Finance (No. 3) Bill (HL Bill 304)

Finance (No. 3) BillPage 150

(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 151

    (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 152

(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 153

(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”.

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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 155

(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 156

(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.

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(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.”

58 In section 169N (amount of entrepreneurs’ relief: general), in subsection
(4B), for “Section 4” substitute “Section 1H”.

59 10In section 169VK (cap on investors’ relief for disposal by an individual), in
subsection (3), for “Section 4” substitute “Section 1H”.

60 In section 169VL (cap on investors’ relief for disposal by trustees of a
settlement), in subsection (4), for “Section 4” substitute “Section 1H”.

61 (1) Section 171 (transfers within a group: general provisions) is amended as
15follows.

(2) In subsection (1A), in the second sentence, for the words from “and would”
to the end substitute “chargeable to corporation tax as a result of section
2B(3) or (4).”

(3) After subsection (1A) insert—

(1B) 20If—

(a) company A is deemed under section 25(3) to have previously
disposed of the asset, but

(b) no gain or loss accrued on that deemed disposal as a result of
section 25ZA(2),

25that deemed disposal is to be ignored in applying subsection (1) of
this section in relation to company B.”

(4) In subsection (2), omit paragraph (ba).

62 In section 171A (election to reallocate gain or loss to another member of the
group), for subsection (2) substitute—

(2) 30In determining for the purposes of subsection (1)(c) whether
subsection (1) of section 171 would have applied, it is to be assumed
that subsection (1A)(b) of that section read—

(b) that—

(i) at the time of the disposal, company B is resident in the
35United Kingdom, or carrying on a trade in the United
Kingdom through a permanent establishment there, or

(ii) the asset is a chargeable asset in relation to company B
immediately after the time of the disposal.””

63 In section 171B (election under section 171A: effect), in subsection (5), for the
40words from “and would by virtue of” to the end substitute “chargeable to
corporation tax as a result of section 2B(3) or (4).”

64 In section 175 (replacement of business assets by members of a group), in
subsection (2AA), for “section 10B” substitute “section 2B(3)”.

Finance (No. 3) BillPage 158

65 (1) Section 179 (company ceasing to be member of group: post-appointed day
cases) is amended as follows.

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

(3) In subsection (10A)(a), for the words from “and would by virtue of” to
5“purposes” substitute “chargeable to corporation tax as a result of section
2B(3) or (4),”.

66 Omit section 187A (deemed disposal under section 185: ATED-related gains
and losses).

67 For section 187B substitute—

187B 10 Postponing gain or loss under section 185(2): interests in UK land

(1) This section applies if an interest in UK land is deemed to have been
disposed of under section 185(2) by a company at any time.

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

(3) 15But, on a subsequent disposal by the company 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) 20A company may elect for a disposal deemed to have been made
under section 185(2) to be excluded from the operation of this
section.

(6) The election must be made within 2 years after the day on which the
deemed disposal occurs.

(7) 25In this section “interest in UK land” has the meaning given by section
1C.”

68 Omit sections 188A to 188K (and the italic heading before section 188A).

69 (1) Section 190 (tax recoverable from another group company or controlling
director) is amended as follows.

(2) 30In subsection (2), for paragraph (b) substitute—

(b) that the gain is chargeable to corporation tax as a result of
section 2B(3) or (4).”

(3) In subsection (3)(b), for the words from “gain forms” to “10B” substitute
“taxpayer company was not resident in the United Kingdom at the time
35when the gain accrued”.

70 (1) Section 199 (exploration or exploitation assets: deemed disposals) is
amended as follows.

(2) In subsection (2), for “in respect of whom the residence condition (see
section 2(1A)) is not met” substitute “who is not UK resident for a tax year
40(as determined for the purposes of Chapter 1 of Part 1)”.

(3) In subsection (6), for paragraphs (a) and (b) substitute “would be chargeable
to capital gains tax or corporation tax as a result of section 1A(3)(a) or 2B(3)”.

Finance (No. 3) BillPage 159

71 In section 210A (insurance companies: ring-fencing of losses), in subsection
(1), for “Section 8(1)” substitute “Section 2A(1)”.

72 In section 222A (determination of main residence: non-resident CGT
disposals), in subsection (1), for paragraph (b) substitute—

(b) 5the disposal is—

(i) a disposal on which a residential property gain (as
defined by Schedule 1B) accrues which is chargeable
to capital gains tax because of section 1A(3)(b), or

(ii) a disposal on which a loss accrues but is one which,
10had a gain accrued, would be within sub-paragraph
(i).”

73 (1) Section 222B (non-qualifying tax years) is amended as follows.

(2) In subsection (2), for “a non-resident CGT disposal” substitute “a disposal
falling within section 222A(1)(b) (non-resident disposals)”.

(3) 15In subsection (10), for “Section 11(1)(a)” substitute “Section 271ZA(2)”.

74 (1) Section 223 (amount of relief) is amended as follows.

(2) In subsection (7), in paragraph (b), for “an NRCGT gain chargeable to capital
gains tax by virtue of section 14D” substitute “a residential property gain (as
defined by Schedule 1B) which is chargeable to capital gains tax because of
20section 1A(3)(b)”.

(3) In subsection (7A), for “paragraph 9 of Schedule 4ZZB applies by virtue of
sub-paragraph (1)(b) of that paragraph” substitute “paragraph 8 or 14 of
Schedule 4AA applies”.

75 In section 228 (conditions for relief: supplementary), in subsection (6), for the
25words from “, and either” to “section 10B” substitute “chargeable to capital
gains tax or corporation tax on gains”.

76 (1) Section 260 (gifts on which inheritance tax is chargeable etc) is amended as
follows.

(2) In subsection (6ZA)(a), for “non-resident CGT disposal” substitute “direct or
30indirect disposal of UK land which meets the non-residence condition”.

(3) In subsection (6ZB), for “a reference to “chargeable NRCGT gain”” substitute
“a reference to “so much of any gain accruing on the disposal as falls to be
dealt with as mentioned in subsection (6ZD)(a) or (b)””.

(4) In subsection (6ZC), for ““the chargeable NRCGT gain” substitute ““so much
35of the gain mentioned in subsection (6ZB)”.

(5) After that subsection insert—

(6ZD) For the purposes of subsections (6ZA) to (6ZC) a disposal is a “direct
or indirect disposal of UK land which meets the non-residence
condition” if it is—

(a) 40a 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) 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
45asset disposed of is within section 1A(3)(b) or (c).”