Finance (No. 3) Bill (HC Bill 282)

Finance (No. 3) BillPage 140

(d) a qualifying fund or qualifying company in respect of
which an election under paragraph 12 has effect.

(5) In this paragraph “BLAGAB” means basic life assurance and
general annuity business.

5Disapplication of paragraph 3A of Schedule 7AC: qualifying institutional investors

34 (1) This paragraph applies if—

(a) a gain or loss accrues to a company (“the investing
company”) which has ordinary share capital owned by one
or more qualifying institutional investors,

(b) 10some of the gain or loss is not chargeable or allowable as a
result of paragraph 16(3), and

(c) some or all of the ownership of the qualifying institutional
investors in the investing company is through the
company which is Q for the purposes of paragraph 16(3).

(2) 15The ownership of the qualifying institutional investors in the
investing company is to be ignored for the purpose of applying the
exemption conferred by paragraph 3A of Schedule 7AC so far as
the ownership is through Q.

(3) In this paragraph “qualifying institutional investors” has the same
20meaning as in Schedule 7AC.

(4) Paragraph 3B of Schedule 7AC (meaning of “ownership”) applies
for the purposes of this paragraph as it applies for the purposes of
paragraph 3A of that Schedule.

Relationship between rules in this Part and REIT rules in Part 12 of CTA 2010

35 (1) 25Nothing in this Part of this Schedule is to exempt so much of any
qualifying REIT gain as accrues on a disposal made by a company
which is, or is a member of, a UK REIT.

(2) A chargeable gain is a “qualifying REIT gain” so far as—

(a) the gain is not a chargeable gain as a result of section 535
30or 535A of CTA 2010, and

(b) the gain is not one falling to be exempted as a result of the
application of either of those sections following a notice
given under section 586(1) or 587(1) of that Act (venturing
group).

(3) 35In this paragraph “UK REIT” has the same meaning as in Part 12
of CTA 2010.

36 (1) This paragraph applies if—

(a) a gain accrues on a disposal made by a company (“the JV
company”) which is a member of a group UK REIT,

(b) 40the gain is one falling to be exempted as a result of the
application of section 535 or 535A of CTA 2010 following a
notice given under section 586(1) or 587(1) of that Act
(venturing group),

Finance (No. 3) BillPage 141

(c) the principal company of the group UK REIT that gave the
notice is covered by an election made under paragraph 12
in respect of a qualifying fund, and

(d) the JV company is also covered by the election.

(2) 5The amount of the gain accruing to the JV company which is not a
chargeable gain as a result of the operation, by reference to the
election, of the rules in this Part of this Schedule—

(a) is found by first taking the two steps mentioned below
(which require the application of each of the exemption
10rules without regard to the other), and

(b) once those two steps are taken, is so much of the amount
found by the first step as exceeds the amount found by the
second step.

(3) The first step is, ignoring the effect of Part 12 of CTA 2010, to apply
15the rules in this Part of this Schedule that operate by reference to
the election to identify the amount of the gain which (but for this
paragraph) would not be chargeable.

(4) The second step is, ignoring the effect of this Part of this Schedule,
to apply the rules in Part 12 of CTA 2010 that operate in relation to
20the group UK REIT to identify the amount of the gain accruing to
the JV company which falls to be exempted as mentioned in sub-
paragraph (1)(b).

(5) In the case of a disposal, a company is “covered by an election
made under paragraph 12” for the purposes of this paragraph if
25the disposal is one to which paragraph 16 applies where the
election concerned is the one referred to in this paragraph.

(6) In this paragraph “group UK REIT” has the same meaning as in
Part 12 of CTA 2010.

Separate application of exemptions under this Schedule and elsewhere

37 (1) 30If—

(a) a person disposes of a right or interest in a company on
which a gain or loss accrues, and

(b) proportions of the gain or loss are not chargeable or
allowable as a result of the operation of any relevant
35exemption provision,

each relevant exemption provision is to work separately (without
regard to the other) in relation to each proportion of the gain or
loss to which the relevant exemption provision applies.

(2) Accordingly—

(a) 40each relevant exemption provision is to operate by
reference to the whole of the gain or loss (ignoring the
effect of the other relevant exemption provision), and

(b) the total proportion of the gain or loss which is not
chargeable or allowable is the total of the proportions
45separately found (but not so as to exceed the whole
amount of the gain or loss).

Finance (No. 3) BillPage 142

(3) Each of the following is a “relevant exemption provision” for the
purposes of this paragraph—

(a) any provision made by this Part of this Schedule,

(b) any provision made by paragraph 3A of Schedule 7AC,
5and

(c) any provision made by Part 12 of CTA 2010.

(4) This paragraph is subject to paragraphs 34 to 36.

Meaning of meeting “the applicable exemption conditions”

38 (1) For the purposes of Part of this Schedule a qualifying fund “meets
10the applicable exemption conditions” at any time if, at that time—

(a) it is a collective investment vehicle, and

(b) it meets the entitlement conditions set out in paragraph
12(2).

(2) For the purposes of Part of this Schedule a qualifying company
15“meets the applicable exemption conditions” at any time if, at that
time, it meets the entitlement conditions set out in paragraph
12(3).

Meaning of “the relevant fund” and “the relevant fund manager”

39 (1) In this Part of this Schedule “the relevant fund”—

(a) 20in the case of an election in respect of a qualifying fund
under paragraph 12, means the collective investment
vehicle concerned, and

(b) in the case of an election in respect of a qualifying company
under paragraph 12, means the collective investment
25scheme which wholly (or almost wholly) owns that
company.

(2) In this Part of this Schedule “the relevant fund manager”, in the
case of an election in respect of a qualifying fund or qualifying
company under paragraph 12, means the manager of the relevant
30fund.

Meaning of “wholly owned” or “wholly (or almost wholly) owned”

40 (1) For the purposes of this Part of this Schedule a collective
investment scheme, or a person or persons together, wholly owns
or own a company at any time if the scheme, or person or persons
35together, has or have a 100% investment in the company at that
time.

(2) Whether a scheme, or person or persons together, have a 100%
investment in a company at any time is determined—

(a) by applying a modified version of the rule in paragraph 9
40of Schedule 1A, and,

(b) in the case of a collective investment scheme, on the
assumption that it is a person.

(3) The reference here to a modified version of the rule in paragraph
9 of Schedule 1A is to the rule in that paragraph as it has effect

Finance (No. 3) BillPage 143

without regard to paragraph 10 and as if in sub-paragraph (1) of
paragraph 9 the following modifications were made—

(a) for the opening words substitute “A person or persons
together (“P”) has or have a 100% investment in a company
5(“C”) if all of the following conditions are met—”,

(b) omit paragraph (a),

(c) in each of paragraphs (b), (c) and (d), for “25% or more”
substitute “100%”, and

(d) for the “or” at the end of paragraph (c) substitute “and”.

41 (1) 10For the purposes of this Part of this Schedule a collective
investment scheme or person wholly (or almost wholly) owns a
company at any time if—

(a) the scheme or person wholly owns the company at that
time, or

(b) 15the scheme or person has a 99% investment in the
company at that time.

(2) Whether a scheme or person has a 99% investment in a company
at any time is determined—

(a) by applying a modified version of the rule in paragraph 9
20of Schedule 1A, and,

(b) in the case of a collective investment scheme, on the
assumption that it is a person.

(3) The reference here to a modified version of the rule in paragraph
9 of Schedule 1A is to the rule in that paragraph as it has effect
25without regard to paragraph 10 and as if in sub-paragraph (1) of
paragraph 9 the following modifications were made—

(a) omit paragraph (a),

(b) for “25%”, in each place, substitute “99%”, and

(c) for the “or” at the end of paragraph (c) substitute “and”.

30Meaning of “designated HMRC officer”

42 In this Part of this Schedule “designated HMRC officer” means an
officer of Revenue and Customs who has been designated by the
Commissioners for Her Majesty’s Revenue and Customs for the
purpose of revoking elections under paragraph 12.

35Part 5 Reporting and payment
Reporting by collective investment vehicles

43 (1) The Treasury may by regulations make provision for managers of
collective investment vehicles to elect to provide information to an
40officer of Revenue and Customs in respect of any participant in the
vehicle who holds units the disposal of which would constitute an
indirect disposal of UK land.

(2) The regulations may specify circumstances in which the provision
of information or documents in accordance with the regulations is
45taken to satisfy obligations of the participant (or anyone else) to

Finance (No. 3) BillPage 144

provide information or documents to an officer of Revenue and
Customs.

(3) The regulations may be framed so as to apply to obligations of a
description specified in the regulations.

5Withholding of amounts on account of capital gains tax

44 (1) The Treasury may by regulations make provision for managers of
collective investment vehicles to elect to meet the liability to
capital gains tax or corporation tax in respect of indirect disposals
of UK land made by any participant in the vehicle.

(2) 10The regulations may make provision for a simplified calculation of
the tax liability of the participant in respect of those disposals.

(3) The regulations may make provision authorising the manager of a
collective investment vehicle (or anyone else of a description
specified in the regulations) to deduct an amount on account of
15capital gains tax from amounts that would otherwise be receivable
by the participant.

(4) The regulations—

(a) may provide for the times at which amounts deducted on
account of capital gains tax are to be paid to Her Majesty’s
20Revenue and Customs, and

(b) may set out the extent to which those payments meet the
liability of the participant to capital gains tax or
corporation tax in respect of any indirect disposal of UK
land.

25General

45 (1) Regulations under this Part of this Schedule—

(a) may make different provision for different purposes, and

(b) may make supplementary, incidental, consequential or
transitional or saving provision.

(2) 30Regulations under this Part of this Schedule may make provision
having effect in relation to times before the regulations are made.

Part 6 General
Meaning of “close company”, “qualifying investor” and “direct or indirect
35participator”

46 (1) This paragraph has effect for the purposes of the provisions of this
Schedule which apply this paragraph (or to which this paragraph
is applied).

(2) Whether a company is “a close company” is determined in
40accordance with the rules in Chapter 2 of Part 10 of CTA 2010 but
subject to the following modifications—

Finance (No. 3) BillPage 145

(a) section 442(a) (non-UK resident companies) is to be treated
as omitted,

(b) section 444 (companies involved with non-close
companies) is to be treated as omitted,

(c) 5section 447(1)(a) (shares in quoted companies beneficially
held by non-close companies) is to be treated as omitted,
and

(d) for the purposes of any attribution under section 451(4)
(rights of a person’s associates to be attributed to the
10person etc in determining “control”) the rights and powers
of a person (“A”) are not to be attributed to another person
(“P”) merely because A is a partner of P.

(3) A “qualifying investor” means—

(a) a person who is within any of section 528(4A)(a), (b), (c), (i)
15or (j) of CTA 2010 where, if the collective investment
vehicle mentioned in the provision concerned is a
company, it meets the non-close condition or, if not, the
vehicle meets the genuine diversity of ownership
condition,

(b) 20a person who is within any other provision of section
528(4A) of that Act, or

(c) a qualifying fund or qualifying company in respect of
which an election under paragraph 12 has effect.

(4) For the purposes of sub-paragraph (3)(a) a collective investment
25vehicle meets the genuine diversity of ownership condition at any
time if, at that time—

(a) it meets conditions A to C of regulation 75 of the Offshore
Funds (Tax) Regulations 2009, or

(b) it meets the condition in regulation 75(5) of those
30Regulations,

and those Regulations apply for the purposes of this sub-
paragraph as if any collective investment vehicle which is not an
offshore fund were regarded as an offshore fund.

(5) For the purposes of sub-paragraph (3)(a) a company meets the
35non-close condition at any time if, at that time, it—

(a) is not a close company, or

(b) is a close company but only because it has a qualifying
investor as a direct or indirect participator,

applying the provisions of this paragraph for the purposes of this
40sub-paragraph.

(6) A person is a “direct participator” if the person is a participator for
the purposes of Part 10 of CTA 2010 (see section 454).

(7) A person is an “indirect” participator in a company if the person
has a share or interest in the capital or income of the company
45through another body corporate or other bodies corporate.

(8) The reference here to having a share or interest in the capital or
income of a company through a body corporate is to be read as
follows.

Finance (No. 3) BillPage 146

(9) Suppose that 3 or more bodies corporate are ordered in a series
such that each body in the series (other than the last) has a share
or interest in the capital or income of the body immediately below
it in the series.

(10) 5If B is a body that is below, but not immediately below, A in the
series, A is said to own a share or interest in the capital or income
of B through each body corporate that is between A and B in the
series.

(11) A person is regarded for the purposes of sub-paragraphs (7) to (10)
10as having a share or interest in the capital or income of a company
if the person would be a participator in the company as a result of
section 454(2) of CTA 2010.

Other definitions

47 (1) In this Schedule—

  • 15“double taxation arrangements” means arrangements having
    effect under section 2(1) of TIOPA 2010,

  • “interest in UK land” is to be read in accordance with section
    1C,

  • “the manager”, in relation to a collective investment vehicle,
    20means—

    (a)

    any person who is the manager of the property that is
    the subject of or held by the vehicle, or

    (b)

    any other person who has, or is expected to have, day-
    to-day control of that property, and

  • 25“prospectus”, in relation to a collective investment vehicle,
    means any document (however described) which is made
    available to investors and which sets out descriptions of
    the investments to be made, or intended to be made, by the
    vehicle.

(2) 30For the purposes of this Schedule—

(a) a reference to a direct disposal of UK land is to a disposal
of an interest in UK land, and

(b) a reference to an indirect disposal of UK land is to a
disposal of an asset deriving at least 75% of its value from
35UK land.

(3) For this purpose the reference to a disposal of an asset deriving at
least 75% of its value from UK land is to be read in accordance with
Part 2 of Schedule 1A.

Power to make provision in relation to UK property rich collective investment vehicles
40etc

48 (1) The Treasury may by regulations make provision for the purposes
of any provision of this Act in relation to—

(a) collective investment vehicles that are UK property rich, or

(b) investments made (directly or indirectly) by collective
45investment vehicles in companies that are UK property
rich.

Finance (No. 3) BillPage 147

(2) Among other things, the regulations—

(a) may amend any provision made by this Schedule, or

(b) may disapply any provision made by or under this Act or
provide for any provision made by or under this Act to
5have effect with modifications specified in the regulations.

(3) The regulations may make provision having effect in relation to
times before the regulations are made.

(4) The regulations—

(a) may make different provision for different purposes, and

(b) 10may make supplementary, incidental, consequential or
transitional or saving provision.

Part 7 Transitional provision
Elections for transparency under paragraph 8

49 (1) 15This paragraph applies in the case of an offshore collective
investment vehicle to which paragraph 8 applies which was
constituted before 6 April 2019.

(2) Paragraph 9(1)(c) has effect as if it permitted the election under
paragraph 8 to be made before 6 April 2020.

(3) 20The election is to have effect in relation to disposals made on or
after 6 April 2019 (so that paragraph 8(2) has effect subject to this
sub-paragraph).

(4) If a person is a participant in the vehicle on 6 April 2019—

(a) the making of an election under paragraph 8 is not to be
25regarded as being a disposal of the person’s units in the
vehicle, and

(b) any question arising for the purposes of this Act, in
relation to a disposal on or after 6 April 2019 of the
person’s units in the vehicle, is to be determined as if the
30election under paragraph 8 had had effect in relation to all
times on or after the vehicle’s constitution.

Elections under paragraph 12 and information about disposals by participants

50 Nothing in paragraph 14 requires information about disposals
made before 6 April 2019.”

Finance (No. 3) BillPage 148

Part 2 Consequential amendments

TMA 1970

22 In TMA 1970, after section 8B insert—

8C 5 Returns so far as relating to capital gains tax

(1) This section applies if—

(a) the amount of chargeable gains accruing to a person in a tax
year does not exceed the annual exempt amount for the year
applicable to the person under section 1K of the 1992 Act,

(b) 10the total amount or value of the consideration for all
chargeable disposals of assets made by the person in the year
does not exceed four times that annual exempt amount,

(c) the person is not a remittance-basis individual for the year,
and

(d) 15a notice under section 8 or 8A is given to the person requiring
information for the purpose of establishing the amount in
which the person is chargeable to capital gains tax for the
year.

(2) If the person makes a statement confirming the matters set out in
20subsection (1)(a) to (c), the statement constitutes sufficient
compliance with that requirement.

(3) For the purposes of this section every disposal is a “chargeable
disposal” other than—

(a) a disposal on which any gain accruing is not a chargeable
25gain, and

(b) a disposal to which section 58 of the 1992 Act applies
(spouses and civil partners).

(4) For the purposes of this section an individual is “a remittance-basis
individual” for a tax year if—

(a) 30section 809B of ITA 2007 applies to the individual for the
year, or

(b) paragraph 2 of Schedule 1 to the 1992 Act applies in relation
to any gains that are treated as accruing to the individual in
the year as a result of paragraph 1 of that Schedule.”

35TCGA 1992

23 TCGA 1992 is amended as follows.

24 In section 16 (computation of losses), omit subsection (3).

25 (1) Section 25 (non-residents: deemed disposals) is amended as follows.

(2) In subsection (3A), for paragraph (b) substitute—

(b) 40on ceasing to carry on the trade the asset is disposed of in
circumstances in which section 139 or 171 applies.”

Finance (No. 3) BillPage 149

(3) In subsection (7), for the words from “the disposal—” to the end substitute
“the disposal would be chargeable to capital gains tax under section 1A(3)(a)
or to corporation tax under section 2B(3).”

26 For section 25ZA substitute—

25ZA 5 Postponing gain or loss under section 25(3): interests in UK land

(1) This section applies if an interest in UK land is deemed to have been
disposed of under section 25(3) by a person at any time.

(2) The gain or loss that, but for this subsection, would have accrued to
the person at that time is not to accrue at that time.

(3) 10But, on a subsequent disposal by the person of the whole or part of
the interest in UK land, the whole or a corresponding part of the gain
or loss is treated as accruing on the subsequent disposal.

(4) This gain or loss is in addition to any gain or loss that actually accrues
on the subsequent disposal.

(5) 15A disposal to which section 171 (transfers within a group) applies
does not count as a subsequent disposal for the purposes of this
section.

(6) A person may elect for a disposal deemed to have been made under
section 25(3) to be excluded from the operation of this section.

(7) 20An election made by a company must be made within 2 years after
the day on which the deemed disposal occurs.

(8) In this section “interest in UK land” has the meaning given by section
1C.”

27 (1) Section 48A (unascertainable consideration) is amended as follows.

(2) 25In subsection (1), for paragraph (a) substitute—

(a) a person (“P”) has made a disposal (“the original disposal”)
on which a relevant non-resident gain or relevant non-
resident loss accrued,”.

(3) In subsection (2)—

(a) 30in the opening words, for the words from “condition A” to “the
receipt of the ascertained consideration—” substitute “P is not UK
resident for the tax year in which the ascertained consideration is
received (as determined for the purposes of Chapter 1 of Part 1)—”,
and

(b) 35in paragraph (c), in step 2, for “NRCGT gain or loss, ATED-related
gain or loss” substitute “relevant non-resident gain or relevant non-
resident loss”.

(4) After subsection (6) insert—

(7) In this section—

  • 40“relevant non-resident gain” means—

    (a)

    a gain that falls to be dealt with by section 1A(3)
    because the asset disposed of is within paragraph (b)
    or (c) of that subsection, or

    Finance (No. 3) BillPage 150

    (b)

    a gain that falls to be dealt with by section 1A(1) in
    accordance with section 1G(2) because the asset
    disposed of is within section 1A(3)(b) or (c), and

  • “relevant non-resident loss” means an allowable loss accruing
    5on a disposal which, had a gain accrued instead, would have
    been a relevant non-resident gain.”

(5) The amendments made by this paragraph have effect where the ascertained
consideration is received on or after 6 April 2019, but, subject to the
following modifications, in a case where the original disposal was made
10before that date.

(6) In that case, section 48A of TCGA 1992—

(a) has effect without the amendments made by sub-paragraphs (2) and
(3)(b), and

(b) has effect as if, in step 3 in subsection (2)(c) of that section, for “(of the
15type appropriate to the computation)” (in both places) there were
substituted “(of a kind most closely corresponding to that accruing
on the original disposal)”.

28 In section 59 (partnerships), in subsections (2)(b), (3) and (4), for “capital
gains of the partnership” substitute “chargeable gains of the partnership”.

29 (1) 20Section 62 (death: general provisions) is amended as follows.

(2) In subsection (2A)—

(a) in paragraph (a), for “section 10A” substitute “section 1M”, and

(b) for paragraph (b) substitute—

(b) relevant non-resident gains (see subsection (11)).”

(3) 25In subsection (2AA), for “allowable NRCGT losses (see section 57B and
Schedule 4ZZB)” substitute “relevant non-resident losses (see subsection
(11))”.

(4) After subsection (10) insert—

(11) In this section—

  • 30“relevant non-resident gain” means—

    (a)

    a gain that falls to be dealt with by section 1A(3)
    because the asset disposed of is within paragraph (b)
    or (c) of that subsection, or

    (b)

    a gain that falls to be dealt with by section 1A(1) in
    35accordance with section 1G(2) because the asset
    disposed of is within section 1A(3)(b) or (c), and

  • “relevant non-resident loss” means an allowable loss accruing
    on a disposal which, had a gain accrued instead, would have
    been a relevant non-resident gain.”

(5) 40The reference to relevant non-resident gains in section 62(2A)(b) of TCGA
1992 (as substituted by sub-paragraph (2)(b)) includes NRCGT gains as
defined by section 57B of, and Schedule 4ZZB to, that Act.

(6) The reference here to section 57B of, and Schedule 4ZZB to, TCGA 1992 is to
those provisions as they had effect before their repeal by this Schedule.

30 (1) 45Section 79B (attribution to trustees of gains of non-resident companies) is
amended as follows.

Finance (No. 3) BillPage 151

(2) In subsection (1), for “section 13” substitute “section 3 (see section 3B)”.

(3) In subsection (2), for “section 13” substitute “section 3”.

(4) In subsection (3)—

(a) for “section 13(2)” substitute “section 3”, and

(b) 5for “section 13(9)” substitute “section 3(7)”.

(5) In subsection (4), for “section 13(9)” substitute “section 3(7)”.

31 For section 80A substitute—

80A Postponing gain or loss under section 80(2): interests in UK land

(1) This section applies if—

(a) 10an interest in UK land is deemed to have been disposed of
under section 80(2) by trustees of a settlement at any time,
and

(b) the trustees make an election under this subsection.

(2) The gain or loss that, but for this subsection, would have accrued to
15the trustees at that time is not to accrue at that time.

(3) But, on a subsequent disposal by the trustees of the whole or part of
the interest in UK land, the whole or a corresponding part of the gain
or loss is treated as accruing on the subsequent disposal.

(4) This gain or loss is in addition to any gain or loss that actually accrues
20on the subsequent disposal.

(5) In this section “interest in UK land” has the meaning given by section
1C.”

32 In section 85A (transfers of value: attribution of gains to beneficiaries and
treatment of losses)—

(a) 25in subsection (2A), for “any section 2(2) amount” substitute “any
section 1(3) amount”, and

(b) in subsection (3), for “section 2(2) amount” (in both places) substitute
“section 1(3) amount”.

33 (1) Section 86 (attribution of gains to settlors with interest in non-resident or
30dual resident settlements) is amended as follows.

(2) In subsection (1)(e), for “section 2(2)” substitute “section 1(3)”.

(3) For subsection (4ZA) substitute—

(4ZA) Where (apart from this subsection) the amount mentioned in
subsection (1)(e) would include a chargeable gain or allowable loss
35to which section 1A(3)(b) or (c) applies (disposals by non-UK
residents within the charge to capital gains tax), so much of the gain
or loss as would be so included is to be disregarded for the purposes
of subsection (1)(e).”

34 (1) Section 86A (attribution of gains to settlor in section 10A cases) is amended
40as follows.

(2) In subsection (1)(a), for “section 10A” substitute “section 1M(3)”.

Finance (No. 3) BillPage 152

(3) In subsection (2), for “the section 2(2) amount” substitute “the section 1(3)
amount”.

(4) In subsection (3), for “section 10A” substitute “section 1M(3)”.

(5) In subsection (4)(a), for “the section 2(2) amount” substitute “the section 1(3)
5amount”.

(6) In subsection (6), for “section 10A” substitute “section 1M(3)”.

(7) In subsection (7), for “the section 2(2) amount” (in both places) substitute
“the section 1(3) amount”.

(8) In subsection (8)(c), for “section 10A” substitute “section 1M(3)”.

(9) 10In the title, for “in section 10A cases” substitute “where temporarily non-
resident”.

35 (1) Section 87 (non-UK resident settlements: attribution of gains to
beneficiaries) is amended as follows.

(2) In subsection (2), for “the section 2(2) amount” substitute “the section 1(3)
15amount”.

(3) In subsection (4)—

(a) in the opening words, for “The section 2(2) amount” substitute “The
section 1(3) amount”, and

(b) in paragraph (a), for “section 2(2)” substitute “section 1(3)”.

(4) 20In subsection (5), for “The section 2(2) amount” substitute “The section 1(3)
amount”.

(5) For subsection (5A) substitute—

(5A) Where (apart from this subsection) the amount mentioned in
subsection (4)(a) would include a chargeable gain or allowable loss
25to which section 1A(3)(b) or (c) applies (disposals by non-UK
residents within the charge to capital gains tax), so much of the gain
or loss as would be so included is to be disregarded for the purposes
of determining the section 1(3) amount.”

(6) In subsection (5B), for “the section 2(2) amount” substitute “the section 1(3)
30amount”.

36 In section 87A (section 87: matching), for “the section 2(2) amount” (in each
place) substitute “the section 1(3) amount”.

37 In section 87B (section 87: remittance basis), for subsection (2) substitute—

(2) The chargeable gains are chargeable gains accruing on the disposal
35of an asset situated outside the United Kingdom.”

38 In section 87J (relevant parts of payment from which onward gift derive), in
subsections (2) and (5), for “the section 2(2) amount” substitute “the section
1(3) amount”.

39 In section 87N (sections 87 and 87A: disregard of payments to migrating
40beneficiary), in subsection (2)(d)(i) and (ii), for “the section 2(2) amount”
substitute “the section 1(3) amount”.

Finance (No. 3) BillPage 153

40 In section 87P (sections 87 and 87A: temporary migration after payment
disregarded), in subsection (1)(e)(i) and (ii), for “the section 2(2) amount”
substitute “the section 1(3) amount”.

41 In section 88 (gains of dual settlements), in subsections (2) and (3)(a) and (b),
5for “section 2(2)” substitute “section 1(3)”.

42 In section 89 (migrant settlements, etc), in subsection (2), for “the section 2(2)
amount” substitute “the section 1(3) amount”.

43 In section 90 (sections 87 and 89(2): transfers between settlements), in
subsection (3) (in both places) and subsections (5) and (10)(b), for “the
10section 2(2) amount” substitute “the section 1(3) amount”.

44 In section 91 (increase in tax payable under section 87 or 89(2), in subsection
(1)(a), for “the section 2(2) amount” substitute “the section 1(3) amount”.

45 In section 96 (payments by and to companies), in subsection (9A)(a), for
“section 10A” substitute “section 1M”.

46 15Omit section 100A (exemption for certain EEA UCITS).

47 In section 103KC (carried interest: foreign chargeable gains), for “a foreign
chargeable gain within the meaning of section 12” substitute “a chargeable
gain accruing on the disposal of an asset situated outside the United
Kingdom”.

48 20In section 103KE (carried interest: avoidance of double taxation), in
subsection (8)(b), for “section 2(2)(b)” substitute “section 1(3)(b)”.

49 (1) Section 139 (reconstruction involving transfer of business) is amended as
follows.

(2) In subsection (1A)—

(a) 25in paragraphs (a) and (b), omit “or NRCGT assets”, and

(b) in the sentence after paragraph (b), for the words from “and would
by virtue of” to “purposes” substitute “chargeable to corporation tax
as a result of section 2B(3) or (4)”.

(3) Omit subsection (1AA).

50 30In section 140A (transfer or division of UK business), in subsection (2), for
“section 10B” substitute “section 2B(3)”.

51 (1) Section 140E (merger leaving assets within UK tax charge) is amended as
follows.

(2) In subsection (5)(b), for “section 10B” substitute “section 2B(3)”.

(3) 35In subsection (6)(b), for “section 10B” substitute “section 2B(3)”.

52 In section 159 (non-residents: roll-over relief), in subsection (4), for the
words from “the disposal—” to the end substitute “the disposal would be
chargeable to capital gains tax under section 1A(3)(a) or to corporation tax
under section 2B(3).”

53 40For section 159A substitute—

159A Disposals of interests in UK land by non-residents: roll-over relief

(1) This section applies in a case where—

Finance (No. 3) BillPage 154

(a) the old assets that are disposed of are interests in UK land,
and

(b) a chargeable gain accruing on the disposal would (apart from
section 152) be within the charge to tax because of section
51A(3)(b) or 2B(4)(a).

(2) Section 152 applies only if the new assets that are acquired are
interests in UK land.

(3) In this section—

(a) “interest in UK land” has the meaning given by section 1C,

(b) 10“the old assets” and “the new assets” have the same meaning
as in section 152,

(c) any reference to a disposal of the old assets includes a
disposal of an interest in them,

(d) the reference to the acquisition of the new assets includes the
15acquisition of an interest in them or entering into an
unconditional contract for their acquisition.”

54 (1) Section 161 (appropriations to and from trading stock) is amended as
follows.

(2) In subsection (1), for “subsections (3) to (3ZB)” substitute “subsection (3)”.

(3) 20Omit subsections (3ZA) and (3ZB).

(4) In subsection (3A), omit “or (3ZA)”.

55 (1) Section 165 (relief for gifts of business assets) is amended as follows.

(2) In subsection (7A)(a), for “non-resident CGT disposal” substitute “direct or
indirect disposal of UK land which meets the non-residence condition”.

(3) 25In subsection (7B), for “references to “chargeable NRCGT gain”” substitute
“references to “so much of any gain accruing on the disposal as falls to be
dealt with as mentioned in subsection (7D)(a) or (b)””.

(4) In subsection (7C), for ““the chargeable NRCGT gain” substitute ““so much
of the gain mentioned in subsection (7B)”.

(5) 30After that subsection insert—

(7D) For the purposes of subsections (7A) to (7C) a disposal is a “direct or
indirect disposal of UK land which meets the non-residence
condition” if it is—

(a) a disposal on which a gain accrues that falls to be dealt with
35by section 1A(3) because the asset disposed of is within
paragraph (b) or (c) of that subsection, or

(b) a disposal on which a gain accrues that falls to be dealt with
by section 1A(1) in accordance with section 1G(2) because the
asset disposed of is within section 1A(3)(b) or (c).”

56 (1) 40Section 167A (gifts of UK residential property interests to non-residents) is
amended as follows.

(2) In subsection (1)—

(a) in the opening words, for “of a UK residential property interest”
substitute “of an asset within section 1A(3)(b) or (c)”, and

Finance (No. 3) BillPage 155

(b) for paragraph (b) substitute—

(b) on the assumption that the disposal is a direct or
indirect disposal of UK land which meets the non-
residence condition (whether or not that is the case) ,
5that gain would be a relevant gain (see subsections (6)
and (7)).”

(3) In subsection (3)—

(a) in the opening words, for “non-resident CGT disposal” substitute
“direct or indirect disposal of UK land which meets the non-
10residence condition”,

(b) in paragraph (a), for ““chargeable NRCGT gain”” substitute
““relevant gain””,

(c) in paragraph (b), for ““chargeable NRCGT gain”” substitute
““relevant gain””, and

(d) 15in paragraph (c), for ““the chargeable NRCGT gain” substitute ““the
relevant gain”.

(4) In subsection (4)—

(a) in the opening words, for “the interest in UK land” substitute “the
asset within section 1A(3)(b) or (c)”, and

(b) 20for paragraph (b) substitute—

(b) (if that would not otherwise be the case) is to be
treated as a relevant gain.”

(5) For subsection (6) substitute—

(6) For the purposes of this section, a disposal is a “direct or indirect
25disposal of UK land which meets the non-residence condition” if it
is—

(a) a disposal on which a gain accrues that falls to be dealt with
by section 1A(3) because the asset disposed of is within
paragraph (b) or (c) of that subsection, or

(b) 30a disposal on which a gain accrues that falls to be dealt with
by section 1A(1) in accordance with section 1G(2) because the
asset disposed of is within section 1A(3)(b) or (c).

(7) For the purposes of this section, a “relevant gain” means so much of
any chargeable gain accruing on a disposal as falls to be dealt with as
35mentioned in subsection (6)(a) or (b).”

(6) In the title, for “UK residential property interests” substitute “direct or
indirect interests in UK land”.

57 For section 168A substitute—

168A Postponing held-over gain: interests in UK land

(1) 40This section applies if—

(a) an interest in UK land is deemed to have been disposed of
under section 168(1) by a transferee at any time, and

(b) the transferee makes an election under this subsection.

(2) The held-over gain (within the meaning of section 165 or 260) that,
45but for this subsection, would have accrued to the transferee at that
time is not to accrue at that time.

Finance (No. 3) BillPage 156

(3) But, on a subsequent disposal by the transferee of the whole or part
of the interest in UK land, the whole or a corresponding part of the
held-over gain is treated as accruing on the subsequent disposal.

(4) This gain is in addition to any gain or loss that actually accrues on the
5subsequent disposal.

(5) In this section “interest in UK land” has the meaning given by section
1C.”