Capital Gains Tax Act 1979 (repealed 6.3.1992)

34 Restriction of losses by reference to capital allowances and renewals allowances. U.K.

(1) Section 33 above shall not require the exclusion from the sums allowable as a deduction in the computation under this Chapter of any expenditure as being expenditure in respect of which a capital allowance or renewals allowance is made, but the amount of any losses accruing on the disposal of an asset shall be restricted by reference to capital allowances and renewals allowances as follows.

(2) In the computation under this Chapter of the amount of a loss accruing to the person making the disposal, there shall be excluded from the sums allowable as a deduction any expenditure to the extent to which any capital allowance or renewals allowance has been or may be made in respect of it.

(3) If the person making the disposal acquired the asset—

(a) by a transfer by way of sale in relation to which an election under [F1 section 158 of the Capital Allowances Act 1990] was made, or

(b) by a transfer to which [F1 section 78(2)] of that Act applies,

(being enactments under which a transfer is treated for the purposes of capital allowances as being made at written down value), the preceding provisions of this section shall apply as if any capital allowance made to the transferor in respect of the asset had (except so far as any loss to the transferor was restricted under those provisions) been made to the person making the disposal (that is the transferee); and where the transferor acquired the asset by such a transfer, capital allowances which by virtue of this subsection can be taken into account in relation to the transferor shall also be taken into account in relation to the transferee (that is the person making the disposal), and so on for any series of transfers before the disposal.

(4) In this section “capital allowance” means—

(a) any allowance under the Capital Allowances Act [F2 1990, including the provisions of the Taxes Act 1988 which are to be treated as contained in the 1990 Act], other than an allowance under [F3 section 33(1) of the Taxes Act 1988] (relief for cost of maintenance of agricultural land),

(aa) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

(b) any relief given under section [F5 30] of [F6 the Taxes Act 1988] (expenditure on sea walls), and

(c) any deduction in computing profits or gains allowable under section [F5 91] of [F6 the Taxes Act 1988] (cemeteries).

(5) In this section “renewals allowance” means a deduction allowable in computing the profits or gains of a trade, profession or vocation for the purpose of income tax by reference to the cost of acquiring an asset for the purposes of the trade, profession or vocation in replacement of another asset, and for the purposes of this Chapter a renewals allowance shall be regarded as a deduction allowable in respect of the expenditure incurred on the asset which is being replaced.

(6) The amount of capital allowances to be taken into account under this section in relation to a disposal include any allowances falling to be made by reference to the event which is the disposal, and there shall be deducted from the amount of the allowances the amount of any balancing charge to which effect has been or is to be given by reference to the event which is the disposal, or any earlier event, . . . F7

(7) Where the disposal is of machinery or plant in relation to expenditure on which allowances or charges have been made under [F8 Part II of the Capital Allowances Act 1990 and neither section 79 (assets used only partly for trade purposes) nor section 80 (wear and tear subsidies) of that Act] applies, the capital allowances to be taken into account under this section are to be regarded as equal to the difference between the capital expenditure incurred, or treated as incurred, under [F9 that Part] on the provision of the machinery or plant by the person making the disposal and the disposal value required to be brought into account in respect of the machinery or plant.

Textual Amendments

F1 Words substituted by Capital Allowances Act 1990 (c. 1, SIF 63:1), s. 164(1)(3), Sch. 1 para. 3(3)(a)

F2 Words substituted by Capital Allowances Act 1990 (c. 1, SIF 63:1), s. 164(1)(3), Sch. 1 para. 3(3)(b)

F3 Words substituted by Finance Act 1988 (c. 39, SIF 63;1, 2), s. 146 and Sch. 13 para. 16

F4 S. 34(4)(aa) inserted by Finance (No. 2) Act 1983 (c. 49), s. 6(3) and repealed by Capital Allowances Act 1990 (c. 1, SIF 63:1), ss. 82, 164(4)(5), Sch. 2

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

F6 Words substituted by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 29 paras. 15 and 32

F7 Words repealed by Capital Allowances Act 1990 (c. 1, SIF 63:1), ss. 82, 164(4)(5), Sch. 2

F8 Words substituted by Capital Allowances Act 1990 (c. 1, SIF 63:1), s. 164(1)(3), Sch. 1 para. 3(3)(c)(i)

F9 Words substituted by Capital Allowances Act 1990 (c. 1, SIF 63:1), s. 164(1)(3), Sch. 1 para. 3(3)(c)(iii)

Modifications etc. (not altering text)

C1 See Finance Act 1988 (c. 39, SIF 63;1, 2), ss. 62, 63, 96 and Sch. 8 para. 3