Finance Act 1982

Schedule 13 U.K. The Indexation Allowance

Modifications etc. (not altering text)

C1 See—Finance Act 1985 (c. 54), s. 68(3)(e) and Sch. 19 para. 23Income and Corporation Taxes 1988 (c. 1, SIF 63:1), Sch. 28 para. 4(3) re computation of offshore income gains

Part I U.K. General

Modifications etc. (not altering text)

C2 See—Finance Act 1988 (c. 39, SIF 63:1, 2), s. 113

Part disposals U.K.

1 For the purpose of determining the indexation allowance (if any) on the occasion of a part disposal of an asset, the apportionment under section 35 of the M1 Capital Gains Tax Act 1979 of the sums which make up the relevant allowable expenditure shall be effected before the application of section 87 of this Act and, accordingly, in relation to a part disposal—

(a) references in section 87 to an item of expenditure shall be construed as references to that part of that item which is so apportioned for the purposes of the computation under Chapter II of Part II of that Act of the [F1 unindexed gain or loss] on the part disposal; and

(b) no indexation allowance shall be determined by reference to the part of each item of relevant allowable expenditure which is apportioned to the property which remains undisposed of.

Textual Amendments

F1 Words substituted by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

Marginal Citations

M1 1979 c. 14.

Disposals on a no-gain/no-loss basis U.K.

2 (1) This paragraph applies to a disposal of an asset which falls within subsection (1)(a) of section 86 of this Act if, by virtue of any enactment other than [F2 subsection (5)(b) of that section or] any provision of this Schedule, the disposal is treated as one on which neither a gain nor loss accrues to the person making the disposal.

(2) In relation to a disposal to which this paragraph applies—

• “the transferor” means the person making the disposal of the asset concerned; and

• “the transferee” means the person acquiring the asset on the disposal.

(3) On a disposal to which this paragraph applies [F2 and which falls within subsection (1)(b) of section 86 of this Act], the amount of the consideration shall be calculated for the purposes of the M2 Gains Tax Act 1979 on the assumption that—

(a) the disposal is one to which that section applies; and

(b) on the disposal [F3 an unindexed gain] accrues to the transferor which is equal to the indexation allowance on the disposal;

and, accordingly, the disposal shall be one on which, after taking account of the indexation allowance, neither a gain nor a loss accrues.

(4) Except as provided by paragraph 3 below, for the purposes of the application of sections 86 and 87 of this Act there shall be disregarded so much of any enactment as provides that, on the subsequent disposal by the transferee of the asset acquired by him on a disposal to which this paragraph applies, the transferor’s acquisition of the asset is to be treated as the transferee’s acquisition of it.

Textual Amendments

F2 Words repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

F3 Words substituted by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

Modifications etc. (not altering text)

C3 See also Income and Corporation Taxes 1988 (c. 1, SIF 63:1), Sch. 28 para. 3(1) re computation of offshore income gains

Marginal Citations

M2 1979 c. 14.

[F4 Subsequent disposals following no-gain/no-loss disposals] U.K.

Textual Amendments

F4 Sch. 13 para. 3 repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

3 (1) The provisions of this paragraph apply in relation to a disposal by the transferee of the asset acquired by him on a disposal to which paragraph 2 above applies; and in this paragraph—

(a) “the initial disposal” means the disposal to which paragraph 2 above applies;

(b) “the subsequent disposal” means the disposal to which this paragraph applies; and

(c) “the transferor” and “the transferee” have the same meaning as in paragraph 2 above.

(2) If the subsequent disposal is one on which a loss accrues (and, accordingly, is one to which section 86 of this Act does not apply) then, for the purposes of the M3 Capital Gains Tax Act 1979, the amount of that loss shall be taken to be reduced by—

(a) an amount equal to the indexation allowance (if any) on the initial disposal; or

(b) such an amount as will secure that, on the subsequent disposal, neither a gain nor a loss accrues,

whichever is the less.

(3) The following provisions of this paragraph apply where the initial disposal is one to which paragraph 2 above applies by reason only of any of the following enactments applying to the initial disposal, namely—

(a) section 267 or section 273 of [F5 the Taxes Act 1970]; or

(b) section 44 of the Capital Gains Tax Act 1979; or

(c) section 148 of this Act.

[F6 (d) subsection (4) of section 7 of the Finance (No. 2) Act 1983.]

[F7 (e) paragraph 2 of Schedule 2 to the Trustee Savings Banks Act 1985.]

(4) For the purpose of calculating the indexation allowance (if any) to which the transferee is entitled on the subsequent disposal in a case where the initial disposal falls within sub-paragraph (3) above and the transferor made that disposal outside the qualifying period,—

(a) subsection (1) of section 86 of this Act shall have effect with the omission of paragraph (b); and

(b) the indexed rise in any item of relevant allowable expenditure falling within section 32(1)(a) of the Capital Gains Tax Act 1979 shall be calculated as if, in the definition of RI in the formula in section 87(2) of this Act, the words “which is the twelfth month after that” were omitted, and as if section 87(3)(a) of this Act were also omitted.

(5) For the purpose of calculating the indexation allowance (if any) to which the transferee is entitled on the subsequent disposal in a case where the initial disposal falls within sub-paragraph (3) above and the transferor made that disposal within the qualifying period (so that he was not entitled to any indexation allowance) the transferor’s acquisition of the asset shall be treated as being the transferee’s acquisition of it.

(6) If, in a case where sub-paragraph (5) above applies, the subsequent disposal is itself a disposal to which paragraph 2 above applies, that sub-paragraph shall again apply so that the original transferor’s acquisition of the asset shall be treated as being the acquisition of it by the transferee under the subsequent disposal; and so on if there is a series of disposals to which paragraph 2 above applies, all occurring within twelve months of the first such disposal.

Textual Amendments

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

F6 Sch. 13 para. 3(3)(d) added by Finance (No. 2) Act 1983 (c. 49), s. 7(5) in relation to disposals on or after 6 April 1983 where the relevant date, as defined in s. 7(1) of that Act, falls after 1 January 1983

F7 Sch. 13 para. 3(3)(e) added by Trustee Savings Banks Act 1985 (c. 58), s. 5 and Sch. 2 para. 2(3)

Marginal Citations

M3 1979 c. 14.

Receipts etc. which are not treated as disposals but affect relevant allowable expenditure U.K.

4 (1) This paragraph applies where, in determining the relevant allowable expenditure in relation to a disposal to which section 86 of this Act applies, account is required to be taken, as mentioned in subsection (3) of that section, of any provision of any enactment which, by reference to a relevant event [F8 occurring after the beginning of the qualifying period], reduces the whole or any part of an item of expenditure as mentioned in that subsection.

(2) For the purpose of determining, in a case where this paragraph applies, the indexation allowance (if any) to which the person making the disposal is entitled, not account shall in the first instance be taken of the provision referred to in sub-paragraph (1) above in calculating the indexed rise in the item of expenditure to which that provision applies but, from that indexed rise as so calculated, there shall be deducted a sum equal to the indexed rise (determined as for the purposes of the actual disposal) in a notional item of expenditure which—

(a) is equal to the amount of the reduction effected by the provision concerned; and

(b) was incurred on the date of the relevant event referred to in sub-paragraph (1) above.

(3) In this paragraph “relevant event” means any event which does not fall to be treated as a disposal for the purposes of the M4 Capital Gains Tax Act 1979.

Textual Amendments

F8 Words repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

Marginal Citations

M4 1979 c. 14.

Reorganisations, reconstructions etc. U.K.

5 (1) This paragraph applies where,—

(a) by virtue of section 78 of the Capital Gains Tax Act 1979, on a reorganisation the original shares (taken as a single asset) and the new holding (taken as a single asset) fall to be treated as the same asset acquired as the original shares were acquired; and

(b) on the reorganisation, a person gives or becomes liable to give any consideration for his new holding or any part of it.

(2) Where this paragraph applies, so much of the consideration referred to in sub-paragraph (1)(b) above as, on a disposal to which section 86 of this Act applies of the new holding, will, by virtue of section 79(1) of the Capital Gains Tax Act 1979, be treated as having been given for the original shares, shall be treated for the purposes of section 87 of this Act as an item of relevant allowable expenditure incurred not at the time the original shares were acquired but at the time the person concerned gave or became liable to give the consideration (and, accordingly, subsection (5) of section 87 of this Act shall not apply in relation to that item of expenditure).

(3) In the preceding provisions of this paragraph the expressions “reorganisation”, “the original shares” and “the new holding” have the meanings assigned by section 77 of the Capital Gains Tax Act 1979 except that in a case where, by virtue of any other provision of Chapter II of Part IV of that Act (which extends to conversion of securities, company reconstructions and amalgamations etc.) sections 78 and 79 of that Act apply in circumstances other than a reorganisation (within the meaning of section 77 of that Act), those expressions shall be construed in like manner as they fall to be construed in sections 78 and 79 as so applied.

Calls on shares etc. U.K.

6 (1) Sub-paragraph (2) below applies where,—

(a) on a disposal to which section 86 of this Act applies, the relevant allowable expenditure is or includes the amount or value of the consideration given for the issue of shares or securities in, or debentures of, a company; and

(b) the whole or some part of that consideration was given after the expiry of the [F9 period of twelve months beginning on the date of the issue of the shares, securities or debentures].

(2) For the purpose of computing the indexation allowance (if any) on the disposal referred to in sub-paragraph (1)(a) above,—

(a) so much of the consideration as was given after the expiry of the [F9 period referred to in sub-paragraph (1)(b) above] shall be regarded as an item of expenditure separate from any consideration given during that period; and

(b) subsection (5) of section 87 of this Act shall not apply to that separate item of expenditure which, accordingly, shall be regarded as incurred at the time the consideration in question was actually given.

Textual Amendments

F9 Words substituted by Finance Act 1985 (c. 54), s. 68 and Sch. 19 Pt. I for disposals made on or after 6 April 1985, or 1 April 1985 for companies, or 28 February 1986 for securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV other than gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), which are not affected

Options U.K.

7 (1) This paragraph applies where, on a disposal to which section 86 of this Act applies, the relevant allowable expenditure includes both—

(a) the cost of acquiring an option binding the grantor to sell (in this paragraph referred to as “the option consideration”); and

(b) the cost of acquiring what was sold as a result of the exercise of the option (in this paragraph referred to as “the sale consideration”).

[F10 (2) Where this paragraph applies, the qualifying period in relation to the disposal referred to in sub-paragraph (1) above shall not begin until the date of the sale resulting from the exercise of the option].

(3) For the purpose of computing the indexation allowance (if any) on the disposal referred to in sub-paragraph (1) above,—

(a) the option consideration and the sale consideration shall be regarded as separate items of expenditure; and

(b) subsection (5) of section 87 of this Act shall apply to neither of those items and, accordingly, they shall be regarded as incurred when the option was acquired and when the sale took place, respectively.

(4) The preceding provisions of this paragraph have effect notwithstanding section 137 of the M5 Capital Gains Tax Act 1979 (under which the grant of an option and the transaction entered into by the grantor in fulfilment of his obligations under the option are to be treated as a single transaction); but expressions used in this paragraph have the same meaning as in that section and subsection (6) of that section (division of consideration for option both to sell and to buy) applies for the purpose of determining the cost of acquiring an option binding the grantor to sell.

Textual Amendments

F10 Sch. 13 para. 7(2) repealed by Finance Act 1985 (c. 54), ss. 68, 98(6), Schs. 19 Pt. I and 27 Pt. VII for disposals made on or after 6 April 1985 or 1 April 1985 for companies, 2 July 1986 for gilt-edged securities (Capital Gains Tax Act 1979 (c. 14, SIF 63:2) Sch. 2) and qualifying corporate bonds (Finance Act 1984 (c. 43, SIF 40:1) s. 64), or 28 February 1986 for other securities within the meaning of Finance Act 1985 (c. 54) Part II Ch. IV

Marginal Citations

M5 1979 c. 14.

Part II U.K. Existing Share Pools

Modifications etc. (not altering text)

C4 See Finance Act 1985 (c. 54), s. 68 and Sch. 19 Part II

8 (1) The provisions of this Part of this Schedule have effect in relation to a number of securities of the same class which, immediately before the operative date, are held by one person in one capacity and, by virtue of section 65 of the M6 Capital Gains Act 1979 are to be regarded for the purposes of that Act as indistinguishable parts of a single asset (in that section and in this Part of this Schedule referred to as a holding).

(2) Subject to paragraph 9 below, on and after the operative date,—

(a) the holding shall continue to be regarded as a single asset for the purposes of the Capital Gains Tax Act 1979 (but one which cannot grow by the acquisition of additional securities of the same class); and

(b) the holding shall be treated for the purposes of section 86 of this Act as having been acquired twelve months before the operative date; and

(c) every sum which, on a disposal of the holding occurring after the operative date, would be an item of relevant allowable expenditure shall be regarded for the purposes of section 87 of this Act as having been incurred at such a time that the month which determines RI, in the formula in subsection (2) of that section, is March 1982.

(3) Nothing in sub-paragraph (2) above affects the operation of section 78 of the Capital Gains Tax Act 1979 (equation of original shares and new holding on a reorganisation etc.) in relation to the holding, but without prejudice to paragraph 5 above.

(4) In this Part of this Schedule “the operative date” means—

(a) where the holding is held by a company, 1st April 1982; and

(b) in any other case, 6th April 1982.

Modifications etc. (not altering text)

C5 See—Finance Act 1988 (c. 39, SIF 63:1, 2), s. 113

Marginal Citations

M6 1979 c. 14.

9 (1) For the purposes of this paragraph there shall be ascertained—

(a) the amount which would be the relevant allowable expenditure on a disposal of the whole of the holding on the day in 1982 which immediately precedes the operative date; and

(b) the amount which would have been the relevant allowable expenditure on a disposal of the whole of the holding (as then constituted) on the same day in 1981;

and in this paragraph these amounts are referred to as the 1982 amount and the 1981 amount respectively.

(2) If the 1982 amount exceeds the 1981 amount, paragraph 8(2) above shall not apply to the holding and the following provisions of this paragraph shall have effect in relation to it.

(3) Where sub-paragraph (2) above applies, the identification rules set out in sub-paragraph (4) below shall be assumed to have applied in relation to every acquisition or disposal of securities which occurred after the day referred to in sub-paragraph (1)(b) above and before the operative date and which, apart from this paragraph, would have increased or reduced the size of the holding; and accordingly—

(a) only such of the securities (if any) which constituted the holding on that day as are not identified, by virtue of those rules, with securities disposed of before the operative date shall be regarded as constituting the holding on the operative date; and

(b) all securities acquired after that day and before the operative date, so far as they are not so identified with securities disposed of before the operative date, shall be regarded as separate assets.

(4) The identification rules referred to in sub-paragraph (3) above are—

(a) that securities disposed of on an earlier date shall be identified before securities disposed of on a later date, and the identification of the securities first disposed of shall accordingly determine the securities which could be comprised in the later disposal; and

(b) that securities disposed of shall be identified with securities acquired on a later date rather than with securities acquired on an earlier date; and

(c) that securities disposed of shall be identified with securities acquired at different times on any one day in as nearly as may be equal proportions;

and these rules shall have priority according to the order in which they are set out above.

(5) In this paragraph and paragraph 10 below—

(a) “the reduced holding” means the securities referred to in sub-paragraph (3)(a) above; and

(b) “relevant allowable expenditure” has, in relation to a disposal taking place at any time, the meaning assigned to it by subsection (2)(b) of section 86 of this Act in relation to a disposal to which that section applies.

(6) Sub-paragraph (2) of paragraph 8 above shall apply in relation to the reduced holding but, so far as paragraph (c) of that sub-paragraph is concerned, subject to paragraph 10(1) below.

10 (1) For the purpose of computing the indexation allowance (if any) on a disposal of—

(a) the reduced holding, or

(b) any other securities which, by virtue of sub-paragraph (3)(b) of paragraph 9 above, constitute one or more separate assets,

the 1982 amount, as defined in that paragraph, shall be apportioned between the reduced holding and that asset or those assets in proportion to a number of securities comprised in each of them on the operative date.

(2) In relation to a disposal on or after the operative date, the amount apportioned to the reduced holding or to any asset by virtue of sub-paragraph (1) above shall be regarded for all purposes of capital gains tax as the relevant allowable expenditure attributable to the securities comprised in the reduced holding or, as the case may be, in the asset in question.

(3) For the purposes of section 87(5) of this Act any relevant allowable expenditure which is attributable to any securities by virtue of sub-paragraph (2) above shall be deemed to be expenditure falling within paragraph (a) of subsection (1) of section 32 of the M7 Capital Gains Tax Act 1979.

Modifications etc. (not altering text)

C6 See—Finance Act 1988 (c. 39, SIF 63:1, 2), s. 113

Marginal Citations

M7 1979 c. 14.

11 In paragraph 2(2) of Schedule 5 to the Capital Gains Tax Act 1979 (identification of quoted securities held on 6th April 1965 with—among other cases—shares or securities subsequently disposed of) and in paragraph 13(3) of that Schedule (corresponding provisions for unquoted securities etc.) for the words “earlier time” there shall be substituted the words “ later time ” and for the words “later time” there shall be substituted the words “ earlier time ”.