Finance Bill

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Session 2013 - 14
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Finance Bill

Finance Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
347

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.
Schedule 24
5
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.
2     (1)
Section 1 (the charge to tax) is amended as follows.
10
      (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
corporation tax, in respect of chargeable gains accruing to them to
15
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)”.
3
In section 2 (persons and gains chargeable to capital gains tax, and allowable
20
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.”
4
After section 2 insert—
25
“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.
(2)
A person is “excluded” if the person is an individual, the trustees of
30
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
(b)
the gain accrues on a disposal of any property held for the
35
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

Finance Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
348

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.
(5)
The loss is not allowable as a deduction from ATED-related
5
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.
(7)
Relief is not to be given under this Act in respect of the loss if, and so
10
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.
(9)
See section 57A and Schedule 4ZZA for how to compute—
15
(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.
(10)
In this section—
20
“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
investment scheme within the meaning of Part 17 of that Act
25
(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
meaning of that Part (see section 236(1) of that Act);
30
“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
(b)
so far as they have not been allowed as a deduction
35
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
2013-14) on such disposals.
40
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
chargeable interest (“the disposed of interest”).
45

Finance Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
349

(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—
(a)
P, or
5
(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
10
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.
15
(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
20
section 105 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;
25
“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
30
(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
35
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 104(3) of that Act;
“the responsible partners” has the same meaning as in section
94 of that Act;
40
“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.
45
(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 92(8)(a) of that Act (first chargeable period for

Finance Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
350

ATED) read “the period beginning with 31 March 1982 and
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
5
of which a claim has been made under section 104(3) of that
Act” were omitted.
2D
“The threshold amount”
(1)
This section applies to determine “the threshold amount” in relation
to a disposal which meets Conditions A to C in section 2C (“the
10
current disposal”).
(2)
If—
(a)
the current disposal is not a part disposal of an asset, and
(b)
P has not made any relevant related disposals,

the threshold amount is £2 million, subject to subsection (5) (joint
15
interests).
(3)
If paragraphs (a) and (b) of subsection (2) do not both apply, the
threshold amount is the relevant fraction of £2 million, subject to
subsection (5) (joint interests).
(4)
“The relevant fraction” is—
20

where—

“C” is the amount or value of the consideration for the current
disposal;

“TMV” is what would be the market value, at the time of the
current disposal, of a notional asset comprising—
25
(a)
the disposed of interest (see section 2C(2)),
(b)
if the current disposal is a part disposal, any part of
the chargeable interest held by P that remains
undisposed of immediately following that part
disposal,
30
(c)
any chargeable interest (or part of a chargeable
interest) which was the subject of a relevant related
disposal, and
(d)
any chargeable interest (or part of a chargeable
interest) held by P at the time of the current disposal
35
which, if P had disposed of it at that time, would have
been the subject of a relevant related disposal.
(5)
If the disposed of interest is a share of the whole of—
(a)
a chargeable interest, or
(b)
a part of a chargeable interest,
40

subsections (2) and (3) have effect as if the references to “£2 million”
were to the joint share fraction of that amount.
(6)
The joint share fraction is the fraction of the whole of the chargeable
interest or part represented by the disposed of interest.

Finance Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
351

(7)
“Relevant related disposal”, in relation to the current disposal,
means any disposal by P which—
(a)
meets Conditions A to C in section 2C in circumstances
where the single-dwelling interest referred to in Condition C
is—
5
(i)
the single-dwelling interest by virtue of which
Condition C is met in relation to the current disposal,
or
(ii)
another single-dwelling interest in the same dwelling
as that interest, and
10
(b)
was made in the period of 6 years ending with the day on
which the current disposal occurs, but not before 6 April
2013.
2E
Restriction of losses
(1)
This section applies where (ignoring this section)—
15
(a)
a disposal would be a relevant high value disposal, but for a
failure to meet condition D in section 2C,
(b)
if it were a relevant high value disposal, an ATED-related
loss would accrue to a person (other than an excluded
person) in a tax year on the disposal, and
20
(c)
the total of the sums allowable as a deduction under section
38 in relation to the disposal exceeds the threshold amount in
relation to the disposal.
(2)
For the purposes of this Act—
(a)
the disposal is to be treated as a relevant high value disposal
25
(and section 57A and Schedule 4ZZA apply accordingly), and
(b)
the ATED-related loss which accrues on the disposal is to be
restricted to the amount which would have been that loss had
the consideration for the disposal been £1 greater than the
threshold amount in relation to the disposal.
30
(3)
In a case where paragraph 2 of Schedule 4ZZA applies (calculation
of gains or losses on disposals of assets held on 5 April 2013), the
reference in subsection (1)(c) to the disposal is to be read as a
reference to the notional disposal referred to in paragraph 3(2) of that
Schedule (disposal on which notional post-April 2013 gain or loss
35
accrues).
(4)
Nothing in subsection (2)(b) restricts any loss which is not ATED-
related, or affects any gain (whether or not ATED-related), accruing
on the relevant high value disposal.
(5)
In this section—
40
“excluded” has the meaning given by section 2B(2);
“the threshold amount” has the meaning given by section 2D.
2F
Tapering relief for gains
(1)
This section applies to an ATED-related gain which accrues on a
relevant high value disposal and is chargeable to capital gains tax by
45
virtue of section 2B.

Finance Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
352

(2)
There is excluded from the gain so much of it as exceeds five-thirds
of the difference between—
(a)
the amount or value of the consideration, and
(b)
the threshold amount (within the meaning of section 2D) in
relation to the disposal.
5
(3)
But where the relevant fraction is less than 1, subsection (2) has effect
as if the amount determined under that subsection were the relevant
fraction of that amount.
(4)
“The relevant fraction”—
(a)
in a case where the ATED-related gain is determined in
10
accordance with paragraph 3 of Schedule 4ZZA, has the
meaning given by paragraph 3(4) of that Schedule, and
(b)
in a case where the ATED-related gain is determined in
accordance with paragraph 6 of that Schedule, has the same
meaning as in paragraph 6(5)(a) of that Schedule.
15
(5)
Nothing in this section restricts any gain which is not ATED-related,
or affects any loss (whether or not ATED-related), accruing on the
relevant high value disposal.”
5
In section 4 (rates of capital gains tax), after subsection (3) insert—
“(3A)
The rate of capital gains tax in respect of gains chargeable under
20
section 2B accruing to a person in a tax year is 28%.”
6
In section 8 (company’s total profits to include chargeable gains), after
subsection (4) insert—
“(4A)
Nothing in this section applies in relation to an ATED-related gain
chargeable to, or an ATED-related loss allowable for the purposes of,
25
capital gains tax by virtue of section 2B.”
7
In section 13 (attribution of gains to members of non-resident companies),
after subsection (1) insert—
“(1A)
But this section does not apply if the gain is an ATED-related gain
chargeable to capital gains tax by virtue of section 2B (capital gains
30
tax on ATED-related gains).”
8
In section 16 (computation of losses), in subsection (3) after “section” insert
“2B,”.
9
In Part 2, after Chapter 4 insert—
“Chapter 5
35
Computation of gains and losses: relevant high value disposals
57A
Gains and losses on relevant high value disposals
(1)
Schedule 4ZZA makes provision about the computation of gains and
losses on relevant high value disposals, including provision about
whether a gain or loss is ATED-related or not.
40
(2)
But if the effect of Schedule 4ZZA applying in relation to a disposal
would be that no ATED-related gain or loss accrues on the disposal,

Finance Bill
Schedule 24 — Charge on certain high value disposals by companies etc
Part 1 — Taxation of Chargeable Gains Act 1992
353

for the purposes of this Act the gain or loss on the disposal is to be
computed ignoring that Schedule (and is not ATED-related).”
10
After section 100 insert—
“100A
Exemption for certain EEA UCITS
(1)
ATED-related gains accruing on relevant high value disposals made
5
by an EEA UCITS which is not an open-ended investment company
or a unit trust scheme are not chargeable gains under section 2B.
(2)
In this section—
“EEA UCITS” has the same meaning as in Part 17 of the
Financial Services and Markets Act 2000 (see section 237 of
10
that Act);
“unit trust scheme” has same meaning as in that Part (see
section 237(1) of that Act);
“open-ended investment company” has the same meaning as in
that Part (see section 236(1) of that Act).”
15
11    (1)
Section 161 (appropriations to and from stock) is amended as follows.
      (2)
In subsection (1) for “subsection (3)” substitute “subsections (3) to (3ZB)”.
      (3)
After subsection (3) insert—
“(3ZA)
But if the person—
(a)
meets the requirement of paragraph (a) or (b) of subsection
20
(3), and
(b)
(ignoring any election under this section) would be treated
under subsection (1) as making a relevant high value disposal
on which an ATED-related gain chargeable to, or loss
allowable for the purposes of, capital gains tax under section
25
2B would accrue,

the person may not elect under subsection (3) but may elect for
subsection (3ZB) to apply.
(3ZB)
Subject to subsection (4), where an election is made for this
subsection to apply—
30
(a)
a gain or loss accruing on the disposal under subsection (1)
which is not ATED-related is not a chargeable gain or an
allowable loss,
(b)
the market value of the asset at the time of the appropriation
is, for the purposes of computing the profits of the trade for
35
the purposes of tax, to be treated as reduced by the amount of
any gain, or increased by the amount of any loss, which
would be a chargeable gain or allowable loss but for
paragraph (a), and
(c)
the chargeable gain or allowable loss which accrues on that
40
disposal and is ATED-related is unaffected by the election.”
      (4)
In subsection (3A), after “subsection (3)” insert “or (3ZA)”.
      (5)
In subsection (4), after “subsection (3)” insert “or (3ZA)”.
12
In section 171 (transfers within a group: general provisions), in subsection