Capital Gains Tax Act 1979 (repealed 6.3.1992)

Exclusion of premiums taxed under Schedule A etc. U.K.

5 (1) Where by reference to any premium income tax has become chargeable under section [F1 34] of [F2 the Taxes Act 1988] on any amount, that amount out of the premium shall be excluded from the consideration brought into account in the computation under Chapter II of Part II of this Act of a gain accruing on the disposal for which the premium is consideration except where the consideration is taken into account in the denominator of the fraction by reference to which an apportionment is made under section 35 of this Act (part disposals).

(2) Where by reference to any premium in respect of a sub-lease granted out of a lease the duration of which (that is of the lease) does not, at the time of granting the lease, exceed fifty years, income tax has become chargeable under section [F1 34] of [F2 the Taxes Act 1988] on any amount that amount shall be deducted from any gain accruing on the disposal for which the premium is consideration as computed in accordance with the provisions of this Act apart from this sub-paragraph, but not so as to convert the gain into a loss, or to increase any loss.

(3) Where income tax has become chargeable under section [F1 36] of [F2 the Taxes Act 1988] (sale of land with right of re-conveyance) on any amount a sum of that amount shall be excluded from the consideration brought into account in the computation under Chapter II of Part II of this Act of a gain accruing on the disposal of the estate or interest in respect of which income tax becomes so chargeable, except where the consideration is taken into account in the denominator of the fraction by reference to which an apportionment is made under section 35 of this Act:

Provided that if what is disposed of is the remainder of a lease or a sub-lease out of a lease the duration of which does not exceed fifty years the preceding provisions of this sub-paragraph shall not apply but the said amount shall be deducted from any gain accruing on the disposal as computed in accordance with the provisions of this Act apart from this sub-paragraph, but not so as to convert the gain into a loss, or to increase any loss.

(4) References in sub-paragraph (1) and (2) above to a premium include references to a premium deemed to have been received under subsection [F2 (4) or (5)] of section [F1 34] of [F2 the Taxes Act 1988] (which correspond to paragraph 3(2) and (3) of this Schedule).

(5) Section 31 of this Act (exclusion of consideration chargeable to tax on income) shall not be taken as authorising the exclusion of any amount from the consideration for a disposal of assets taken into account in the computation under Chapter II of Part II of this Act by reference to any amount chargeable to tax under [F2 section 348 or 349] of [F2 the Taxes Act 1988].

Textual Amendments

F1 Figure substituted by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 29 paras. 15 and 32

F2 Words substituted by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 29 paras. 15 and 32

Modifications etc. (not altering text)

C1 See Development Land Tax Act 1976 (c. 24), s. 34, Sch. 6 paras. 3(10) and 4

C2 See Development Land Tax Act 1976 (c. 24), s. 34 and Sch. 6 para. 3(10)

6 (1) If under section [F3 37(4)] of [F3 the Taxes Act 1988] (allowance where, by the grant of a sub-lease, a lessee has converted a capital amount into a right to income) a person is to be treated as paying additional rent in consequence of having granted a sub-lease, the amount of any loss accruing to him on the disposal by way of the grant of the sub-lease shall be reduced by the total amount of rent which he is thereby treated as paying over the term of the sub-lease (and without regard to whether relief is thereby effectively given over the term of the sub-lease), but not so as to convert the loss into a gain, or to increase any gain.

(2) Nothing in section 31 of this Act shall be taken as applying in relation to any amount on which tax is paid under section [F4 35] of [F3 the Taxes Act 1988] (charge on assignment of lease granted at undervalue).

(3) If any adjustment is made under section [F3 36(2)(b)] of [F3 the Taxes Act 1988] on a claim under that paragraph, any necessary adjustment shall be made to give effect to the consequences of the claim on the operation of this paragraph or paragraph 5 above.

Textual Amendments

F3 Words substituted by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 29 paras. 15 and 32

F4 Figure substituted by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 29 paras. 15 and 32

7 If under section [F5 34(2) and (3)] of [F5 the Taxes Act 1988] income tax is chargeable on any amount, as being a premium the payment of which is deemed to be required by the lease, the person so chargeable shall be treated for the purposes of the computation of any gain accruing to him as having incurred at the time the lease was granted expenditure of that amount (in addition to any other expenditure) attributable to the asset under section 32(1)(b) of this Act.

Textual Amendments

F5 Words substituted by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 29 paras. 15 and 32