 | |
|
SCHEDULE 20
|
| |
APPLICATION OF TAPER RELIEF |
| |
The Schedule inserted before Schedule 1 to the Taxation of Chargeable Gains Act 1992 is as follows:- |
|
"Schedule A1
|
| |
APPLICATION OF TAPER RELIEF |
| |
Introductory |
| | 1. - (1) Section 2A shall be construed subject to and in accordance with this Schedule.
|
| |
(2) The different provisions of this Schedule have effect for construing the other provisions of this Schedule, as well as for construing section 2A.
|
| |
Period for which an asset is held and relevant period of ownership |
| | 2. - (1) In relation to any gain on the disposal of a business or non-business asset, the period after 5th April 1998 for which the asset had been held at the time of its disposal is the period which-
|
| |
(a) begins with whichever is the later of 6th April 1998 and the time when the asset disposed of was acquired by the person making the disposal; and |
| |
(b) ends with the time of the disposal on which the gain accrued. |
| |
(2) Where an asset is disposed of, its relevant period of ownership is whichever is the shorter of-
|
| |
(a) the period after 5th April 1998 for which the asset had been held at the time of its disposal; and |
| |
(b) the period of ten years ending with that time. |
| |
(3) The following shall be disregarded for determining when a person is to be treated for the purposes of this paragraph as having acquired an asset, that is to say-
|
| |
(a) so much of section 73(1)(b) as treats the asset as acquired at a date before 6th April 1965; and |
| |
(b) sections 239(2)(b), 257(2)(b) and 259(2)(b). |
| |
(4) Where the period after 5th April 1998 for which an asset had been held at the time of its disposal includes any period which, in accordance with any of paragraphs 10 to 12 below, is a period that does not count for the purposes of taper relief-
|
| |
(a) the qualifying holding period of the asset shall be treated for the purposes of section 2A as reduced by the length of the period that does not count or, as the case may be, of the aggregate of the periods that do not count; and |
| |
(b) the period that does not count or, as the case may be, every such period- |
| |
(i) shall be left out of account in computing for the purposes of sub-paragraph (2) above the period of ten years ending with the time of the asset's disposal; and
|
| |
(ii) shall be assumed not to be comprised in the asset's relevant period of ownership.
|
| |
(5) Sub-paragraphs (1) to (3) above have effect subject to the provisions of paragraphs 13 to 19 below.
|
| |
Rules for determining whether a gain is a gain on the disposal of a business asset or non-business asset |
| | 3. - (1) Subject to the following provisions of this Schedule, a chargeable gain accruing to any person on the disposal of any asset is a gain on the disposal of a business asset if that asset was a business asset throughout its relevant period of ownership.
|
| |
(2) Where-
|
| |
(a) a chargeable gain accrues to any person on the disposal of any asset, |
| |
(b) that gain does not accrue on the disposal of an asset that was a business asset throughout its relevant period of ownership, and |
| |
(c) that asset has been a business asset throughout one or more periods comprising part of its relevant period of ownership, |
| |
a part of that gain shall be taken to be a gain on the disposal of a business asset and, in accordance with sub-paragraph (4) below, the remainder shall be taken to be a gain on the disposal of a non-business asset.
|
| |
(3) Subject to the following provisions of this Schedule, where sub-paragraph (2) above applies, the part of the chargeable gain accruing on the disposal of the asset that shall be taken to be a gain on the disposal of a business asset is the part of it that bears the same proportion to the whole of the gain as is borne to the whole of its relevant period of ownership by the aggregate of the periods which-
|
| |
(a) are comprised in its relevant period of ownership, and |
| |
(b) are periods throughout which the asset is to be taken (after applying paragraphs 8 and 9 below) to have been a business asset. |
| |
(4) So much of any chargeable gain accruing to any person on the disposal of any asset as is not a gain on the disposal of a business asset shall be taken to be a gain on the disposal of a non-business asset.
|
| |
(5) Where, by virtue of sub-paragraphs (2) to (4) above, a gain on the disposal of a business asset accrues on the same disposal as a gain on the disposal of a non-business asset-
|
| |
(a) the two gains shall be treated for the purposes of taper relief as separate gains accruing on separate disposals of separate assets; but |
| |
(b) the periods after 5th April 1998 for which each of the assets shall be taken to have been held at the time of their disposal shall be the same and shall be determined without reference to the length of the periods mentioned in sub-paragraph (3)(a) and (b) above. |
| |
Conditions for shares to qualify as business assets |
| | 4. - (1) This paragraph applies, in the case of the disposal of any asset, for determining (subject to the following provisions of this Schedule) whether the asset was a business asset at a time before its disposal when it consisted of, or of an interest in, any shares in a company ("the relevant company").
|
| |
(2) Where the disposal is made by an individual, the asset was a business asset at that time if at that time the relevant company was a qualifying company by reference to that individual.
|
| |
(3) Where the disposal is made by the trustees of a settlement, the asset was a business asset at that time if at that time the relevant company was a qualifying company by reference to the trustees of that settlement.
|
| |
(4) Where the disposal is made by an individual's personal representatives, the asset was a business asset at that time if at that time-
|
| |
(a) the relevant company was a trading company or the holding company of a trading group; and |
| |
(b) the voting rights in that company were exercisable, as to not less than 25 per cent., by the deceased's personal representatives. |
| |
(5) Where the disposal is made by an individual who acquired the asset as legatee (as defined in section 64) and that time is not a time when the asset was a business asset by virtue of sub-paragraph (2) above, the asset shall be taken to have been a business asset at that time if at that time-
|
| |
(a) it was held by the personal representatives of the deceased; and |
| |
(b) the conditions in sub-paragraph (4)(a) and (b) above were satisfied. |
| |
Conditions for other assets to qualify as business assets |
| | 5. - (1) This paragraph applies, in the case of the disposal of any asset, for determining (subject to the following provisions of this Schedule) whether the asset was a business asset at a time before its disposal when it was neither shares in a company nor an interest in shares in a company.
|
| |
(2) Where the disposal is made by an individual, the asset was a business asset at that time if at that time it was being used, wholly or partly, for purposes falling within one or more of the following paragraphs-
|
| |
(a) the purposes of a trade carried on at that time by that individual or by a partnership of which that individual was at that time a member; |
| |
(b) the purposes of any trade carried on by a company which at that time was a qualifying company by reference to that individual; |
| |
(c) the purposes of any trade carried on by a company which at that time was a member of a trading group the holding company of which was at that time a qualifying company by reference to that individual; |
| |
(d) the purposes of any qualifying office or employment to which that individual was at that time required to devote substantially the whole of his time; |
| |
(e) the purposes of any office or employment that does not fall within paragraph (d) above but was an office or employment with a trading company in relation to which that individual falls to be treated as having, at that time, been a full-time working officer or employee. |
| |
(3) Where the disposal is made by the trustees of a settlement, the asset was a business asset at that time if at that time it was being used, wholly or partly, for purposes falling within one or more of the following paragraphs-
|
| |
(a) the purposes of a trade carried on by the trustees of the settlement; |
| |
(b) the purposes of a trade carried on at that time by an eligible beneficiary or by a partnership of which an eligible beneficiary was at that time a member; |
| |
(c) the purposes of any trade carried on by a company which at that time was a qualifying company by reference to the trustees of the settlement or an eligible beneficiary; |
| |
(d) the purposes of any trade carried on by a company which at that time was a member of a trading group the holding company of which was at that time a qualifying company by reference to the trustees of the settlement or an eligible beneficiary; |
| |
(e) the purposes of any qualifying office or employment to which an eligible beneficiary was at that time required to devote substantially the whole of his time; |
| |
(f) the purposes of any office or employment that does not fall within paragraph (e) above but was an office or employment with a trading company in relation to which an eligible beneficiary falls to be treated as having, at that time, been a full-time working officer or employee. |
| |
(4) Where the disposal is made by an individual's personal representatives, the asset was a business asset at that time if at that time it was being used, wholly or partly, for purposes falling within one or more of the following paragraphs-
|
| |
(a) the purposes of a trade carried on by the deceased's personal representatives; |
| |
(b) the purposes of any trade carried on by a company which at that time was a qualifying company by reference to the deceased's personal representatives; |
| |
(c) the purposes of any trade carried on by a company which at that time was a member of a trading group the holding company of which was at that time a qualifying company by reference to the deceased's personal representatives. |
| |
(5) Where the disposal is made by an individual who acquired the asset as legatee (as defined in section 64) and that time is not a time when the asset was a business asset by virtue of sub-paragraph (2) above, the asset shall be taken to have been a business asset at that time if at that time it was-
|
| |
(a) being held by the personal representatives of the deceased, and |
| |
(b) being used, wholly or partly, for purposes falling within one or more of paragraphs (a) to (c) of sub-paragraph (4) above. |
| |
Companies which are qualifying companies |
| | 6. - (1) The times when a company shall be taken to have been a qualifying company by reference to an individual, the trustees of a settlement or an individual's personal representatives are-
|
| |
(a) in the case of an individual, those set out in sub-paragraphs (2) and (3) below; and |
| |
(b) in the case of the trustees of a settlement, those set out in sub-paragraphs (2) and (4) below; and |
| |
(c) in the case of personal representatives, those set out in sub-paragraph (2) below. |
| |
(2) A company was a qualifying company by reference to an individual, the trustees of a settlement or personal representatives at any time when both the following conditions were satisfied, that is to say-
|
| |
(a) the company was a trading company or the holding company of a trading group; and |
| |
(b) the voting rights in that company were exercisable, as to not less than 25 per cent., by that individual or, as the case may be, the trustees of the settlement or the personal representatives. |
| |
(3) A company was also a qualifying company by reference to an individual at any time when all of the following conditions were satisfied, that is to say-
|
| |
(a) the company was a trading company or the holding company of a trading group; |
| |
(b) the voting rights in that company were exercisable, as to not less than 5 per cent., by that individual; and |
| |
(c) that individual was a full-time working officer or employee of that company or of a company which at the time had a relevant connection with that company. |
| |
(4) A company was also a qualifying company by reference to the trustees of a settlement at any time when all the following conditions were satisfied, that is to say-
|
| |
(a) the company was a trading company or the holding company of a trading group; |
| |
(b) the voting rights in that company were exercisable, as to not less than 5 per cent., by the trustees of that settlement; and |
| |
(c) an eligible beneficiary was a full-time working officer or employee of that company or of a company which at the time had a relevant connection with that company. |
