Finance Act 1985

70 Relief for other disposals associated with retirement. U.K.

(1) Relief from capital gains tax shall be given, subject to and in accordance with Schedule 20 to this Act, in any case where an individual—

(a) who has attained the age of 60, or

(b) who has retired on ill-health grounds below the age of 60,

makes a relevant disposal of the whole or part of the assets provided or held for the purposes of an office or employment exercised by him; and, if he ceases to exercise that office or employment before the date of the relevant disposal, the date on which he ceased to exercise it is in subsection (2) below referred to as the “prior cessation date”.

(2) For the purposes of subsection (1) above, a disposal of the whole or part of the assets provided or held as mentioned in that subsection is a relevant disposal if—

(a) throughout a period of at least one year ending with the date of the disposal or, where applicable, the prior cessation date, the office or employment was the full—time occupation of the individual making the disposal; and

(b) that office or employment is other than that of director of a company which is either the family company of the individual concerned or is a member of a trading group of which the holding company is his family company; and

(c) where there is a prior cessation date, the individual either had attained the age of 60 on or before that date or on that date retired on ill-health grounds below that age; and

(d) where there is a prior cessation date, the disposal takes place within the permitted period after the cessation date.

(3) Relief from capital gains tax shall be given, subject to and in accordance with Schedule 20 to this Act, where—

(a) the trustees of a settlement dispose of—

(i) shares or securities of a company, or

(ii) an asset used or previously used for the purposes of a business,

being, in either case, part of the settled property; and

(b) the conditions in subsection (4) or, as the case may be, subsection (5) below are fulfilled with respect to a beneficiary who, under the settlement, has an interest in possession in the whole of the settled property or, as the case may be, in a part of it which consists of or includes the shares or securities or the asset referred to in paragraph (a) above, but excluding, for this purpose, an interest for a fixed term; and in those subsections that beneficiary is referred to as “the qualifying beneficiary”.

(4) In relation to a disposal of shares or securities of a company (including such a disposal of an interest in shares as is mentioned in section 69(2)(c) above), the conditions referred to in subsection (3)(b) above are—

(a) that, throughout a period of at least one year ending not earlier than the permitted period before the disposal, the company was the qualifying beneficiary’s family company and either a trading company or the holding company of a trading group; and

(b) that, throughout a period of at least one year ending as mentioned in paragraph (a) above, the qualifying beneficiary was a full-time working director of the company or, if the company is a member of a group or commercial association of companies, of one or more companies which are members of the group or association; and

(c) that, on the date of the disposal or within the permitted period before that date, the qualifying beneficiary ceased to be a full-time working director as mentioned in paragraph (b) above, having attained the age of 60 or retired on ill-health grounds below that age.

(5) In relation to a disposal of an asset, the conditions referred to in subsection (3)(b) above are—

(a) that, throughout a period of at least one year ending not earlier than the permitted period before the disposal, the asset was used for the purposes of a business carried on by the qualifying beneficiary; and

(b) that, on the date of the disposal or within the permitted period before that date, the qualifying beneficiary ceased to carry on the business referred to in paragraph (a) above; and

(c) that, on or before the date of the disposal or, if it was earlier, the date on which the qualifying beneficiary ceased to carry on that business, he attained the age of 60 or retired on ill-health grounds below that age.

(6) In any case where—

(a) by virtue of section 69 above, relief falls to be given, in accordance with Schedule 20 to this Act, in respect of a material disposal of business assets which either consists of the disposal by an individual of his interest in the assets of a partnership or is of a description falling within subsection (5) of that section, and

(b) the individual making that material disposal makes an associated disposal of assets, as defined in subsection (7) below,

relief from capital gains tax shall also be given, subject to and in accordance with that Schedule, in respect of the associated disposal.

(7) In relation to a material disposal of business assets, a disposal of an asset is an associated disposal if—

(a) it takes place as part of a withdrawal of the individual concerned from participation in the business carried on by the partnership referred to in subsection (6)(a) above or, as the case may be, by the company which owns the business as mentioned in subsection (5)(a) of section 69 above; and

(b) immediately before the material disposal or, if it was earlier, the cessation of the business mentioned in paragraph (a) above, the asset was in use for the purposes of that business; and

(c) during the whole or part of the period in which the asset has been in the ownership of the individual making the disposal the asset has been used—

(i) for the purposes of the business mentioned in paragraph (a) above (whether or not carried on by the partnership or company there referred to); or

(ii) for the purposes of another business carried on by the individual or by a partnership of which the individual concerned was a member; or

(iii) for the purposes of another business in respect of which the conditions in paragraphs (a) and (b) of subsection (3) of section 69 above were fulfilled.

(8) In subsections (6) and (7) above “material disposal of business assets” has the same meaning as in section 69 above and Part I of Schedule 20 to this Act shall have effect for the interpretation of this section as well as of that Schedule.

(9) In consequence of the provisions of this section and section 69 above, with respect to disposals on which relief falls to be given under Schedule 20 to this Act, section 126 of and Schedule 4 to the M1 Capital Gains Tax Act 1979 (gifts of business assets) shall be amended as follows—

(a) in subsection (2)(b) of section 126 for the words “the proportion” there shall be substituted “the appropriate proportion”; for the words “subsection (5)(b) of section 124 above” there shall be substituted “paragraph 7(2) or paragraph 8(2) of Schedule 20 to the Finance Act 1985”; and for the words “that section” there shall be substituted “that Schedule”;

(b) in subsection (7)(a) of section 126 for the words “section 124 (8) above” there shall be substituted “paragraph 1 of Schedule 20 to the Finance Act 1985”;

(c) in paragraph 8(4) for the words “the proportion determined under subsection (5)(b) of section 124 of this Act” there shall be substituted “the appropriate proportion determined under Schedule 20 to the Finance Act 1985”; and

(d) for the words “section 124 above” or “section 124 of this Act”, in any other place where they occur, there shall be substituted “Schedule 20 to the Finance Act 1985”;

and, with respect to disposals (and associated acquisitions) made on or after 6th April 1985, in section 120 of the M2 Capital Gains Tax Act 1979 (roll-over relied etc.—trade carried on by family company) in paragraph (b) for the words “section 124 below” there shall be substituted “Schedule 20 to the Finance Act 1985”.

(10) In consequence of the provisions referred to in subsection (9) above, the words “Schedule 20 to the Finance Act 1985” shall be substituted—

[F1 (a) for the words “section 124 of the said Act of 1979” in section 79(3) of the M3 Finance Act 1980 (general relief for gifts); and F1 ]

(b) for the words “section 124 of that Act” in paragraph 1(2)(g) of Schedule 11 to the M4 Finance Act 1984 (furnished holiday lettings);

and, in consequence of paragraph (b) above, in paragraph 1(2)(h) of Schedule 11 to the Finance Act 1984 for the words “that Act” there shall be substituted “the Capital Gains Tax Act 1979”.

Textual Amendments

F1 Repealed by Finance Act 1989 (c.26, SIF 63:1,2), s. 187, Sch. 17 Part VII in relation to disposals on or after 14 March 1989 (except where relief given under 1980 s. 79 in respect of a disposal made before that date).

Marginal Citations

M1 1979 c.14

M2 1979 c. 14

M3 1980 c. 48

M4 1984 c. 43