- Latest available (Revised)
- Point in Time (02/12/2019)
- Original (As enacted)
Version Superseded: 06/04/2020
Point in time view as at 02/12/2019.
Taxation of Chargeable Gains Act 1992, SCHEDULE 7ZA is up to date with all changes known to be in force on or before 14 August 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
Changes and effects yet to be applied by the editorial team are only applicable when viewing the latest version or prospective version of legislation. They are therefore not accessible when viewing legislation as at a specific point in time. To view the ‘Changes to Legislation’ information for this provision return to the latest version view using the options provided in the ‘What Version’ box above.
Section 169SA
Textual Amendments
F1Sch. 7ZA inserted (with effect in accordance with Sch. 13 para. 6(1) of the amending Act) by Finance Act 2016 (c. 24), Sch. 13 para. 5
1(1)This paragraph gives the meaning of “trading company” and “trading group” where used in the following provisions of Chapter 3 of Part 5 (entrepreneurs' relief)—U.K.
(a)in section 169I (material disposal of business assets)—
(i)paragraphs (a) and (b) of subsection (6) (which apply for the purposes of conditions A and B in that section), and
(ii)sub-paragraphs (i) and (ii) of subsection (7A)(c) (which apply for the purposes of conditions C and D in that section), and
(b)section 169J(4) (disposal of trust business assets).
(2)“Trading company” and “trading group” have the same meaning as in section 165 (see section 165A), but as modified by Part 2 of this Schedule.
(3)“Trading activities” (see section 165A(4) and (9)) is to be read in accordance with Part 3 of this Schedule.
2U.K.In provisions of Chapter 3 of Part 5 not mentioned in paragraph 1(1), “trading company” and “trading group” have the same meaning as in section 165 (see section 165A), except that subsections (7) and (12) of section 165A are to be disregarded.
3U.K.In relation to a disposal of assets consisting of (or of interests in) shares in or securities of a company (“company A”), activities of a joint venture company are to be attributed to a company under subsections (7) and (12) of section 165A only if P—
(a)passes the shareholding test in relation to the joint venture company (see paragraphs 5 to 8), and
(b)passes the voting rights test in relation to the joint venture company (see paragraphs 9 to 12).
4(1)For the purposes of this Part, a company is an “investing company” in relation to P and a joint venture company if it meets conditions 1 and 2.U.K.
(2)Condition 1 is that—
(a)the company is company A (see paragraph 3), or
(b)P directly owns some portion of the ordinary share capital of the company.
(3)Condition 2 is that the company owns some portion of the ordinary share capital of the joint venture company (whether it is owned directly, indirectly, or partly directly and partly indirectly).
(4)In sub-paragraph (3) the reference to a company owning share capital indirectly is to be read in accordance with section 1155 of CTA 2010.
5U.K.P passes the shareholding test in relation to a joint venture company if, throughout the relevant period, the sum of the percentages given by paragraphs (a) and (b) is at least 5%—
(a)the percentage of the ordinary share capital of the joint venture company that is owned directly by P, and
(b)P's indirect shareholding percentage (see paragraph 6).
6U.K.P's “indirect shareholding percentage” is found by—
(a)calculating the percentage of the ordinary share capital of the joint venture company that is owned indirectly by P through a particular investing company (see paragraph 7), and
(b)where there are two or more investing companies, adding those percentages together.
7U.K.The percentage of the ordinary share capital of a joint venture company that is owned indirectly by P through a particular investing company (“company IC”) at a particular time is given by—
where—
R is the fraction of company IC's ordinary share capital that is owned by P at that time, and
S is the fraction of the joint venture company's ordinary share capital that is owned by company IC at that time (whether it is owned directly, indirectly, or partly directly and partly indirectly) (see paragraph 8).
8(1)The fraction of the joint venture company's ordinary share capital that is owned indirectly by company IC is calculated—U.K.
(a)by applying sections 1156 and 1157 of CTA 2010, as read with section 1155 of that Act, and
(b)on the assumptions specified in sub-paragraph (2).
(2)The assumptions are—
(a)where company IC directly owns more than 50% of the ordinary share capital of a company, company IC is taken to own the whole of the ordinary share capital of that company;
(b)where a company other than company IC (“company B”) directly owns more than 50% of the ordinary share capital of another company (“company C”) which is a member of a group of companies of which company IC is a member, company B is taken to own the whole of the ordinary share capital of company C.
9U.K.P passes the voting rights test in relation to a joint venture company if, throughout the relevant period, the sum of the percentages given by paragraphs (a) and (b) is at least 5%—
(a)the percentage of the voting rights that P holds directly in the joint venture company, and
(b)P's indirect voting rights percentage (see paragraph 10).
10U.K.P's “indirect voting rights percentage” is found by—
(a)calculating the percentage of the voting rights in the joint venture company that P holds indirectly through a particular investing company (see paragraph 11), and
(b)where there are two or more investing companies, adding those percentages together.
11U.K.The percentage of the voting rights in a joint venture company that P holds indirectly through a particular investing company (“company IC”) at a particular time is given by—
where—
T is the fraction of the voting rights in company IC that is held by P at that time, and
U is the fraction of the voting rights in the joint venture company that is held by company IC at that time (whether the voting rights are held directly, indirectly, or partly directly and partly indirectly) (see paragraph 12).
12(1)The fraction of the voting rights in the joint venture company that is held indirectly by company IC is calculated—U.K.
(a)by applying sections 1156 and 1157 of CTA 2010, as read with section 1155 of that Act, as if references in those sections to owning the ordinary share capital of a company were references to holding voting rights in a company, and
(b)on the assumptions specified in sub-paragraph (2).
(2)The assumptions are—
(a)where company IC directly holds more than 50% of the voting rights in a company, company IC is taken to hold all the voting rights in that company;
(b)where a company other than company IC (“company B”) directly holds more than 50% of the voting rights in another company (“company C”) which is a member of a group of companies of which company IC is a member, company B is taken to hold all the voting rights in company C.
13(1)In relation to a disposal of assets consisting of (or of interests in) shares in or securities of a company (“company A”), activities carried on by a company as a member of a partnership are to be treated as not being trading activities of the company (see section 165A(4) and (9)) if P fails either or both of the following—U.K.
(a)the profits and assets test in relation to the partnership (see paragraphs 15 to 20);
(b)the voting rights test in relation to the partnership (see paragraphs 21 to 23).
(2)In relation to such a disposal, activities carried on by a company as a member of a partnership are also to be treated as not being trading activities of the company if the company is not a member of the partnership throughout the relevant period.
14(1)This paragraph applies for the purposes of this Part.U.K.
(2)A company is a “direct interest company” in relation to P if—
(a)it is company A (see paragraph 13(1)), or
(b)P directly owns some portion of the ordinary share capital of the company.
(3)A company is a “relevant corporate partner” in relation to P and a partnership if—
(a)a direct interest company in relation to P (“company DIC”) owns some portion of the ordinary share capital of the company (whether it is owned directly, indirectly or partly directly and partly indirectly),
(b)the company is a member of a group of companies of which company DIC is a member, and
(c)the company is a member of the partnership.
(4)In sub-paragraph (3) the reference to a company owning share capital indirectly is to be read in accordance with section 1155 of CTA 2010.
15U.K.P passes the profits and assets test in relation to a partnership if, throughout the relevant period, the sum of the percentages given by paragraphs (a), (b) and (c) is at least 5%—
(a)the percentage which is P's direct interest in the assets of the partnership,
(b)the percentage which is P's share of the partnership through direct interest companies that are members of the partnership (see paragraph 16), and
(c)the percentage which is P's share of the partnership through direct interest companies and relevant corporate partners in the partnership (see paragraph 18).
16U.K.P's “share of the partnership through direct interest companies that are members of the partnership” is found by—
(a)calculating the percentage which is P's indirect share of the partnership through each direct interest company that is a member of the partnership (see paragraph 17), and
(b)where there are two or more direct interest companies that are members of the partnership, adding those percentages together.
17U.K.The percentage which is P's indirect share of the partnership through a particular direct interest company that is a member of the partnership (“company DICP”) at a particular time is given by—
where—
R is the fraction of company DICP's ordinary share capital that is owned by P at that time, and
V is the lower of—
the fraction of the profits of the partnership in which company DICP has an interest at that time, and
the fraction of the assets of the partnership in which company DICP has an interest at that time.
18U.K.P's “share of the partnership through direct interest companies and relevant corporate partners in the partnership” is found by—
(a)calculating the percentage which is P's indirect share of the partnership through each direct interest company and each relevant corporate partner in the partnership (see paragraph 19), and
(b)where there are two or more direct interest companies or two or more relevant corporate partners, or both, adding those percentages together.
19U.K.The percentage which is P's indirect share of the partnership through a particular direct interest company (“company DIC”) and a particular relevant corporate partner in the partnership (“company CP”) at a particular time is given by—
where—
R is the fraction of company DIC's ordinary share capital that is owned by P at that time,
V is the lower of—
the fraction of the profits of the partnership in which company CP has an interest at that time, and
the fraction of the assets of the partnership in which company CP has an interest at that time, and
W is the fraction of company CP's ordinary share capital that is owned by company DIC at that time (whether it is owned directly, indirectly, or partly directly and partly indirectly) (see paragraph 20).
20(1)The fraction of a company's ordinary share capital that is owned indirectly by company DIC is calculated—U.K.
(a)by applying sections 1156 and 1157 of CTA 2010, as read with section 1155 of that Act, and
(b)on the assumptions specified in sub-paragraph (2).
(2)The assumptions are—
(a)where company DIC directly owns more than 50% of the ordinary share capital of a company, company DIC is taken to own the whole of the ordinary share capital of that company;
(b)where a company other than company DIC (“company B”) directly owns more than 50% of the ordinary share capital of another company (“company C”) which is a member of a group of companies of which company DIC is a member, company B is taken to own the whole of the ordinary share capital of company C.
21(1)P passes the voting rights test in relation to a partnership if, throughout the relevant period, the sum of P's direct voting rights percentage and P's indirect voting rights percentage is at least 5%.U.K.
(2)P's “direct voting rights percentage” is found by—
(a)taking the percentage of the voting rights that P holds directly in each direct interest company that is a member of the partnership, and
(b)where P directly holds voting rights in two or more direct interest companies that are members of the partnership, adding those percentages together.
(3)P's “indirect voting rights percentage” is found by—
(a)calculating the percentage which is P's indirect holding of voting rights in each relevant corporate partner in the partnership through each direct interest company (see paragraph 22), and
(b)where there are two or more relevant corporate partners or two or more direct interest companies, or both, adding those percentages together.
22U.K.The percentage which is P's indirect holding of voting rights in a particular relevant corporate partner in the partnership (“company CP”) through a particular direct interest company (“company DIC”) at a particular time is given by—
where—
T is the fraction of the voting rights in company DIC that is held by P at that time, and
X is the fraction of the voting rights in company CP that is held by company DIC at that time (whether the voting rights are held directly, indirectly, or partly directly and partly indirectly) (see paragraph 23).
23(1)The fraction of the voting rights in a company that is held indirectly by company DIC is calculated—U.K.
(a)by applying sections 1156 and 1157 of CTA 2010, as read with section 1155 of that Act, as if references in those sections to owning the ordinary share capital of a company were references to holding voting rights in a company, and
(b)on the assumptions specified in sub-paragraph (2).
(2)The assumptions are—
(a)where company DIC directly holds more than 50% of the voting rights in a company, company DIC is taken to hold all the voting rights in that company;
(b)where a company other than company DIC (“company B”) directly holds more than 50% of the voting rights in another company (“company C”) which is a member of a group of companies of which company DIC is a member, company B is taken to hold all the voting rights in company C.
24(1)In the case of a material disposal of business assets, “P” means the individual making the disposal.U.K.
(2)In the case of a disposal of trust business assets—
(a)“P” means any relevant beneficiary, but
(b)in any reference to P passing or failing the tests mentioned in paragraphs 3 and 13(1), P is to be read as being a single body consisting of all the relevant beneficiaries (so that, for the purposes of determining if those tests are met, percentages are to be calculated in respect of each relevant beneficiary and then aggregated).
(3)The following are “relevant beneficiaries”—
(a)the qualifying beneficiary in relation to the disposal (see section 169J(3)), and
(b)any other beneficiary who is, in relation to the disposal, a beneficiary mentioned in section 169O(1).
25U.K.“The relevant period” means—
(a)for the purposes of conditions A and C in section 169I, the period of [F22 years] ending with the date of the disposal,
(b)for the purposes of conditions B and D in section 169I, the period of [F32 years] ending with the date mentioned in subsection (7)(a) or (b) or (7O)(a) or (b) of that section, and
(c)for the purposes of section 169J(4), a period of [F42 years] ending not earlier than 3 years before the date of the disposal.
Textual Amendments
F2Words in Sch. 7ZA para. 25(a) substituted (with effect in accordance with Sch. 16 para. 4(1) of the amending Act) by Finance Act 2019 (c. 1), Sch. 16 para. 1(6)(a)
F3Words in Sch. 7ZA para. 25(b) substituted (with effect in accordance with Sch. 16 para. 4(3) of the amending Act) by Finance Act 2019 (c. 1), Sch. 16 para. 1(6)(b)
F4Words in Sch. 7ZA para. 25(c) substituted (with effect in accordance with Sch. 16 para. 4(3) of the amending Act) by Finance Act 2019 (c. 1), Sch. 16 para. 1(6)(b)
26(1)Terms used in this Schedule which are defined in subsection (14) of section 165A have the same meaning as they have in that subsection.U.K.
(2)References to a person holding voting rights include references to a person who has the ability to control the exercise of voting rights by another person.
(3)For the purposes of Part 3 of this Schedule, the assets of—
(a)a Scottish partnership, or
(b)a partnership under the law of any other country or territory under which assets of a partnership are regarded as held by or on behalf of the partnership as such,
are to be treated as held by the members of the partnership in the proportions in which they are entitled to share in the capital profits of the partnership.
References in Part 3 to a person's interest in the assets of a partnership are to be construed accordingly.]
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download.
Would you like to continue?
The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.
Would you like to continue?
Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.
Original (As Enacted or Made): The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.
Point in Time: This becomes available after navigating to view revised legislation as it stood at a certain point in time via Advanced Features > Show Timeline of Changes or via a point in time advanced search.
Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.
Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.
Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:
This timeline shows the different points in time where a change occurred. The dates will coincide with the earliest date on which the change (e.g an insertion, a repeal or a substitution) that was applied came into force. The first date in the timeline will usually be the earliest date when the provision came into force. In some cases the first date is 01/02/1991 (or for Northern Ireland legislation 01/01/2006). This date is our basedate. No versions before this date are available. For further information see the Editorial Practice Guide and Glossary under Help.
Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:
Click 'View More' or select 'More Resources' tab for additional information including: