Finance (No. 2) Bill

Session 2012 - 13
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Finance (No. 2) Bill

Finance (No. 2) Bill
Schedule 23 — EMI options and entrepreneurs’ relief etc
342

(7R)
If the disqualifying event is within section 534(1)(c) of ITEPA 2003,
subsection (7B)(a) has effect as if the reference to the cessation date
were a reference to the first day after the period mentioned in section
532(1)(b) of that Act if that day is later than the cessation date.”
Identification of shares acquired under EMI option
5
2
Chapter 1 of Part 4 of TCGA 1992 (general provision relating to shares etc) is
amended as follows.
3
In section 105 (disposal on or before day of acquisition of shares etc) after
subsection (3) insert—
“(4)
Subsection (5) applies if an individual—
10
(a)
acquires shares (“the relevant shares”) of the same class, on
the same day and in the same capacity, and
(b)
some of the relevant shares are relevant EMI shares (as
defined by section 169I(7C) to (7G)).
(5)
This section has effect as if—
15
(a)
paragraph (a) of subsection (1) required the relevant EMI
shares to be treated as acquired by the individual by a single
transaction separate from the remainder of the relevant
shares (which are also to be treated by virtue of that
paragraph as acquired by the individual by a single
20
transaction), and
(b)
subsection (1) required the relevant EMI shares to be treated
as disposed of after the remainder of the relevant shares.”
4     (1)
Section 106A (identification of securities for capital gains tax purposes) is
amended as follows.
25
      (2)
In subsection (5)—
(a)
omit the “and” after paragraph (a),
(b)
after paragraph (a) insert—
“(aa)
with securities acquired by him within that period
which are not relevant EMI shares, rather than with
30
securities acquired by him within that period which
are relevant EMI shares; and”, and
(c)
at the beginning of paragraph (b) insert “subject to paragraph (aa),”.
      (3)
After subsection (6) insert—
“(6A)
Subject to subsections (4) and (5) above, a company’s shares which
35
are disposed of shall be identified—
(a)
with relevant EMI shares, rather than with other shares, and
(b)
with relevant EMI shares acquired at an earlier time rather
than with relevant EMI shares acquired at a later time.
(6B)
No shares identified with relevant EMI shares by virtue of subsection
40
(6A)(a) or (b) above shall be regarded as forming part of an existing
section 104 holding or as constituting a section 104 holding.”


Finance (No. 2) Bill
Schedule 23 — EMI options and entrepreneurs’ relief etc
343

      (4)
In subsection (10), before the definition of “securities”, insert—
“relevant EMI shares” has the meaning given by section
169I(7C) to (7G),”.
Commencement and transitional provision
5     (1)
The amendments made by paragraphs 1 to 4 above have effect in relation to
5
disposals of shares on or after 6 April 2013.
      (2)
In the case of the amendments made by paragraphs 2 to 4 above, sub-
paragraph (1) is subject to paragraph 6(4) below.
6     (1)
This paragraph applies if, during the tax year 2012-13, an individual
acquires shares of a class in a company (“the relevant shares”) which would
10
be relevant EMI shares were the reference to 6 April 2013 in section
169I(7D)(a) of TCGA 1992 (as inserted by paragraph 1 above) a reference to
6 April 2012 instead.
      (2)
If the individual makes no disposals of shares of that class in that company
during that tax year, the relevant shares are to be treated as if they were
15
relevant EMI shares.
      (3)
If the individual disposes of shares of that class in that company during that
tax year, the individual may elect for the relevant shares to be treated as if
they were relevant EMI shares.
      (4)
If the individual makes an election under sub-paragraph (3)—
20
(a)
the amendments made by paragraphs 2 to 4 above also have effect,
in the case of the individual, in relation to disposals of shares of that
class in that company during that tax year, but
(b)
for this purpose, the amendment made by sub-paragraph (5) has
effect instead of the amendment made by paragraph 4(3) above.
25
      (5)
In section 106A of TCGA 1992 after subsection (6) insert—
“(6A)
Subject to subsections (4) and (5) above, a company’s shares which
are disposed of shall be identified—
(a)
with shares which are not relevant EMI shares, rather than
with relevant EMI shares, and
30
(b)
with relevant EMI shares acquired at a later time rather than
with relevant EMI shares acquired at an earlier time.
(6B)
No shares identified with relevant EMI shares by virtue of subsection
(6A)(b) above shall be regarded as forming part of an existing section
104 holding or as constituting a section 104 holding.”
35
      (6)
An election under sub-paragraph (3) may not be made or revoked after 31
January 2014 (and paragraph 3(1)(b) of Schedule 1A to TMA 1970 does not
apply in relation to such an election).
      (7)
For the purposes of this paragraph shares in a company are not to be treated
as being of the same class unless they are so treated by the practice of a
40
recognised stock exchange or would be so treated if dealt with on a
recognised stock exchange.
      (8)
“Recognised stock exchange” has the meaning given by section 1005 of ITA
2007.

Finance (No. 2) Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
344

Schedule 24
Section 64

Charge on certain high value disposals by companies etc
Part 1
Taxation of Chargeable Gains Act 1992
1
TCGA 1992 is amended as follows.
5
2     (1)
Section 1 (the charge to tax) is amended as follows.
      (2)
In subsection (2), after “Acts” insert “, subject to the exception in subsection
(2A)”.
      (3)
After subsection (2) insert—
“(2A)
But companies are chargeable to capital gains tax, and not
10
corporation tax, in respect of chargeable gains accruing to them to
the extent that those gains are ATED-related gains in respect of
which the companies are chargeable to capital gains tax under
section 2B.”
      (4)
In subsection (3) for “subsection (2)” substitute “subsections (2) and (2A)”.
15
3
In section 2 (persons and gains chargeable to capital gains tax, and allowable
losses), after subsection (7) insert—
“(7A)
Nothing in this section applies in relation to an ATED-related gain
chargeable to, or an ATED-related loss allowable for the purposes of,
capital gains tax by virtue of section 2B.”
20
4
After section 2 insert—
“2B
Persons chargeable to capital gains tax on ATED-related gains
(1)
A person (other than an excluded person) (“P”) is chargeable to
capital gains tax in respect of any ATED-related chargeable gain
accruing to P in a tax year on a relevant high value disposal.
25
(2)
A person is “excluded” if the person is an individual, the trustees of
a settlement or the personal representatives of a deceased person
and—
(a)
the gain accrues on a disposal of any partnership assets and
the person is a member of the partnership, or
30
(b)
the gain accrues on a disposal of any property held for the
purposes of a relevant collective investment scheme and the
person is a participant in relation to the scheme.
(3)
Capital gains tax is charged on the total amount of ATED-related
chargeable gains accruing to P in the tax year on relevant high value
35
disposals, after deducting ring-fenced ATED-related allowable
losses in relation to that year.
(4)
Subsections (5) to (7) apply in relation to an ATED-related allowable
loss accruing to P in a tax year on a relevant high value disposal.

Finance (No. 2) Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
345

(5)
The loss is not allowable as a deduction from ATED-related
chargeable gains accruing in any earlier tax year on relevant high
value disposals.
(6)
Relief is not to be given under this Act more than once in respect of
the loss or any part of the loss.
5
(7)
Relief is not to be given under this Act in respect of the loss if, and so
far as, relief has been or may be given in respect of it under the Tax
Acts.
(8)
The only deductions which can be made from ATED-related
chargeable gains are those permitted by this section.
10
(9)
See section 57A and Schedule 4ZZA for how to compute—
(a)
the ATED-related gain or loss accruing on a relevant high
value disposal, and
(b)
the gain or loss accruing on a relevant high value disposal
which is not ATED-related.
15
(10)
In this section—
“participant”, in relation to a relevant collective investment
scheme, is to be read in accordance with section 235 of the
Financial Services and Markets Act 2000;
“relevant collective investment scheme” means a collective
20
investment scheme within the meaning of Part 17 of that Act
(see section 235 of that Act) other than—
(a)
a unit trust scheme within the meaning of that Part
(see section 237(1) of that Act), or
(b)
an open-ended investment company within the
25
meaning of that Part (see section 236(1) of that Act);
“ring-fenced ATED-related allowable losses”, in relation to a tax
year, means—
(a)
any ATED-related allowable losses accruing to P in
the tax year on relevant high value disposals, and
30
(b)
so far as they have not been allowed as a deduction
from ATED-related chargeable gains accruing in any
previous tax year on relevant high value disposals,
any ATED-related allowable losses accruing to P in
any previous tax year (not earlier than the tax year
35
2013-14) on such disposals.
2C
“Relevant high value disposal”
(1)
A disposal on which a gain or loss accrues to P is a “relevant high
value disposal” if conditions A to D are met.
(2)
Condition A is that the disposal is of the whole or part of a
40
chargeable interest (“the disposed of interest”).
(3)
Condition B is that the disposed of interest has, at any time during
the relevant ownership period, been or formed part of a single-
dwelling interest.
(4)
Condition C is that—
45
(a)
P, or

Finance (No. 2) Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
346

(b)
if the disposed of interest is a partnership asset, the
responsible partners, or
(c)
if the disposed of interest is held for the purposes of a
relevant collective investment scheme, the person who has
day-to-day control over the management of the property
5
subject to the scheme,

has or have been within the charge to annual tax on enveloped
dwellings with respect to that single-dwelling interest on one or
more days in the relevant ownership period which are not relievable
days in relation to the interest.
10
(5)
Condition D is that the amount or value of the consideration for the
disposal exceeds the threshold amount (see section 2D).
(6)
In this section and section 2D—
“chargeable interest” has the same meaning as in Part 3 of the
Finance Act 2013 (annual tax on enveloped dwellings) (see
15
section 104 of that Act (chargeable interest));
“dwelling” has the same meaning as in that Part (see section 110
of that Act);
“relevant collective investment scheme” has the same meaning
as in section 2B;
20
“the relevant ownership period” means the period which
begins—
(a)
if an election has been made under paragraph 5 of
Schedule 4ZZA, with the day on which P acquired the
chargeable interest or, if later, 31 March 1982, and
25
(b)
in any other case, with the day on which P acquired
the chargeable interest or, if later, 6 April 2013,
and ends with the day before the day on which the disposal
occurs;
“relievable day” means a day which is “relievable” by virtue of
30
any of the provisions mentioned in section 130 of the Finance
Act 2013 (ATED: effect of reliefs) and in respect of which a
claim has been made under section 103(3) of that Act;
“the responsible partners” has the same meaning as in section
93 of that Act;
35
“single-dwelling interest” has the same meaning as in Part 3 of
that Act;

and a reference to being “within the charge” to annual tax on
enveloped dwellings with respect to a single-dwelling interest is to
be read in accordance with section 168(2) of that Act.
40
(7)
For the purposes of Condition C—
(a)
Part 3 of the Finance Act 2013 applies, in relation to any part
of the relevant ownership period falling before 1 April 2013,
as if section 91(8)(a) of that Act (first chargeable period for
ATED) read “the period beginning with 31 March 1982 and
45
ending with 31 March 1983”, and
(b)
when determining whether any day falling before 1 April
2013 is a relievable day, the definition of “relievable day” in
subsection (6) above is to read as if the words “and in respect
of which a claim has been made under section 103(3) of that
50
Act” were omitted.