Finance (No. 2) Bill (HC Bill 193)

Finance (No. 2) BillPage 220

(f) Part 7 contains definitions for the purposes of this
Schedule.

(3) See section 14B for the meaning of “non-resident CGT disposal”.

Part 2 5Elections for alternative methods of computation

2 (1) A person (“P”) making a non-resident CGT disposal of (or of a part
of) an interest in UK land which P held on 5 April 2015 may—

(a) make an election for straight-line time apportionment in
relation to the interest in UK land;

(b) 10make an election for the retrospective basis of computation
to apply in relation to that interest,

(but may not do both).

(2) P may not make an election under sub-paragraph (1)(a) if the
disposal is one to which Part 4 of this Schedule applies (cases
15involving relevant high value disposals).

(3) For the effect of making an election under sub-paragraph (1)(a),
see paragraph 8.

(4) For the effect of making (or not making) an election under sub-
paragraph (1)(b), see paragraphs 5(1)(b), 9(1)(b), 13(1)(b), 14(1)(a)
20and 15(1)(c) (and paragraph 6A(3)(c) of Schedule 4ZZA).

(5) An election made under paragraph 5 of Schedule 4ZZA (including
any such election made before the coming into force of this
paragraph) has effect as if it were also an election under sub-
paragraph (1)(b).

3 (1) 25An election under paragraph 2(1) is irrevocable (and where an
election has been made under paragraph 2(1) or paragraph 5 of
Schedule 4ZZA in relation to an asset, no election may
subsequently be made under either of those provisions in relation
to the asset).

(2) 30An election under paragraph 2(1) may (regardless of section 42(2)
of the Management Act) be made by being included in—

(a) a tax return under the Management Act for the tax year in
which the first non-resident CGT disposal by P of the
interest in UK land (or any part of it) is made, or

(b) 35the NRCGT return relating to the disposal,

(but not by any other method).

(3) References in sub-paragraph (2) to an election being included in a
return include an election being included by virtue of an
amendment of the return.

(4) 40All such adjustments are to be made, whether by way of discharge
or repayment of tax, the making of assessments or otherwise, as
are required to give effect to an election under paragraph 2(1).

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Part 3 Main computation rules
Disposals to which this Part applies

4 (1) This Part of this Schedule applies where a person (“P”) makes a
5non-resident CGT disposal of (or of a part of) an interest in UK
land.

(2) But this Part of this Schedule does not apply if the disposal is—

(a) a relevant high value disposal, or

(b) a disposal in which a relevant high value disposal is
10comprised (see paragraph 12(3)).

(3) In this Part of this Schedule “the disposed of interest” means—

(a) the interest in UK land, or

(b) if the disposal is of part of that interest, the part disposed
of.

15Introduction to paragraphs 6 to 8

5 (1) Paragraphs 6 to 8 apply where—

(a) the disposed of interest was held by P on 5 April 2015, and

(b) P has not made an election under paragraph 2(1)(b) in
relation to the interest in UK land.

(2) 20In paragraphs 6 and 7—

(a) “notional post-April 2015 gain or loss” means the gain or
loss which would have accrued on the disposal had P
acquired the disposed of interest on 5 April 2015 for a
consideration equal to its market value on that date;

(b) 25“notional pre-April 2015 gain or loss” means the gain or
loss which would have accrued on 5 April 2015 had the
disposed of interest been disposed of for a consideration
equal to its market value on that date;

but see also paragraph 8(1).

(3) 30For the purpose of determining the amount of the hypothetical
gain or loss mentioned in sub-paragraph (2)(a), no account is taken
of section 57B or this Schedule (apart from paragraph 23).

Assets held at 5 April 2015: default method

6 (1) The NRCGT gain or loss accruing on the disposal is equal to the
35relevant fraction of the notional post-April 2015 gain or loss (as the
case may be).

But see also sub-paragraph (3).

(2) “The relevant fraction” is—


40where—

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“RD” is the number of days in the post-commencement ownership
period on which the subject matter of the disposed of interest
consists wholly or partly of a dwelling;

(3) 5If there has been mixed use of the subject matter of the disposed of
interest on one or more days in the post-commencement
ownership period, the NRCGT gain or loss accruing on the
disposal is the fraction of the amount that would (apart from this
sub-paragraph) be given by sub-paragraphs (1) and (2) that is, on
10a just and reasonable apportionment, attributable to the dwelling
or dwellings.

(4) For the purposes of this paragraph there is “mixed use” of land on
any day on which the land consists partly, but not exclusively, of
one or more dwellings.

(5) 15“Post-commencement ownership period” means the period
beginning with 6 April 2015 and ending with the day before the
day on which the disposal occurs.

7 The gain or loss accruing on the disposal which is not an NRCGT
gain or (as the case may be) loss is computed as follows.

20Step 1

Determine the amount of the notional pre-April 2015 gain or loss.

Step 2

In a case where there is a notional post-April 2015 gain, determine
the amount of that gain remaining after the deduction of the
25NRCGT gain determined under paragraph 6.

Step 3

In a case where there is a notional post-April 2015 loss, determine
the amount of that loss remaining after the deduction of the
NRCGT loss determined under paragraph 6.

30Step 4

Add—

  • (a)the amount of any gain or loss determined under Step 1,
    and

  • (b)the amount of any gain determined under Step 2 or (as the
    35case may be) any loss determined under Step 3,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the gain on the
disposal which is not an NRCGT gain.

40Modified application of paragraphs 5 to 7 where election made for straight-line time
apportionment

8 (1) Where the non-resident CGT disposal is of (or of a part of) an
interest in UK land in respect of which P makes, or has made, an

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election for straight-line time apportionment under paragraph
2(1)(a)—

(a) paragraphs (a) and (b) of paragraph 5(2) do not apply in
relation to the disposal, and

(b) 5for the purposes of paragraphs 6 and 7, the “notional pre-
April 2015 gain or loss” and the “notional post-April 2015
gain or loss” are to be determined in accordance with the
following steps.

Step 1

10Determine the amount of the gain or loss which accrues to P on the
disposal.

For the purpose of determining that amount, no account is taken
of section 57B or this Schedule (apart from paragraph 23).

Step 2

15An amount equal to the post-commencement fraction of that gain
or loss is the notional post-April 2015 gain or (as the case may be)
loss.

Step 3

(2) The “post-commencement fraction” is—


20

where—

“PCD” is the number of days in the post-commencement
ownership period;

(3) The “pre-commencement fraction” is—


25

where “PCD” and “TD” have the same meanings as in sub-
paragraph (2).

(4) In this paragraph—

  • “ownership period” means the period beginning with the
    30day on which P acquired the disposed of interest or, if
    later, 31 March 1982 and ending with the day before the
    day on which the disposal occurs;

  • “post-commencement ownership period” has the meaning
    given by paragraph 6(5).

35Cases where asset acquired after 5 April 2015 or election made under paragraph 2(1)(b)

9 (1) This paragraph applies if—

(a) the disposed of interest was not held by P throughout the
period beginning with 5 April 2015 and ending with the
disposal, or

Finance (No. 2) BillPage 224

(b) the non-resident CGT disposal is of (or of part of) an
interest in UK land in respect of which P makes, or has
made, an election under paragraph 2(1)(b).

(2) The NRCGT gain or loss accruing on the disposal is computed as
5follows.

Step 1

Determine the amount of the gain or loss which accrues to P.

For the purpose of determining the amount of that gain or loss, no
account is taken of section 57B or this Schedule (apart from
10paragraph 23).

Step 2

The NRCGT gain or (as the case may be) loss accruing on the
disposal is an amount equal to the relevant fraction of that gain or
loss (but see Step 3).

15Step 3

(3) For the purposes of this paragraph there is “mixed use” of land on
any day on which the land consists partly, but not exclusively, of
one or more dwellings.

(4) In Step 3 “the appropriate fraction” means the fraction that is, on a
20just and reasonable apportionment, attributable to the dwelling or
dwellings.

(5) The gain or loss accruing on the disposal which is not an NRCGT
gain or (as the case may be) loss is to be computed as follows.

Step 1

25In a case where there is a gain under Step 1 of sub-paragraph (2),
determine the amount of that gain remaining after the deduction
of the NRCGT gain determined under that sub-paragraph.

That remaining gain is the gain accruing on the disposal which is
not an NRCGT gain.

30Step 2

In a case where there is a loss under Step 1 of sub-paragraph (2),
determine the amount of that loss remaining after deduction of the
NRCGT loss determined under that sub-paragraph.

(6) For the purposes of sub-paragraph (2), “the relevant fraction” is—


35

where—

“RD” is the number of days in the relevant ownership period on
which the subject matter of the disposed of interest consists
wholly or partly of a dwelling;

Finance (No. 2) BillPage 225

(7) “The relevant ownership period” means the period—

(a) beginning with the day on which P acquired the disposed
of interest or, if later, 31 March 1982, and

(b) ending with the day before the day on which the disposal
5mentioned in paragraph 4(1) occurs.

Interest subsisting under contract for off-plan purchase

10 (1) Sub-paragraph (2) applies where the non-resident CGT disposal
referred to in paragraph 4(1) is a disposal of a UK residential
property interest only because of the second condition in
10paragraph 1 of Schedule B1 (interest subsisting under a contract
for the acquisition of land that consists of, or includes, a building
that is to be constructed for use as a dwelling etc).

(2) The land that is the subject of the contract concerned is treated for
the purposes of this Part of this Schedule as consisting of (or, as the
15case requires, including) a dwelling throughout P’s period of
ownership of the disposed of interest.

Part 4 Cases involving relevant high value disposals
Overview

11 (1) 20This Part is about non-resident CGT disposals which are, or
involve, relevant high value disposals (see section 2B, which
charges capital gains tax on ATED-related gains on relevant high
value disposals).

(2) Paragraphs 12 to 15 contain provision about how any NRCGT
25gains and losses on such a disposal are computed, including
provision—

(a) for the NRCGT gains or losses to be computed for each
relevant high value disposal comprised in the non-resident
CGT disposal (paragraphs 13 to 15), and

(b) 30for the results to be added (where necessary) to find the
NRCGT gain or loss on the non-resident CGT disposal (see
paragraph 12).

(3) For provision about how to compute any ATED-related gains or
losses accruing on the relevant high value disposals, see Schedule
354ZZA.

(4) Paragraphs 16 to 19 contain provisions for computing any gains or
losses accruing on the disposals mentioned in sub-paragraph (1)
which are neither ATED-related nor NRCGT gains or losses,
including provision—

(a) 40for such balancing gains or losses to be computed for each
relevant high value disposal comprised in the non-resident
CGT disposal, and

(b) for the results to be added together (where necessary) to
find the balancing gain or loss on the non-resident CGT
45disposal (see paragraph 16).

Finance (No. 2) BillPage 226

(5) Paragraph 20 is about cases where a disposal which is not a
relevant high value disposal is also comprised in the non-resident
CGT disposal.

Disposal involving one or more relevant high value disposals

12 (1) 5This Part of this Schedule applies where—

(a) a person (other than an excluded person) (“P”) makes a
non-resident CGT disposal of (or of part of) an interest in
UK land, and

(b) that disposal (“the disposal of land”) is a relevant high
10value disposal or a relevant high value disposal is
comprised in it.

In this sub-paragraph “excluded person” has the meaning given
by section 2B(2).

(2) The NRCGT gain or loss accruing on the disposal of land is
15computed as follows.

Step 1

Determine in accordance with paragraphs 13 to 15 the amount of
the NRCGT gain or loss accruing on each relevant high value
disposal.

20Step 2

Add together the amounts of any gains or losses determined
under Step 1 (treating any amount which is a loss as a negative
amount).

If the result is a positive amount, that amount is the NRCGT gain
25on the disposal of land.

If the result is a negative amount, that amount (expressed as a
positive number) is the NRCGT loss on the disposal of land.

(3) For the purposes of this Schedule, a relevant high value disposal
is “comprised in” a non-resident CGT disposal if—

(a) 30the non-resident CGT disposal is treated for the purposes
of section 2C and Schedule 4ZZA as two or more disposals,
and

(b) the relevant high value disposal is one of those.

(4) In this Part of this Schedule—

(a) 35“the asset”, in relation to a relevant high value disposal,
means the chargeable interest which (or a part of which) is
the subject of that disposal, and

(b) “the disposed of interest”, in relation to a relevant high
value disposal, means the asset or, if only part of the asset
40is the subject of the relevant high value disposal, that part
of the asset.

(5) For the purposes of this Part of this Schedule a day is a “section
14D chargeable day” in relation to a relevant high value disposal
if—

Finance (No. 2) BillPage 227

(a) it is a day on which the subject matter of the disposed of
interest consists wholly or partly of a dwelling, but

(b) it is not an ATED chargeable day (as defined in paragraph
3 of Schedule 4ZZA).

5Assets held at 5 April 2015 (where no election made and no rebasing in 2016 required)

13 (1) This paragraph applies where—

(a) the disposed of interest was held by P on 5 April 2015,

(b) P has not made an election under paragraph 2(1)(b) (or
paragraph 5 of Schedule 4ZZA) in respect of the asset, and

(c) 10paragraph 15 does not apply.

(2) The NRCGT gain or loss accruing on the relevant high value
disposal is equal to the special fraction of the notional post-April
2015 gain or loss (as the case may be) on that disposal.

(3) “Notional post-April 2015 gain or loss” means the gain or loss
15which would have accrued on the relevant high value disposal
had P acquired the disposed of interest on 5 April 2015 for a
consideration equal to the market value of that interest on that
date.

(4) “The special fraction” is—


20

where—

“SD” is the number of section 14D chargeable days (see paragraph
12(5)) in the post-commencement ownership period;

(5) “The post-commencement ownership period” means the period
25beginning with 6 April 2015 and ending with the day before the
day on which the relevant high value disposal occurs.

Asset acquired after 5 April 2015 or election made under paragraph 2(1)(b) (but no
rebasing in 2016 required)

14 (1) This paragraph applies where—

(a) 30P makes, or has made, an election under paragraph 2(1)(b)
(or paragraph 5 of Schedule 4ZZA) in respect of the asset,
or

(b) the disposed of interest was not held by P throughout the
period beginning with 5 April 2015 and ending with the
35disposal.

(2) But this paragraph does not apply if paragraph 15 applies.

(3) The NRCGT gain or loss accruing on the relevant high value
disposal is computed as follows.

Step 1

40Determine the amount of the gain or loss which accrues to P.

Finance (No. 2) BillPage 228

(For the purpose of determining the amount of that gain or loss, no
account need be taken of section 57B or this Schedule (apart from
paragraph 23).)

5Step 2

(4) For this purpose “the special fraction” is—


where—

“SD” is the number of section 14D chargeable days (see paragraph
1012(5)) in the relevant ownership period;

(5) “Relevant ownership period” means the period—

(a) beginning with the day on which P acquired the disposed
of interest or, if later, 31 March 1982, and

(b) ending with the day before the day on which the relevant
15high value disposal occurs.

Certain disposals after 5 April 2016 (computation involving additional rebasing in
2016)

15 (1) This paragraph applies where—

(a) the disposed of interest was held by P on 5 April 2016,

(b) 20the relevant high value disposal falls within Case 3 for the
purposes of Schedule 4ZZA (see paragraph 2(4) of that
Schedule), and

(c) no election is or has been made (or treated as made) by P
under paragraph 2(1)(b) in respect of the asset.

(2) 25The NRCGT gain or loss accruing on the relevant high value
disposal is computed as follows.

Step 1

Determine the amount equal to the special fraction of the notional
post-April 2016 gain or loss (as the case may be).

30Step 2

Determine the amount equal to the special fraction of the notional
pre-April 2016 gain or loss (as the case may be).

Step 3

Add—

  • 35(a)the amount of any gain or loss determined under Step 1,
    and

  • (b)the amount of any gain or loss determined under Step 2,

(treating any amount which is a loss as a negative amount).

40If the result is a positive amount, that amount is the NRCGT gain
on the relevant high value disposal.

(3) “The special fraction” is—


where—

45“SD” is the number of section 14D chargeable days (see paragraph
12(5)) in the relevant ownership period;

(4) The “relevant ownership period” is—

(a) for the purpose of computing under step 1 of sub-
paragraph (2) the special fraction of the notional post-April
502016 gain or loss, the period beginning with 6 April 2016
and ending with the day before the day on which the
relevant high value disposal occurs;

(b) for the purpose of computing under step 2 of sub-
paragraph (2) the special fraction of the notional pre-April
552016 gain or loss, the period beginning with the day on
which P acquired the disposed of interest or, if later, 6
April 2015 and ending with 5 April 2016.

(5) “Notional post-April 2016 gain or loss” means the gain or loss
which would have accrued on the relevant high value disposal
60had P acquired the disposed of interest on 5 April 2016 for a
consideration equal to its market value on that date.

(6) If the disposed of interest was not held by P on 5 April 2015,
“notional pre-April 2016 gain or loss” means the gain or loss which
would have accrued on 5 April 2016 had the disposed of interest
65been disposed of for a consideration equal to the market value of
the interest on that date.

(7) If the disposed of interest was held by P on 5 April 2015, “notional
pre-April 2016 gain or loss” means the gain or loss which would
have accrued to P on the disposal mentioned in paragraph (b), had
70P—

(a) acquired the disposed of interest on 5 April 2015 for a
consideration equal to the market value of that interest on
that date, and

(b) disposed of that interest on 5 April 2016 for a consideration
75equal to the market value of that interest on that date.

Amount of gain or loss that is neither ATED-related nor an NRCGT gain or loss

16 (1) The gain or loss on the disposal of land (see paragraph 12(1)(b))
which is neither ATED-related nor an NRCGT gain or loss (“the
balancing gain or loss”) is computed as follows.

80Step 1

Determine in accordance with paragraphs 17 to 19 the amount of
the gain or loss accruing on each relevant high value disposal
which is neither ATED-related nor an NRCGT gain or loss.

Finance (No. 2) BillPage 229

This is the “balancing” gain or loss for each such disposal.

Step 2

Add together the amounts of any balancing gains or losses
5determined under Step 1 (treating any amount which is a loss as a
negative amount).

If the result is a positive amount, that amount is the balancing gain
on the disposal of land.

(2) In relation to a relevant high value disposal, “balancing day”
10means a day which is neither—

(a) a section 14D chargeable day (see paragraph 12(5)), nor

(b) an ATED chargeable day.

(3) In relation to a relevant high value disposal, “non-ATED
chargeable day” means a day which is not an ATED chargeable
15day.

(4) The references in sub-paragraphs (2) and (3) to an “ATED
chargeable day” are to be interpreted in accordance with
paragraph 3(6) of Schedule 4ZZA.

17 (1) This paragraph applies in relation to a relevant high value
20disposal to which paragraph 13 applies.

(2) If paragraph 6A of Schedule 4ZZA does not apply, the amount of
the balancing gain or loss on the relevant high value disposal is
found by adding—

(a) the amount of the balancing gain or loss belonging to the
25notional post-April 2015 gain or loss, and

(b) the amount of the balancing gain or loss belonging to the
notional pre-April 2015 gain or loss,

(treating any amount which is a loss as a negative amount).

30If the result is a positive amount, that amount is the balancing gain
on the relevant high value disposal.

(3) If paragraph 6A of Schedule 4ZZA applies, the amount of the
balancing gain or loss on the relevant high value disposal is found
by adding—

(a) 35the amount of the balancing gain or loss belonging to the
notional post-April 2015 gain or loss,

(b) the amount of the balancing gain or loss belonging to the
notional pre-April 2015 gain or loss, and

(c) if P held the disposed of interest on 5 April 2013, the
40amount of the notional pre-April 2013 gain or loss,

(treating any amount which is a loss as a negative amount).

If the result is a positive amount, that amount is the balancing gain
on the relevant high value disposal.

(4) 45The balancing gain or loss belonging to the notional post-April
2015 gain or loss is equal to the balancing fraction of the notional
post-April 2015 gain or loss.

(5) The balancing gain or loss belonging to the notional pre-April 2015
gain or loss is equal to the non-ATED related fraction of the
50notional pre-April 2015 gain or loss.

(6) “The balancing fraction” is—


where—

“BD” is the number of balancing days (see paragraph 16(2)) in the
55appropriate ownership period;

(7) “The non-ATED related fraction” is—


where—

“NAD” is the number of non-ATED chargeable days (see
60paragraph 16(3)) in the appropriate ownership period;

(8) “Appropriate ownership period” means—

(a) for the purpose of computing the balancing gain or loss
belonging to the notional post-April 2015 gain or loss, the
post-commencement ownership period defined in
65paragraph 13(5);

(b) for the purpose of computing the balancing gain or loss
belonging to the notional pre-April 2015 gain or loss, the
relevant ownership period defined in paragraph 6A(11) of
Schedule 4ZZA.

(9) 70In this paragraph—

(a) “notional post-April 2015 gain or loss” has the same
meaning as in paragraph 13;

(b) “notional pre-April 2015 gain or loss” has the same
meaning as in paragraph 6A of Schedule 4ZZA;

(c) 75“notional pre-April 2013 gain or loss” means the gain or
loss which would have accrued on 5 April 2013 had the
disposed of interest been disposed of for a consideration
equal to the market value of that interest at that date.

18 (1) In the case of a relevant high value disposal to which paragraph 14
80applies, the amount of the balancing gain or loss is determined as
follows.