Finance Act 2011

Part 4 Chargeable gains

TCGA 1992

14 (1) TCGA 1992 is amended as follows.

(2) In section 241 (furnished holiday lettings)—

(a) in the heading, for “Furnished” substitute “UK furnished”,

(b) in subsection (3A), omit “Schedule 6 (retirement relief etc)”, and

(c) in subsection (4), after “furnished holiday accommodation” insert “in the United Kingdom”.

(3) After that section insert—

“241A EEA furnished holiday lettings

(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 EEA states other than 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.

(3) 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.

(4) Subject to subsections (6) to (10) below, for the purposes of the provisions mentioned in subsection (5) below—

(a) any overseas property business which consists of, or so far as it consists of, the commercial letting of furnished holiday accommodation in one or more EEA states 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.

(5) The provisions referred to in subsection (4) above are—

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

• section 165 (gifts relief),

• section 169S(1) (entrepreneurs’ relief),

• section 253 (relief for loans to traders), and

• Schedule 7AC (exemptions for disposals by companies with substantial shareholdings).

(6) Subject to subsection (7) below, for the purposes of the provisions mentioned in subsection (5) 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 an EEA state other than 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.

(7) Subsection (6) 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.

(8) 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 (4) 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.

(9) 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.

(10) 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.

(11) In this section “overseas property business” means—

(a) an overseas property business within the meaning of the Income Tax Acts (see section 989 of ITA 2007), or

(b) a overseas property business within the meaning of the Corporation Tax Acts (see section 1119 of CTA 2010).”

Commencement etc

15 Subject to paragraph 16, this Part has effect—

(a) for corporation tax purposes, in relation to disposals made in accounting periods beginning on or after 1 April 2011, and

(b) for capital gains tax purposes, in relation to disposals made on or after 6 April 2011.

16 Section 241A of TCGA 1992, so far as it applies for the purposes of section section 253 of that Act, has effect—

(a) for corporation tax purposes, in relation claims made on or after 1 April 2011, and

(b) for capital gains tax purposes, in relation to claims made on or after 6 April 2011.

17 (1) In relation to disposals within paragraph 15 and claims within paragraph 16, section 241A of TCGA 1992 is to be treated as having had effect on and after 1 January 1994 in determining, for the purposes of any of the provisions referred to in section 241A(5) of that Act, whether a trade was carried on in any period beginning on or after that date.

(2) Sub-paragraph (3) has effect, for the purposes of sub-paragraph (1), in relation to any expression in section 241A of TCGA 1992 which is defined by reference to any provision of ITTOIA 2005, ITA 2007, CTA 2009 or CTA 2010.

(3) As respects any time before the coming into force of that provision, that expression is to have the meaning that it had under the enactments in force at that time.