Finance Act 1993

Non-trading gains and losses U.K.

129 Non-trading gains and losses: general. U.K.

(1) In a case where—

(a) as regards an asset, liability or contract an initial exchange gain accrues to a qualifying company for an accrual period, and

(b) the whole or part of the gain is not an exchange gain of a trade or part of a trade for the period,

the whole or part (as the case may be) is a non-trading exchange gain for the period.

(2) The company shall be treated as—

(a) receiving in respect of the asset, liability or contract an amount equal to the non-trading exchange gain for the accrual period, and

(b) receiving the amount in the accounting period which constitutes the accrual period or in which the accrual period falls;

[F1 and the rule in section 130(1) below shall apply].

(3) In a case where—

(a) as regards an asset, liability or contract an initial exchange loss accrues to a qualifying company for an accrual period, and

(b) the whole or part of the loss is not an exchange loss of a trade or part of a trade for the period,

the whole or part (as the case may be) is a non-trading exchange loss for the period.

(4) The company shall be treated as—

(a) incurring in respect of the asset, liability or contract a loss of an amount equal to the non-trading exchange loss for the accrual period, and

(b) incurring the loss in the accounting period which constitutes the accrual period or in which the accrual period falls;

[F2 and the rule in section 130(2) below shall apply].

F3 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F3 (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) In a case where—

(a) a non-trading exchange gain or loss would (apart from this subsection) accrue as regards an asset consisting of a right to settlement under a qualifying debt, and

(b) the right is a right to receive income [F4 that is not interest falling to be brought into account for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) as interest accruing, or (according to the authorised method of accounting used) becoming due and payable, in an accounting period ending after 31st March 1996],

the non-trading exchange gain or loss shall be treated as not accruing.

(8) In a case where—

(a) a non-trading exchange gain or loss would (apart from this subsection) accrue to a company as regards a liability consisting of a duty to settle under a qualifying debt, and

(b) a charge is allowed to the company in respect of the debt under section 338 of the Taxes Act 1988 (allowance of charges on income and capital) F5 . . .,

the non-trading exchange gain or loss shall be treated as not accruing.

[F6 (8A) A charge shall be treated as allowed as mentioned in subsection (8) above if—

(a) it would be so allowed if the company’s total profits were sufficient,

(b) it would be so allowed if the duty mentioned in that subsection were settled, and if in settling it payment were made out of the company’s profits brought into charge to corporation tax, or

(c) it would be so allowed if the facts were as mentioned in both paragraph (a) and paragraph (b) above.]

(9) Section 396 of the Taxes Act 1988 (Case VI losses) shall not be taken to apply to a loss which a company is treated as incurring by virtue of this section; and an amount which a company is treated as receiving by virtue of this section shall not be regarded, for the purposes of subsection (1) of section 396, as income arising as mentioned in that subsection.

Textual Amendments

F1 Words in s. 129(2) substituted (29.4.1996) by 1996 c. 8, s. 104, Sch. 14 para. 68(1) (with ss. 80-105)

F2 Words in s. 129(4) substituted (29.4.1996) by 1996 c. 8, s. 104, Sch. 14 para. 68(2) (with ss. 80-105)

F3 S. 129(5)(6) repealed (29.4.1996 with effect in accordance with Chapter II of Part IV of the repealing Act) by 1996 c. 8, ss. 104, 205, Sch. 14 para. 68(3), Sch. 41 Pt. V(3) (with ss. 80-105)

F4 Words in s. 129(7)(b) substituted (29.4.1996) by 1996 c. 8, s. 104, Sch. 14 para. 68(4) (with ss. 80-105)

F5 Words in s. 129(8)(b) repealed (retrospectively) by 1995 c. 4, ss. 130, 162, Sch. 24 Pt. I paras. 1, 3, Sch. 29 Pt. VIII(17)

F6 S. 129(8A) inserted (retrospectively) by 1995 c. 4, s. 130, Sch. 24 Pt. I paras. 1, 3(3)

Modifications etc. (not altering text)

C1 S. 129 modified (23.3.1995) by S.I. 1994/3226, reg. 15(5)

C2 S. 129 applied (23.3.1995) by S.I. 1994/3229, reg. 3(2)(b)

[F7 130 Non-trading gains and losses. U.K.

(1) Where a company is treated by virtue of section 129 above as receiving any amount in an accounting period, that amount shall be brought into account for that accounting period as if it were a non-trading credit falling for the purposes of Chapter II of Part IV of the Finance Act 1996 (loan relationships) to be brought into account in respect of a loan relationship of the company.

(2) Where a company is treated by virtue of section 129 above as incurring any loss in an accounting period, the amount of the loss shall be brought into account for that accounting period as if it were a non-trading debit falling for the purposes of Chapter II of Part IV of the Finance Act 1996 to be brought into account in respect of a loan relationship of the company.]

Textual Amendments

F7 S. 130 substituted (29.4.1996) for ss. 130-133 by 1996 c. 8, s. 104, Sch. 14 para. 69 (with ss. 80-105)

F8 131. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F9 132. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F10 133. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .