(1)This section applies to a chargeable gain accruing to the trustees of a settlement where—
(a)in computing the gain, the allowable expenditure is reduced in consequence, directly or indirectly, of a claim to gifts relief in relation to an earlier disposal to the trustees;
(b)the transferor on that earlier disposal, or any person connected with the transferor, has at any time—
(i)acquired an interest in the settled property, or
(ii)entered into an arrangement to acquire such an interest; and
(c)in connection with that acquisition or arrangement any person has at any time received, or become entitled to receive, any consideration.
(2)Where this section applies to a chargeable gain, no allowable losses accruing to the trustees (in the year in which the gain accrues or any earlier year) may be set against the gain.
This applies to the whole of the chargeable gain (and not just the element deferred as a result of the claim to gifts relief).
(3)In this section—
(a)“gifts relief” means relief under section 165 or 260; and
(b)references to losses not being allowed to be set against a chargeable gain are to the losses not being allowed as a deduction against chargeable gains to the extent that they include that gain.
(4)The references in subsection (1)(b) above to an interest in settled property have the same meaning as in Schedule 4A.]
Textual Amendments
F1S. 79A inserted (with application in accordance with s. 93(2) of the amending Act) by Finance Act 2000 (c. 17), s. 93(1)