SCHEDULES
SCHEDULE 7 Relief for gifts of business assets
Part II Reductions in held-over gain
Application and interpretation
4
1
The provisions of this Part of this Schedule apply in cases where a claim for relief is made under section 165.
2
In this Part of this Schedule—
a
“the principal provision” means section 165(2), or, as the case may require, sub-paragraph (2) of paragraph 2 above,
b
“shares” includes securities,
c
“the transferor” has the same meaning as in section 165 except that, in a case where paragraph 2 above applies, it refers to the trustees mentioned in that paragraph, and
d
“unrelieved gain”, in relation to a disposal, has the same meaning as in section 165(7).
3
In this Part of this Schedule—
a
any reference to a disposal of an asset is a reference to a disposal which falls within subsection (1) of section 165 by virtue of subsection (2)(a) of that section or, as the case may be, falls within sub-paragraph (1) of paragraph 2 above by virtue of sub-paragraph (2)(a) of that paragraph, and
b
any reference to a disposal of shares is a reference to a disposal which falls within subsection (1) of section 165 by virtue of subsection (2)(b) of that section or, as the case may be, falls within sub-paragraph (1) of paragraph 2 above by virtue of sub-paragraph (2)(b) of that paragraph.
4
In relation to a disposal of an asset or of shares, any reference in the following provisions of this Part of this Schedule to the held-over gain is a reference to the held-over gain on that disposal as determined under subsection (6) or, where it applies, subsection (7) of section 165.
Reductions peculiar to disposals of assets
5
1
If, in the case of a disposal of an asset, the asset was not used for the purposes of the trade, profession or vocation referred to in paragraph (a) of the principal provision throughout the period of its ownership by the transferor, the amount of the held-over gain shall be reduced by multiplying it by the fraction—
where—
A is the number of days in that period of ownership during which the asset was so used, and
B is the number of days in that period.
2
This paragraph shall not apply where the circumstances are such that a reduction in respect of the asset—
a
is made under Chapter II of Part V of the M1Inheritance Tax Act 1984 in relation to a chargeable transfer taking place on the occasion of the disposal, or
b
would be so made if there were a chargeable transfer on that occasion, or
c
would be so made but for section 124A of that Act (assuming, where there is no chargeable transfer on that occasion, that there were).
6
1
If, in the case of a disposal of an asset, the asset is a building or structure and, over the period of its ownership by the transferor or any substantial part of that period, part of the building or structure was, and part was not, used for the purposes of the trade, profession or vocation referred to in paragraph (a) of the principal provision, there shall be determined the fraction of the unrelieved gain on the disposal which it is just and reasonable to apportion to the part of the asset which was so used, and the amount of the held-over gain (as reduced, if appropriate, under paragraph 5 above) shall be reduced by multiplying it by that fraction.
2
This paragraph shall not apply where the circumstances are such that a reduction in respect of the asset—
a
is made under Chapter II of Part V of the Inheritance Tax Act 1984 in relation to a chargeable transfer taking place on the occasion of the disposal, or
b
would be so made if there were a chargeable transfer on that occasion, or
c
would be so made but for section 124A of that Act (assuming, where there is no chargeable transfer on that occasion, that there were).
Reduction where gain partly relieved by retirement relief
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