Taxation of Chargeable Gains Act 1992

[F1 SCHEDULE 4ZZA U.K. Relevant high value disposals: gains and losses

Textual Amendments

F1 Sch. 4ZZA inserted (with effect in accordance with Sch. 25 para. 20 of the amending Act) by Finance Act 2013 (c. 29), Sch. 25 para. 16

Introductory U.K.

1 [F2 (1)] This Schedule applies for the purposes of determining in relation to a relevant high value disposal made by a person (“P”)— U.K.

(a) whether a gain or loss which is ATED-related accrues to P on the disposal, and

(b) whether a gain or loss which is not ATED-related accrues to P on the disposal.

[F3 (2) See also Part 4 of Schedule 4ZZB, which—

(a) makes provision about non-resident CGT disposals which are, or involve, relevant high value disposals, and

(b) includes provision about the computation of gains or losses on such disposals which are neither NRCGT gains or losses (as defined in section 57B and Schedule 4ZZB) nor ATED-related.]

Textual Amendments

F2 Sch. 4ZZA para. 1 renumbered as Sch. 4ZZA para. 1(1) (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 38(2)

F3 Sch. 4ZZA para. 1(2) inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 38(3)

[F4 Assets held on 5 April 2013, 5 April 2015 or 5 April 2016: no paragraph 5 election] U.K.

Textual Amendments

F4 Sch. 4ZZA para. 2 cross-heading substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 7

[F5 2 (1) In Cases 1 to 3 below— U.K.

(a) paragraph 3 applies for the purposes of computing the gain or loss accruing to P which is ATED-related, and

(b) paragraph 4 applies for the purposes of computing the gain or loss accruing to P which is not ATED-related.

[F6 See also the special rule in paragraph 6 (which takes precedence over paragraphs 3 and 4 where it applies).]

(2) Case 1 is that—

(a) the interest disposed of was held by P on 5 April 2013, and

(b) neither Case 2 nor Case 3 applies.

(3) Case 2 is that—

(a) the interest disposed of was held by P on 5 April 2015,

(b) Case 3 does not apply, and

(c) no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2015 during which P held the interest disposed of.

(4) Case 3 is that—

(a) the interest disposed of was held by P on 5 April 2016, and

(b) no relevant single dwelling interest was subject to ATED on one or more days in the period ending with 31 March 2016 during which P held the interest disposed of.

(5) For the purposes of this paragraph—

(a) “relevant single-dwelling interest” means the single-dwelling interest by reference to which Condition B in section 2C is met in relation to the relevant high value disposal, or, if Condition B is met by reference to more than one such interest, each of them;

(b) a relevant single dwelling interest is “subject to ATED” on a day if P—

(i) was within the charge to annual tax on enveloped dwellings with respect to that interest on that day, or

(ii) would have been within that charge but for the day being “relievable” by virtue of any of the provisions mentioned in section 132 of the Finance Act 2013 (ATED: effect of reliefs).

(6) In paragraphs 3 and 4, “the relevant year” means—

(a) in relation to Case 1, 2013;

(b) in relation to Case 2, 2015;

(c) in relation to Case 3, 2016.]

Textual Amendments

F5 Sch. 4ZZA para. 2 substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 8

F6 Words in Sch. 4ZZA para. 2(1) inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 38(4)

3 (1) An amount equal to the relevant fraction of the notional [F7 post-commencement] gain or loss is the ATED-related gain or loss (as the case may be). U.K.

(2) “Notional [F8 post-commencement] gain or loss” means the gain or loss which (in the absence of section 2B and this Schedule) would have accrued on the relevant high value disposal had P acquired the interest on [F9 5 April in the relevant year] for a consideration equal to its market value on that date.

(3) For the purposes of sub-paragraph (2), the amount of the gain or loss accruing to P is to be computed (whether or not that would otherwise be the case) as if P were within the charge to capital gains tax (but not within the charge to corporation tax on chargeable gains).

(4) “The relevant fraction” is—

where—

“CD” is the number of days in the relevant ownership period which are ATED chargeable days;

“TD” is the total number of days in the relevant ownership period.

(5) “The relevant ownership period” means the period beginning with [F10 6 April in the relevant year] and ending with the day before the day on which the relevant high value disposal occurs.

(6) “ATED chargeable day” means any day by virtue of which condition C in section 2C(4) is met in relation to the relevant high value disposal.

Textual Amendments

F7 Words in Sch. 4ZZA para. 3(1) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 9(2)

F8 Words in Sch. 4ZZA para. 3(2) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 9(3)(a)

F9 Words in Sch. 4ZZA para. 3(2) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 9(3)(b)

F10 Words in Sch. 4ZZA para. 3(5) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 9(4)

4 (1) The gain or loss accruing on the relevant high value disposal which is not ATED-related is computed as follows. U.K.

• Step 1 Determine the amount of the notional [F11 pre-commencement] gain or loss.

• Step 2 In a case where there is a notional [F12 post-commencement] gain—

  (a)

  determine the amount of that gain remaining after the deduction of the ATED-related gain determined under paragraph 3, and

  (b)

  adjust that remaining gain by reducing it by the notional indexation allowance.

• Step 3 In a case where there is a notional [F12 post-commencement] loss, determine the amount of that loss remaining after deduction of the ATED-related loss determined under paragraph 3.

• Step 4 Add—

  (a)

  the amount of any gain or loss determined under Step 1, and

  (b)

  the amount of any adjusted gain determined under Step 2 or (as the case may be) any loss determined under Step 3,

  (treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the gain on the relevant high value disposal which is not ATED-related.

If the result is a negative amount, that amount (expressed as a positive number) is the loss on the relevant high value disposal which is not ATED-related.

(2) “The notional [F13 pre-commencement] gain or loss” means the gain or loss which would have accrued on [F14 5 April in the relevant year] had the interest been disposed of for a consideration equal to its market value on that date.

(3) For the purposes of sub-paragraph (2), the amount of the gain or loss accruing to P is to be computed (whether or not that would otherwise be the case) as if P were within the charge to corporation tax on chargeable gains (but not within the charge to capital gains tax).

(4) Paragraph 3(2) and (3) (meaning of “notional [F15 post-commencement] gain or loss”) also applies for the purposes of this paragraph.

(5) “Notional indexation allowance” means the relevant fraction of an amount equal to the difference between—

(a) the indexation allowance which (in the absence of section 2B and this Schedule) would be made under Chapter 4 of Part 2 in determining the gain accruing on the relevant high value disposal were that gain being computed for corporation tax purposes, and

(b) the indexation allowance which is made under Chapter 4 of Part 2 in determining the notional [F16 pre-commencement] gain.

(6) “The relevant fraction” is—

where “CD” and “TD” have the same meaning as in paragraph 3(4).

Textual Amendments

F11 Word in Sch. 4ZZA para. 4(1) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(2)(a)

F12 Word in Sch. 4ZZA para. 4(1) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(2)(b)

F13 Word in Sch. 4ZZA para. 4(2) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(3)(a)

F14 Words in Sch. 4ZZA para. 4(2) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(3)(b)

F15 Word in Sch. 4ZZA para. 4(4) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(4)

F16 Word in Sch. 4ZZA para. 4(5) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(5)

Election for paragraph 2 to 4 not to apply to a chargeable interest U.K.

5 (1) A person may make an election under this paragraph for paragraphs 2 to 4 not to apply in relation to a chargeable interest held by (or any part of which is held by) the person on [F17 5 April in the relevant year]. U.K.

(2) An election is irrevocable.

(3) An election must be made by being included in a tax return under the Management Act for the tax year in which the first relevant high value disposal by the person of the chargeable interest (or any part of it) on or after [F18 6 April in the relevant year] occurs.

[F19 (3A) An election made in relation to an asset under paragraph 2(1)(b) of Schedule 4ZZB (disposals by non-residents etc of UK residential property interests: gains and losses) also has effect as an election made under this paragraph in relation to the asset.]

(4) The reference in sub-paragraph (3) to an election being included in a return includes an election being included by virtue of an amendment of the return.

(5) All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to an election.

[F20 (6) In this paragraph—

• “chargeable interest” has the same meaning as in Part 3 of the Finance Act 2013 (annual tax on enveloped dwellings) (see section 107 of that Act);

• “relevant year” has the meaning given by paragraph 2.]

Textual Amendments

F17 Words in Sch. 4ZZA para. 5(1) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 11(2)

F18 Words in Sch. 4ZZA para. 5(3) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 11(3)

F19 Sch. 4ZZA para. 5(3A) inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 38(5)

F20 Sch. 4ZZA para. 5(6) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 11(4)

Cases where election made or [F21 or none of Cases 1 to 3 apply] U.K.

Textual Amendments

F21 Words in Sch. 4ZZA para. 6 cross-heading substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 12

6 (1) This paragraph applies if— U.K.

(a) an election is made by P under paragraph 5 in respect of the chargeable interest which (or a part of which) is the subject of the relevant high value disposal, or

[F22 (b) none of Cases 1, 2 and 3 in paragraph 2 applies to the disposal.]

(2) The ATED-related gain or loss accruing on the relevant high value disposal is computed as follows.

• Step 1 Determine the amount of the gain or loss which would accrue to P, ignoring section 2B and this Schedule (but not the remainder of this Step). For this purpose, the amount of the gain or loss is to be computed (whether or not that would otherwise be the case) as if P were within the charge to capital gains tax (but not within the charge to corporation tax on chargeable gains).

• Step 2 An amount equal to the relevant fraction of that gain or loss is the ATED-related gain or loss accruing on the relevant high value disposal.

(3) The gain or loss accruing on the relevant high value disposal which is not ATED-related is to be computed as follows.

• Step 1 In a case where there is a gain under Step 1 of sub-paragraph (2)—

  (a)

  determine the amount of the gain remaining after the deduction of the ATED-related gain, and

  (b)

  adjust the remaining gain by reducing it by an amount equal to the notional indexation allowance.

  That adjusted gain is the gain accruing on the relevant high value disposal which is not ATED-related.

• Step 2 In a case where there is a loss under Step 1 of sub-paragraph (2), determine the amount of the loss remaining after deduction of the ATED-related loss. That remaining loss is the loss accruing on the relevant high value disposal which is not ATED-related.

(4) “Notional indexation allowance” means the relevant fraction of the indexation allowance which would be made under Chapter 4 of Part 2 in determining the gain under Step 1 in sub-paragraph (2) were that gain being computed for corporation tax purposes.

(5) Subject to sub-paragraph (6), “the relevant fraction”—

(a) in sub-paragraph (2) has the same meaning as in paragraph 3(4), and

(b) in sub-paragraph (4) has the same meaning as in paragraph 4(6).

(6) For the purpose of determining the relevant fraction under sub-paragraph (5), paragraph 3(5) has effect as if the relevant ownership period began on the day on which P acquired the interest or, if later, 31 March 1982.

Textual Amendments

F22 Sch. 4ZZA para. 6(1)(b) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 13

[F23 Special rule for certain disposals to which both this Schedule and Schedule 4ZZB relate U.K.

Textual Amendments

F23 Sch. 4ZZA para. 6A and cross-heading inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 38(6)

6A (1) This paragraph applies where conditions A and B are met. U.K.

(2) Condition A is that the relevant high value disposal is—

(a) a non-resident CGT disposal (see section 14B), or

(b) one of two or more disposals which are (by virtue of section 2C and this Schedule) treated as comprised in a non-resident CGT disposal.

(3) Condition B is that—

(a) the interest disposed of by the relevant high value disposal was held by P on 5 April 2015,

(b) neither Case 2 nor Case 3 in paragraph 2 applies, and

(c) no election under paragraph 5 of this Schedule (or paragraph 2(1)(b) of Schedule 4ZZB) is or has been made in relation to the chargeable interest which (or a part of which) is the subject of the relevant high value disposal.

(4) The ATED-related gain or loss accruing on the relevant high value disposal is computed as follows.

• Step 1 Determine the amount of the post-April 2015 ATED-related gain or loss.

• Step 2 Determine the amount of the pre-April 2015 ATED-related gain or loss.

• Step 3 Add—

  (a)

  the amount of any gain or loss determined under Step 1, and

  (b)

  the amount of any gain or loss determined under Step 2,

  (treating any amount which is a loss as a negative amount). If the result is a positive amount, that amount is the ATED-related gain on the relevant high value disposal. If the result is a negative amount, that amount (expressed as a positive number) is the ATED-related loss on the relevant high value disposal.

(5) The post-April 2015 ATED-related gain or loss is equal to the amount that would be given by paragraph 3(1) as the amount of the ATED-related gain or loss if the relevant year for the purposes of that paragraph were 2015.

(6) The “pre-April 2015 ATED-related gain or loss” means the relevant fraction of the notional pre-April 2015 gain or loss.

(7) “The relevant fraction” is—

where—

“CD” is the number of days in the relevant ownership period which are ATED chargeable days;

“TD” is the total number of days in the relevant ownership period.

(8) If the interest disposed of was not held by P on 5 April 2013, the “notional pre-April 2015 gain or loss” is the gain or loss which would have accrued on 5 April 2015 had the interest been disposed of on that date for a consideration equal to its market value on that date.

(9) If the interest disposed of was held by P on 5 April 2013, the “notional pre-April 2015 gain or loss” is the gain or loss which would have accrued on 5 April 2015 if P had—

(a) acquired the interest on 5 April 2013 for a consideration equal to its market value on that date, and

(b) disposed of it on 5 April 2015 for a consideration equal to its market value on that date.

(10) Paragraph 3(3) applies for the purposes of sub-paragraphs (8) and (9) as for the purposes of paragraph 3(2).

(11) In sub-paragraph (7) “relevant ownership period” means the period—

(a) beginning with the day on which P acquired the chargeable interest or, if later, 6 April 2013, and

(b) ending with 5 April 2015.

(12) For how to compute the amount of the gain or loss on the relevant high value disposal that is neither ATED-related nor an NRCGT gain or loss (as defined in section 57B and Schedule 4ZZB) see paragraphs 16 to 19 of Schedule 4ZZB.]

Adjustments of ATED chargeable days U.K.

7 (1) This paragraph applies where, as a result of a claim under section 106(3) of the Finance Act 2013 (adjustment of chargeable amount), or an amendment of or adjustment to such a claim, there is an alteration in the number of ATED chargeable days. U.K.

(2) All such adjustments are to be made, whether by way of discharge or repayment of tax, the making of assessments or otherwise, as are required to give effect to any change in liability to tax as a result of that alteration.

[F24 Wasting assets U.K.

Textual Amendments

F24 Sch. 4ZZA paras. 8, 9 and cross-headings inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 38(7)

8 (1) Sub-paragraph (2) applies where it is necessary, in computing in accordance with paragraph 3(2) the notional post-commencement gain or loss accruing to a person on a relevant high value disposal, to determine whether or not the interest which is the subject of the disposal is a wasting asset. U.K.

(2) The assumption in paragraph 3(2) that the interest was acquired on a particular 5 April is to be ignored in determining that question.

(3) Sub-paragraph (4) applies where it is necessary, in computing in accordance with paragraph 6A(9) the notional pre-April 2015 gain or loss accruing to a person on a disposal, to determine whether or not the interest which is the subject of the disposal is a wasting asset.

(4) The assumption in paragraph 6A(9) that the interest was acquired on 5 April 2013 is to be ignored in determining that question.

(5) In this paragraph references to a “wasting asset” are to a wasting asset as defined for the purposes of Chapter 2 of Part 2 of this Act.

Capital allowances U.K.

9 (1) Sub-paragraph (2) applies where it is to be assumed for the purpose of computing— U.K.

(a) the notional post-commencement gain or loss accruing to a person on a relevant high value disposal in accordance with paragraph 3(2), or

(b) the notional pre-April 2015 gain or loss accruing to a person on a disposal in accordance with paragraph 6A(9),

that an asset was acquired by a person on 5 April 2013 for a consideration equal to its market value on that date.

(2) For the purposes of that computation, sections 41 (restriction of losses by reference to capital allowances etc) and 47 (wasting assets qualifying for capital allowances) are to apply in relation to any capital allowance or renewals allowance made in respect of the expenditure actually incurred by the person in acquiring or providing the asset as if that allowance were made in respect of the expenditure treated as incurred by the person on 5 April 2013 as mentioned in sub-paragraph (1).]]