Taxation of Chargeable Gains Act 1992

[F1 [F2 Assets held on 5 April 2013, 5 April 2015 or 5 April 2016: no paragraph 5 election] U.K.

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

F2 Sch. 4ZZA para. 2 cross-heading substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 7

[F3 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.

[F4 See also the special rule in [F5 paragraph 6A] (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

F3 Sch. 4ZZA para. 2 substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 8

F4 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)

F5 Words in Sch. 4ZZA para. 2(1) substituted (with effect in accordance with s. 90(3) of the amending Act) by Finance Act 2016 (c. 24), s. 90(1)

3 (1) An amount equal to the relevant fraction of the notional [F6 post-commencement] gain or loss is the ATED-related gain or loss (as the case may be). U.K.

(2) “Notional [F7 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 [F8 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 [F9 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

F6 Words in Sch. 4ZZA para. 3(1) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 9(2)

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

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

F9 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 [F10 pre-commencement] gain or loss.

• Step 2 In a case where there is a notional [F11 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 [F11 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 [F12 pre-commencement] gain or loss” means the gain or loss which would have accrued on [F13 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 [F14 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 [F15 pre-commencement] gain.

(6) “The relevant fraction” is—

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

Textual Amendments

F10 Word in Sch. 4ZZA para. 4(1) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(2)(a)

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

F12 Word in Sch. 4ZZA para. 4(2) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(3)(a)

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

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

F15 Word in Sch. 4ZZA para. 4(5) substituted (26.3.2015) by Finance Act 2015 (c. 11), Sch. 8 para. 10(5)