (c. 39, SIF 107:2), s. 113Finance Act 1990 (c. 29, SIF 40:1), s. 54

C10See also Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 28 para. 4(3) re computation of offshore income gains

87 Calculation of indexation allowance. U.K.

(1)The provisions of this section have effect for the purpose of computing the indexation allowance on a disposal to which section 86 above applies.

(2)The indexation allowance is the aggregate of the indexed rise in each item of relevant allowable expenditure ; and, in relation to any such item of expenditure, the indexed rise is a sum produced by multiplyiing the amount of that item by a figure expressed as a decimal and determined, subject to subsections (3) and (4) below, by the formula (RD-RI)PRI where—

RD is the retail prices index for the month in which the disposal occurs ; and

RI is the retail prices index for March 1982 or the month [F16which is the twelfth month after that] in which the expenditure was incurred, whichever is the later.

(3)If, in relation to any item of expenditure,—

[F17(a)the expenditure is attributable to the acquisition of relevant securities, within the meaning of section 88 below, which are disposed of within the period of ten days beginning on the day on which the expenditure was incurred, or]

(b)RD, as defined in subsection (2) above, is equal to or less than RI, as so defined,

the indexed rise in that item is nil.

(4)If, in relation to any item of expenditure, the figure determined in accordance with the formula in subsection (2) above would, apart from this subsection, be, a figure having more than three decimal places, it shall be rounded to the nearest third decimal place.

(5)For the purposes of this section—

(a)relevant allowable expenditure falling within paragraph (a) of subsection (1) of section 32 of the M9 Capital Gains Tax Act 1979 shall be assumed to have been incurred at the time when the asset in question was acquired or provided; and

(b)relevant allowable expenditure falling within paragraph (b) of that subsection shall be assumed to have been incurred at the time when that expenditure became due and payable.

Textual Amendments

F16Words repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

F17S. 87(3)(a) substituted by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

Modifications etc. (not altering text)

C11See—Finance Act 1988 (c. 39, SIF 107:2), s. 113Finance Act 1990 (c. 29, SIF 40:1), s. 54

C12See—Finance Act 1983 (c. 28), s. 34 and Sch. 6 para. 5(1)Finance Act 1985 (c. 54), s. 68(3)(b) and Sch. 19 para. 11(1)

C14S. 87(2) applied (with modifications) (16.1.1992) by S.I. 1992/58, art. 9, Sch. 2 para. 12(1)

C15See Finance Act 1985 (c. 54), s. 68(3)(c) and Sch. 19 para. 18(4)

C16See Finance Act 1985 (c. 54), s. 68(3)(a) and Sch. 19 para. 7(3)

Marginal Citations

88 Identification of securities etc. disposed of: general rules. U.K.

(1)With respect to [F18relevant securities] held on, or acquired on or after, 6th April 1982 or, in the case of a company, 1st April 1982 the provisions of this section (other than subsection (8)) [F19and section 89 below] have effect in place of sections 65 and 66 of the Capital Gains Tax Act 1979 (pooling and other rules for identification of securities) ; and, in taking account of those provisions,—

(a)this section, [F19section 89 below] and Part II of Schedule 13 shall have effect subject to section 58 of the M10 Finance (No. 2) Act 1975 (disposal of shares and securities within prescribed period of acquisition); [F20and]

[F20(b)the reference in section 68(4) of the Capital Gains Tax Act 1979 (general identification rules for gilt-edged securities) to section 66(1) of that Act shall be construed as including a reference to subsection (4) below].

(2)Where a person disposes of [F18relevant securities], the securities disposed of shall be identified in accordance with the rules contained in this section with the securities of the same class acquired by him which could be comprised in that disposal, and shall be so identified notwithstanding that they are otherwise identified by the disposal or by a transfer or delivery giving effect to it (but so that where a person disposes of securities in one capacity, they shall not be identified with securities which he holds or can, dispose of only in some other capacity).

(3)[F18Relevant securities] disposed of on an earlier date shall be identified before securities disposed of on a later date, and the identification of the securities first disposed of shall accordingly determine the securities which could be comprised in the later disposal.

(4)[F18Relevant securities] disposed of for transfer or delivery on a particular date or in a particular period—

(a)shall not be identified with securities acquired for transfer or delivery on a later date or in a later period and

(b)shall be identified with securities acquired for transfer or delivery on or before that date or in or before that period, but on or after the date of the disposal, rather than with securities not so acquired.

(5)The [F18relevant securities] disposed of shall be identified—

(a)with securities acquired within the twelve months preceding the disposal rather than with securities not so acquired, and with securities so acquired on an earlier date rather than with securities so acquired on a later date, and

(b)subject to paragraph (a) above, with securities acquired on a later date rather than with securities acquired on an earlier date ; and

(c)with securities acquired at different times on any one day in as nearly as may be equal proportions.

[F21(5A)If an election has been made under Schedule 6 to the Finance Act 1983, securities disposed of shall be identified with securities comprised in a holding, within the meaning of paragraph 3 of that Schedule, rather than with securities of a description specified in paragraph 1(2)(b) thereof.]

(6)The rules contained in the preceding subsections shall have priority according to the order in which they are so contained.

(7)Notwithstanding anything in subsections (3) to (5) above, where, under arrangements designed to postpone the transfer or delivery of [F18relevant securities] disposed of, a person by a single bargain acquires securities for transfer or delivery on a particular date or in a particular period and disposes of them for transfer or delivery on a later date or in a later period, then—

(a)the securities disposed of by that bargain shall be identified with the securities thereby acquired ; and

(b)securities previously disposed of which, but for the operation of paragraph (a) above in relation to acquisitions for transfer or delivery on the earlier date or in the earlier period, would have been identified with the securities acquired by that bargain—

(i)shall, subject to subsection (3) above, be identified with any available securities acquired for such transfer or delivery (that is to say, any securities so acquired other than securities to which paragraph (a) above applies and other than securities with which securities disposed of for such transfer or delivery would be identified apart from this subsection) ; and

(ii)in so far as they cannot be so identified shall be treated as disposed of for transfer or delivery on the later date, or in the later period, mentioned above.

(8)The provisions of Part 11 of Schedule 13 to this Act have effect with respect to [F18relevant securities] acquired before 6th April 1982 or, in the case of a company, before 1st April 1982.

(9)In this section and Schedule 13 to this Act [F22“relevant securities” means—

(a)securities, within the meaning of [F23section 710 of the Taxes Act 1988];

(b)deep discount secuities, within the meaining of [F23Schedule 4 to that Act]; and

(c)securities which are, or have at any time been, material interests in a non-qualifying offshore fund, within the meaning of Chapter [F23V of Part XVII of the Taxes Act 1988]]

and shares or securities of a company shall not be treated for the purposes of this section and that Schedule as being of the same class unless they are so treated by the practice of The Stock Exchange or would be so treated if dealt with on The Stock Exchange.

Textual Amendments

F18Words substituted by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

F19Words repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

F20S. 88(1)(b) and the word preceding it repealed by Finance Act 1985 (c. 54), s. 98(6) and Sch. 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

F21S. 88(5A) inserted by Finance Act 1983 (c. 28), s. 34(2) and repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

F22S. 88(9)(a)–(c) and the preceding words substituted for s. 88(9)(a)(b) and the preceding words by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

Modifications etc. (not altering text)

Marginal Citations

[F2489

(1)Where, in a case of a man and his wife living with him, one of them—

(a)disposes of securities to his wife or her husband on or after 6th April 1982, and

(b)disposes of other securities, which are of the same kind as those disposed of to the wife or husband, to another person (in this section referred to as “a third party”), the provisions of subsections (3) and (4) below have effect with respect to any securities acquired by the person making those disposals which, but for the provisions of section 88 above, could have been comprised in either of those disposals.

(2)Where a company which is a member of a group of companies—

(a)disposes of securities to another member of the group on or after 1st April 1982, and

(b)disposes of other securities, which are of the same kind as those disposed of to that other company, to another person (in this section referred to as a “third party”) not being another member of the same group, the provisions of subsections (3) and (4) below have effect with respect to any securities acquired by the company making those disposals which, but for the provisions of section 88 above, could have been comprised in either of those disposals.

(3)If, apart from the provisions of this subsection, securities disposed of to a third party—

(a)would be indexed securities, and

(b)but for the disposal referred to in subsection (1)(a) or, as the case may be, subsection (2)(a) above would be unindexed securities,

the identification shall be reversed so that the securities disposed of to the third party (or, if the quantity disposed of to the third party was greater than the quantity disposed of to the wife or husband or, as the case may be, to the other company, a part of them equal to the quantity so disposed of) shall be unindexed securities.

(4)If there is more than one disposal falling within subsection (1)(a) or, as the case may be, subsection (2)(a) above, or more than one disposal to a third party, the provisions of subsection (3) above shall be applied to securities disposed of on an earlier date before being applied to securities disposed of on a later date, and the re-identification of the securities first disposed of shall accordingly determine the way in which this section applies to the securities comprised in the later disposal.

(5)In this subsection “indexed securities” means securities which were acquired or provided more than twelve months before the date of the disposal concerned and “unindexed securities” shall be construed accordingly.

(6)Section 272 of the Taxes Act (groups of companies) shall apply for the purpose of this section as it applies for the purposes of sections 273 to 281 of that Act.

(7)Subsection (9) of section 88 above applies for the purposes of this section as it applies for the purposes of that].

Textual Amendments

F24S. 89 repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

Modifications etc. (not altering text)