Taxation of Chargeable Gains Act 1992

4 Rates of capital gains tax. U.K.

(1) Subject to the provisions of this section and section 5, the rate of capital gains tax in respect of gains accruing to a person in a year of assessment shall be equivalent to the basic rate of income tax for the year.

F1 [(1A) If (after allowing for any deductions in accordance with the Income Tax Acts) an individual has no income for a year of assessment or his total income for the year is less than the lower rate limit, then—

(a) if the amount on which he is chargeable to capital gains tax does not exceed the relevant amount, the rate of capital gains tax in respect of gains accruing to him in the year shall be equivalent to the lower rate;

(b) if the amount on which he is chargeable to capital gains tax exceeds the relevant amount, the rate of capital gains tax in respect of such gains accruing to him in the year as correspond to the relevant amount shall be equivalent to the lower rate.

(1B) For the purposes of subsection (1A) above the relevant amount is—

(a) an amount equal to the lower rate limit, where the individual has no income;

(b) an amount equal to the difference between his total income and that limit, in any other case.]

(2) If income tax is chargeable at the higher rate [F2 or the Schedule F upper rate] in respect of any part of the income of an individual for a year of assessment, the rate of capital gains tax in respect of gains accruing to him in the year shall be equivalent to the higher rate.

(3) If no income tax is chargeable at the higher rate [F3 or the Schedule F upper rate] in respect of the income of an individual for a year of assessment, but the amount on which he is chargeable to capital gains tax exceeds the unused part of his basic rate band, the rate of capital gains tax on the excess shall be equivalent to the higher rate of income tax for the year.

F4 [(3A) Income chargeable to income tax at the lower rate [F5 or the Schedule F ordinary rate] in accordance with [F6 section 1A] of the Taxes Act, and any income which would be chargeable in accordance with that section if it were not chargeable at the higher rate [F7 or the Schedule F upper rate], shall be disregarded in determining for the purposes of subsections (1A) and (1B) above—

(a) whether any individual has income for any year of assessment; or

(b) an individual’s total income for any year of assessment.

(3B) Where any amount on which an individual is chargeable for a year of assessment to capital gains tax at a rate equivalent to the lower rate is or includes an amount (“the amount of the lower rate gains”) on which he is so chargeable by virtue only of subsection (3A) above then—

(a) for the purposes of the Income Tax Acts and this section, the amount (if any) of income comprised in the individual’s total income which is chargeable to income tax at the higher rate [F8 or the Schedule F upper rate] shall be determined as if the basic rate limit for that year were reduced in relation to that individual by the amount of the lower rate gains; and

(b) the amount (if any) on which, but for this paragraph, the individual would be chargeable under subsection (2) above to capital gains tax at a rate equivalent to the higher rate shall be treated as reduced by the amount of the lower rate gains or, if the amount to be reduced is not more than the amount of those gains, to nil.]

(4) The reference in subsection (3) above to the unused part of an individual’s basic rate band is a reference to the amount by which [F9 (disregarding subsection (3B)(a) above)] the basic rate limit exceeds his total income (as reduced by any deductions made in accordance with the Income Tax Acts).

Textual Amendments

F1 S. 4(1A)(1B) inserted (16.7.1992 with effect for the year 1992-93 and subsequent years of assessment) by 1992 c. 48, s. 23(1)(3)

F2 Words in s. 4(2) inserted (with effect in accordance with Sch. 4 para. 24(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 24(2)

F3 Words in s. 4(3) inserted (with effect in accordance with Sch. 4 para. 24(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 24(3)

F4 S. 4(3A)(3B) inserted (27.7.1993 with effect for the year 1993-94 and subsequent years of assessment as mentioned in Sch. 6 para. 25(1)) by 1993 c. 34, s. 79, Sch. 6 paras. 22(1), 25(1)

F5 Words in s. 4(3A) inserted (with effect in accordance with Sch. 4 para. 24(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 24(4)(a)

F6 Words in s. 4(3A) substituted (with effect in accordance with Sch. 6 para. 28 of the amending Act) by Finance Act 1996 (c. 8), Sch. 6 para. 27

F7 Words in s. 4(3A) inserted (with effect in accordance with Sch. 4 para. 24(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 24(4)(b)

F8 Words in s. 4(3B)(a) inserted (with effect in accordance with Sch. 4 para. 24(6) of the amending Act) by Finance (No. 2) Act 1997 (c. 58), Sch. 4 para. 24(5)

F9 Words in s. 4(4) inserted (27.7.1993 with effect for the year 1993-4 and subsequent years of assessment as mentioned in Sch. 6 para. 25(1)) by 1993 c. 34, s. 79, Sch. 6 paras. 22(2), 25(1)