(1)This section makes provision about the rates at which capital gains tax is charged, but is subject to section 169N (rate in case of claim for entrepreneurs' relief) [F2and section 169VC (rate in case of claim for investors' relief)].
(2)Subject to the following provisions of this section [F3and section 4BA], the rate of capital gains tax
[F4(a)in respect of upper rate gains accruing to a person in a tax year, is 18%, and
(b)in respect of gains accruing to a person in a tax year which are not upper rate gains, is 10%].
[F5(2A)In this section “upper rate gains” means—
(a)residential property gains (see section 4BB),
(b)NRCGT gains (see section 14D), and
(c)carried interest gains (see subsections (12) and (13)).]
[F6(3)The rate of capital gains tax in respect of gains accruing in a tax year to the trustees of a settlement or the personal representatives of a deceased person—
(a)in respect of upper rate gains, is 28%, and
(b)in respect of gains which are not upper rate gains, is 20%.]
[F7(3A)The rate of capital gains tax in respect of gains chargeable under section 2B accruing to a person in a tax year is 28%.]
[F8(3B)The rate of capital gains tax is 20% in respect of—
(a)gains chargeable under section 14D accruing to a company in a tax year, and
(b)gains chargeable under section 188D accruing in a tax year to the relevant body of an NRCGT group (as defined in that section).]
(4)If income tax is chargeable at the higher rate[F9, the Scottish higher rate] or the dividend upper rate in respect of any part of the income of an individual for a tax year, the rate of capital gains tax
[F10(a)in respect of upper rate gains accruing to the individual in the tax year, is 28%, and
(b)in respect of gains accruing to the individual in the tax year which are not upper rate gains, is 20%].
(5)If no income tax is chargeable at the higher rate[F9, the Scottish higher rate] or the dividend upper rate in respect of the income of an individual for a tax year, but the amount on which the individual is chargeable to capital gains tax exceeds the unused part of the individual's basic rate band, the rate of capital gains tax on the excess is [F11(subject to section 4BA) 20%].
[F12(6)Subsection (6A) applies for the purposes of subsection (5) where—
(a)there is an excess as mentioned in that subsection (“the higher-rate excess”), and
(b)the amount on which the individual is chargeable to capital gains tax for the tax year includes any special rate gains, that is, gains which are—
(i)chargeable to capital gains tax at the rate in section 169N(3), or
(ii)chargeable to capital gains tax at the rate in section 169VC(2).
(6A)Where this subsection applies—
(a)if the total amount of the special rate gains exceeds the unused part of the individual's basic rate band, the higher-rate excess is to be treated as reduced by the amount by which the special rate gains exceed that unused part;
(b)if not, the higher-rate excess is to be treated as consisting of gains other than the special rate gains.]
(7)[F13Any reference in this section] to the unused part of an individual's basic rate band is a reference to the amount by which the basic rate limit exceeds the individual's Step 3 income.
(8)For the purposes of this section, “the Step 3 income” of an individual means the individual's net income less allowances deducted at Step 3 of the calculation in section 23 of ITA 2007 for the purpose of calculating the individual's income tax liability.
(9)Section 989 of ITA 2007 (the definitions) applies for the purposes of this section [F14and section 4BA] as it applies for income tax purposes.
[F15(12)In subsection (2A)(c) “carried interest gains” means—
(a)gains treated as accruing under section 103KA(2) or (3), and
(b)gains accruing to an individual as a result of carried interest arising to the individual where—
(i)the individual performs investment management services directly or indirectly in respect of an investment scheme under arrangements not involving a partnership,
(ii)the carried interest arises to the individual under the arrangements, and
(iii)the carried interest does not constitute a co-investment repayment or return.
(13)For the purposes of subsection (12)(b)—
(a)“carried interest”, in relation to any arrangements, has the same meaning as in section 809EZB of ITA 2007 (see sections 809EZC and 809EZD of that Act);
(b)carried interest “arises” to an individual if it arises to him or her for the purposes of Chapter 5E of Part 13 of ITA 2007;
(c)“arrangements”, “investment management services” and “investment scheme” have the same meanings as in that Chapter (see sections 809EZA(6) and 809EZE of that Act);
(d)“co-investment repayment or return” has the same meaning as in section 103KA.]]
Textual Amendments
F1Ss. 4, 4A substituted (with effect in accordance with Sch. 1 para. 12 of the amending Act) for s. 4 by Finance (No. 2) Act 2010 (c. 31), Sch. 1 para. 2 (with Sch. 1 para. 18)
F2Words in s. 4(1) inserted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(2)
F3Words in s. 4(2) inserted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(3)(a)
F4Words in s. 4(2) substituted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(3)(b)
F5S. 4(2A) inserted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(4)
F6S. 4(3) substituted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(5)
F7S. 4(3A) inserted (with effect in accordance with Sch. 25 para. 20 of the amending Act) by Finance Act 2013 (c. 29), Sch. 25 para. 5
F8S. 4(3B) inserted (with effect in accordance with Sch. 7 para. 60 of the amending Act) by Finance Act 2015 (c. 11), Sch. 7 para. 6
F9Words in s. 4(4)(5) inserted (with effect in accordance with Sch. 38 para. 15(4) of the amending Act) by Finance Act 2014 (c. 26), Sch. 38 para. 15(2)
F10Words in s. 4(4) substituted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(6)
F11Words in s. 4(5) substituted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(7)
F12S. 4(6)(6A) substituted for s. 4(6) (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(8)
F13Words in s. 4(7) substituted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(9)
F14Words in s. 4(9) inserted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(10)
F15S. 4(12)(13) inserted (with effect in accordance with s. 83(17) of the amending Act) by Finance Act 2016 (c. 24), s. 83(12)