Taxation of Chargeable Gains Act 1992

[F1 PART 4 U.K. Cases involving relevant high value disposals

Textual Amendments

F1 Sch. 4ZZB inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 39

Overview U.K.

11 (1) This Part is about non-resident CGT disposals which are, or involve, relevant high value disposals (see section 2B, which charges capital gains tax on ATED-related gains on relevant high value disposals). U.K.

(2) Paragraphs 12 to 15 contain provision about how any NRCGT gains and losses on such a disposal are computed, including provision—

(a) for the NRCGT gains or losses to be computed for each relevant high value disposal comprised in the non-resident CGT disposal (paragraphs 13 to 15), and

(b) for the results to be added (where necessary) to find the NRCGT gain or loss on the non-resident CGT disposal (see paragraph 12).

(3) For provision about how to compute any ATED-related gains or losses accruing on the relevant high value disposals, see Schedule 4ZZA.

(4) Paragraphs 16 to 19 contain provisions for computing any gains or losses accruing on the disposals mentioned in sub-paragraph (1) which are neither ATED-related nor NRCGT gains or losses, including provision—

(a) for such balancing gains or losses to be computed for each relevant high value disposal comprised in the non-resident CGT disposal, and

(b) for the results to be added together (where necessary) to find the balancing gain or loss on the non-resident CGT disposal (see paragraph 16).

(5) Paragraph 20 is about cases where a disposal which is not a relevant high value disposal is also comprised in the non-resident CGT disposal.

Disposal involving one or more relevant high value disposals U.K.

12 (1) This Part of this Schedule applies where— U.K.

(a) a person (other than an excluded person) (“P”) makes a non-resident CGT disposal of (or of part of) an interest in UK land, and

(b) that disposal (“the disposal of land”) is a relevant high value disposal or a relevant high value disposal is comprised in it.

In this sub-paragraph “excluded person” has the meaning given by section 2B(2).

(2) The NRCGT gain or loss accruing on the disposal of land is computed as follows.

• Step 1 Determine in accordance with paragraphs 13 to 15 the amount of the NRCGT gain or loss accruing on each relevant high value disposal.

• Step 2 Add together the amounts of any gains or losses determined under Step 1 (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the NRCGT gain on the disposal of land. If the result is a negative amount, that amount (expressed as a positive number) is the NRCGT loss on the disposal of land. See paragraphs 16 to 19 for how to compute the gain or loss on the disposal of land which is neither ATED-related nor an NRCGT gain or loss.

(3) For the purposes of this Schedule, a relevant high value disposal is “comprised in” a non-resident CGT disposal if—

(a) the non-resident CGT disposal is treated for the purposes of section 2C and Schedule 4ZZA as two or more disposals, and

(b) the relevant high value disposal is one of those.

(4) In this Part of this Schedule—

(a) “the asset”, in relation to a relevant high value disposal, means the chargeable interest which (or a part of which) is the subject of that disposal, and

(b) “the disposed of interest”, in relation to a relevant high value disposal, means the asset or, if only part of the asset is the subject of the relevant high value disposal, that part of the asset.

(5) For the purposes of this Part of this Schedule a day is a “section 14D chargeable day” in relation to a relevant high value disposal if—

(a) it is a day on which the subject matter of the disposed of interest consists wholly or partly of a dwelling, but

(b) it is not an ATED chargeable day (as defined in paragraph 3 of Schedule 4ZZA).

Assets held at 5 April 2015 (where no election made and no rebasing in 2016 required) U.K.

13 (1) This paragraph applies where— U.K.

(a) the disposed of interest was held by P on 5 April 2015,

(b) P has not made an election under paragraph 2(1)(b) (or paragraph 5 of Schedule 4ZZA) in respect of the asset, and

(c) paragraph 15 does not apply.

(2) The NRCGT gain or loss accruing on the relevant high value disposal is equal to the special fraction of the notional post-April 2015 gain or loss (as the case may be) on that disposal.

(3) “Notional post-April 2015 gain or loss” means the gain or loss which would have accrued on the relevant high value disposal had P acquired the disposed of interest on 5 April 2015 for a consideration equal to the market value of that interest on that date.

(4) “The special fraction” is—

where—

“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the post-commencement ownership period;

“TD” is the total number of days in the post-commencement ownership period.

(5) “The post-commencement ownership period” means the period beginning with 6 April 2015 and ending with the day before the day on which the relevant high value disposal occurs.

Asset acquired after 5 April 2015 or election made under paragraph 2(1)(b) (but no rebasing in 2016 required) U.K.

14 (1) This paragraph applies where— U.K.

(a) P makes, or has made, an election under paragraph 2(1)(b) (or paragraph 5 of Schedule 4ZZA) in respect of the asset, or

(b) the disposed of interest was not held by P throughout the period beginning with 5 April 2015 and ending with the disposal.

(2) But this paragraph does not apply if paragraph 15 applies.

(3) The NRCGT gain or loss accruing on the relevant high value disposal is computed as follows.

• Step 1 Determine the amount of the gain or loss which accrues to P. (For the purpose of determining the amount of that gain or loss, no account need be taken of section 57B or this Schedule (apart from paragraph 23).)

• Step 2 The NRCGT gain or loss accruing on the relevant high value disposal is equal to the special fraction of that gain or loss.

(4) For this purpose “the special fraction” is—

where—

“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the relevant ownership period;

“TD” is the total number of days in the relevant ownership period.

(5) “Relevant ownership period” means the period—

(a) beginning with the day on which P acquired the disposed of interest or, if later, 31 March 1982, and

(b) ending with the day before the day on which the relevant high value disposal occurs.

Certain disposals after 5 April 2016 (computation involving additional rebasing in 2016) U.K.

15 (1) This paragraph applies where— U.K.

(a) the disposed of interest was held by P on 5 April 2016,

(b) the relevant high value disposal falls within Case 3 for the purposes of Schedule 4ZZA (see paragraph 2(4) of that Schedule), and

(c) no election is or has been made (or treated as made) by P under paragraph 2(1)(b) in respect of the asset.

(2) The NRCGT gain or loss accruing on the relevant high value disposal is computed as follows.

• Step 1 Determine the amount equal to the special fraction of the notional post-April 2016 gain or loss (as the case may be).

• Step 2 Determine the amount equal to the special fraction of the notional pre-April 2016 gain or loss (as the case may be).

• Step 3 Add—

  (a)

  the amount of any gain or loss determined under Step 1, and

  (b)

  the amount of any gain or loss determined under Step 2,

  (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the NRCGT gain on the relevant high value disposal. If the result is a negative amount, that amount (expressed as a positive number) is the NRCGT loss on the relevant high value disposal.

(3) “The special fraction” is—

where—

“SD” is the number of section 14D chargeable days (see paragraph 12(5)) in the relevant ownership period;

“TD” is the total number of days in the relevant ownership period.

(4) The “relevant ownership period” is—

(a) for the purpose of computing under Step 1 of sub-paragraph (2) the special fraction of the notional post-April 2016 gain or loss, the period beginning with 6 April 2016 and ending with the day before the day on which the relevant high value disposal occurs;

(b) for the purpose of computing under Step 2 of sub-paragraph (2) the special fraction of the notional pre-April 2016 gain or loss, the period beginning with the day on which P acquired the disposed of interest or, if later, 6 April 2015 and ending with 5 April 2016.

(5) “Notional post-April 2016 gain or loss” means the gain or loss which would have accrued on the relevant high value disposal had P acquired the disposed of interest on 5 April 2016 for a consideration equal to its market value on that date.

(6) If the disposed of interest was not held by P on 5 April 2015, “notional pre-April 2016 gain or loss” means the gain or loss which would have accrued on 5 April 2016 had the disposed of interest been disposed of for a consideration equal to the market value of the interest on that date.

(7) If the disposed of interest was held by P on 5 April 2015, “notional pre-April 2016 gain or loss” means the gain or loss which would have accrued to P on the disposal mentioned in paragraph (b), had P—

(a) acquired the disposed of interest on 5 April 2015 for a consideration equal to the market value of that interest on that date, and

(b) disposed of that interest on 5 April 2016 for a consideration equal to the market value of that interest on that date.

Amount of gain or loss that is neither ATED-related nor an NRCGT gain or loss U.K.

16 (1) The gain or loss on the disposal of land (see paragraph 12(1)(b)) which is neither ATED-related nor an NRCGT gain or loss (“the balancing gain or loss”) is computed as follows. U.K.

• Step 1 Determine in accordance with paragraphs 17 to 19 the amount of the gain or loss accruing on each relevant high value disposal which is neither ATED-related nor an NRCGT gain or loss. This is the “balancing” gain or loss for each such disposal.

• Step 2 Add together the amounts of any balancing gains or losses determined under Step 1 (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the balancing gain on the disposal of land. If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the disposal of land.

(2) In relation to a relevant high value disposal, “balancing day” means a day which is neither—

(a) a section 14D chargeable day (see paragraph 12(5)), nor

(b) an ATED chargeable day.

(3) In relation to a relevant high value disposal, “non-ATED chargeable day” means a day which is not an ATED chargeable day.

(4) The references in sub-paragraphs (2) and (3) to an “ATED chargeable day” are to be interpreted in accordance with paragraph 3(6) of Schedule 4ZZA.

17 (1) This paragraph applies in relation to a relevant high value disposal to which paragraph 13 applies. U.K.

F2 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) F3 ... The amount of the balancing gain or loss on the relevant high value disposal is found by adding—

(a) the amount of the balancing gain or loss belonging to the notional post-April 2015 gain or loss,

(b) the amount of the balancing gain or loss belonging to the notional pre-April 2015 gain or loss, and

(c) if P held the disposed of interest on 5 April 2013, the amount of the notional pre-April 2013 gain or loss,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal.

If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal.

(4) The balancing gain or loss belonging to the notional post-April 2015 gain or loss is equal to the balancing fraction of the notional post-April 2015 gain or loss.

(5) The balancing gain or loss belonging to the notional pre-April 2015 gain or loss is equal to the non-ATED related fraction of the notional pre-April 2015 gain or loss.

(6) “The balancing fraction” is—

where—

“BD” is the number of balancing days (see paragraph 16(2)) in the appropriate ownership period;

“TD” is the total number of days in the appropriate ownership period.

(7) “The non-ATED related fraction” is—

where—

“NAD” is the number of non-ATED chargeable days (see paragraph 16(3)) in the appropriate ownership period;

“TD” is the total number of days in the appropriate ownership period.

(8) “Appropriate ownership period” means—

(a) for the purpose of computing the balancing gain or loss belonging to the notional post-April 2015 gain or loss, the post-commencement ownership period defined in paragraph 13(5);

(b) for the purpose of computing the balancing gain or loss belonging to the notional pre-April 2015 gain or loss, the relevant ownership period defined in paragraph 6A(11) of Schedule 4ZZA.

(9) In this paragraph—

(a) “notional post-April 2015 gain or loss” has the same meaning as in paragraph 13;

(b) “notional pre-April 2015 gain or loss” has the same meaning as in paragraph 6A of Schedule 4ZZA;

(c) “notional pre-April 2013 gain or loss” means the gain or loss which would have accrued on 5 April 2013 had the disposed of interest been disposed of for a consideration equal to the market value of that interest at that date.

Textual Amendments

F2 Sch. 4ZZB para. 17(2) omitted (with effect in accordance with s. 90(4) of the amending Act) by Finance Act 2016 (c. 24), s. 90(2)(a)

F3 Words in Sch. 4ZZB para. 17(3) omitted (with effect in accordance with s. 90(4) of the amending Act) by Finance Act 2016 (c. 24), s. 90(2)(b)

18 (1) In the case of a relevant high value disposal to which paragraph 14 applies, the amount of the balancing gain or loss is determined as follows. U.K.

(2) Determine the number of balancing days (see paragraph 16(2)) in the relevant ownership period.

(3) The balancing gain or loss on the disposal is equal to the balancing fraction of the amount of the gain or (as the case may be) loss determined under Step 1 of paragraph 14(3).

(4) “The balancing fraction” is—

where—

“BD” is the number of balancing days in the relevant ownership period;

“TD” is the total number of days in the relevant ownership period.

(5) In this paragraph “relevant ownership period” has the same meaning as in paragraph 14.

19 (1) The amount of the balancing gain or loss on a relevant high value disposal to which paragraph 15 applies is found by adding— U.K.

(a) the amount of the balancing gain or loss belonging to the notional post-April 2016 gain or loss,

(b) the amount of the balancing gain or loss belonging to the notional pre-April 2016 gain or loss, and

(c) if P held the disposed of interest on 5 April 2015, the amount of the notional pre-April 2015 gain or loss,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the balancing gain on the relevant high value disposal.

If the result is a negative amount, that amount (expressed as a positive number) is the balancing loss on the relevant high value disposal.

(2) The balancing gain or loss belonging to the notional post-April 2016 gain or loss is equal to the balancing fraction of the notional post-April 2016 gain or loss.

(3) The balancing gain or loss belonging to the notional pre-April 2016 gain or loss is equal to the balancing fraction of the notional pre-April 2016 gain or loss.

(4) “The balancing fraction” is—

where—

“BD” is the number of balancing days (see paragraph 16(2)) in the appropriate ownership period;

“TD” is the total number of days in the appropriate ownership period.

(5) The appropriate ownership period is—

(a) for the purpose of computing the balancing gain or loss belonging to the notional post-April 2016 gain or loss, the relevant ownership period mentioned in paragraph 15(4)(a);

(b) for the purpose of computing the balancing gain or loss belonging to the notional pre-April 2016 gain or loss, the relevant ownership period mentioned in paragraph 15(4)(b).

(6) In this paragraph—

(a) “notional post-April 2016 gain or loss” and “notional pre-April 2016 gain or loss” mean the same as in paragraph 15;

(b) “notional pre-April 2015 gain or loss” means the gain or loss which would have accrued on 5 April 2015 if the disposed of interest had been disposed of for a consideration equal to the market value of that interest on that date.

Where relevant high value disposal and “other” disposal are comprised in the disposal of land U.K.

20 (1) This paragraph applies where the disposals comprised in the disposal of land (see paragraph 12(3)) include a disposal (the “non-ATED related disposal”) which is not a relevant high value disposal. U.K.

(2) This Part of this Schedule (apart from this paragraph) applies in relation to the non-ATED related disposal as if it were a relevant high value disposal.

(3) Sub-paragraph (4) applies if there has, at any time in the relevant ownership period, been mixed use of the subject matter of the disposed of interest.

(4) The amount of any NRCGT gain or loss on the non-ATED related disposal computed under this Part of this Schedule is taken to be the appropriate fraction of the amount that it would otherwise be.

(5) In sub-paragraph (4) “the appropriate fraction” means the fraction that is, on a just and reasonable apportionment, attributable to the dwelling or dwellings.

(6) In this paragraph “the relevant ownership period” means, as applicable—

(a) the post-commencement ownership period, as defined in paragraph 13(5),

(b) the relevant ownership period, as defined in paragraph 14(5), or

(c) the relevant ownership period as defined in paragraph 15(4).

Interest subsisting under contract for off-plan purchase U.K.

21 (1) Sub-paragraph (2) applies where the non-resident CGT disposal made by P as mentioned in paragraph 12(1) is a disposal of a UK residential property interest only because of the second condition in paragraph 1 of Schedule B1 (interest subsisting under a contract for the acquisition of land that consists of, or includes, a building that is to be constructed for use as a dwelling etc). U.K.

(2) The land that is the subject of the contract concerned is treated for the purposes of this Part of this Schedule as consisting of (or, as the case requires, including) a dwelling throughout P's period of ownership of the interest in UK land.]