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Chargeable gains: private residence relief |
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Relief on disposal of private residence |
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1 (1) | Section 222 of the Taxation of Chargeable Gains Act 1992 is amended as |
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(2) | In subsection (5)(a) (notice to inspector to determine which of two or more |
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residences is individual’s main residence) for “the inspector” (on both |
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occasions) substitute “an officer of the Board”. |
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2 (1) | Section 223 of the Taxation of Chargeable Gains Act 1992 (c. 12) is amended |
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(2) | In subsection (4) (dwelling-house let as residential accommodation) in |
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paragraph (a), omit the unnecessary words “or those provisions as applied |
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(3) | After subsection (7) insert— |
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“(8) | This section is subject to— |
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(a) | section 224 (amount of relief: further provisions), and |
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(b) | section 226A (private residence relief: cases where relief |
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obtained under section 260).”. |
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Amount of relief: further provisions |
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3 (1) | Section 224 of the Taxation of Chargeable Gains Act 1992 is amended as |
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(2) | In subsection (1) (gain accruing from disposal of dwelling-house part of |
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which is used exclusively for purposes of trade etc: relief to apply only to |
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portion of gain) for “accrues from” substitute “accrues on”. |
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Private residence occupied under terms of settlement |
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4 (1) | Section 225 of the Taxation of Chargeable Gains Act 1992 is amended as |
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(2) | In the opening words— |
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(a) | for “a trustee” substitute “the trustees of a settlement”, and |
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(b) | for “the trustee” substitute “the trustees”. |
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(3) | In paragraph (a), for “the trustee” substitute “the trustees”. |
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(a) | for “the inspector” substitute “an officer of the Board”, and |
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(b) | for “the trustee” substitute “the trustees”. |
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(5) | At the end of that paragraph insert “; |
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| but section 223 (as so applied) shall apply only on the making of a |
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Private residence held by personal representatives |
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5 | After section 225 of the Taxation of Chargeable Gains Act 1992 insert— |
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“225A | Private residence held by personal representatives |
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(1) | Sections 222 to 224 shall also apply in relation to a gain accruing to |
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the personal representatives of a deceased person on a disposal of an |
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asset within section 222(1) if the following conditions are satisfied. |
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(2) | The first condition is that, immediately before and immediately after |
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the death of the deceased person, the dwelling-house or part of the |
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dwelling-house mentioned in section 222(1) was the only or main |
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residence of one or more individuals. |
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(3) | The second condition is that— |
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(a) | that individual or one of those individuals has a relevant |
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entitlement, or two or more of those individuals have |
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relevant entitlements, and |
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(b) | the relevant entitlement accounts for, or the relevant |
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entitlements together account for, 75% or more of the net |
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| and for this purpose “relevant entitlement” means an entitlement as |
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legatee of the deceased person to, or to an interest in possession in, |
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the whole or any part of the net proceeds of disposal. |
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(4) | In subsection (3) above “net proceeds of disposal” means— |
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(a) | the proceeds of the disposal of the asset realised by the |
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personal representatives,
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(b) | any incidental costs allowable as a deduction in accordance |
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with section 38(1)(c) in computing the gain accruing to the |
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personal representatives on that disposal, |
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| but on the assumption that none of the proceeds is required to meet |
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the liabilities of the deceased person’s estate (including any liability |
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(5) | In sections 222 to 224 as applied by this section— |
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(a) | references to the individual shall be taken as references to the |
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personal representatives except in relation to the occupation |
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of the dwelling-house or part of the dwelling-house, and |
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(b) | the notice which may be given to an officer of the Board |
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under section 222(5)(a) shall be a joint notice by the personal |
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representatives and the individual or individuals entitled to |
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occupy the dwelling-house or part of the dwelling-house. |
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(6) | But section 223 (as so applied) shall apply only on the making of a |
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claim by the personal representatives.”. |
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Private residence relief: cases where relief obtained under section 260 |
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6 | After section 226 of the Taxation of Chargeable Gains Act 1992 (c. 12) |
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“226A | Private residence relief: cases where relief obtained under section 260 |
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(1) | This section applies where— |
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(a) | section 223 applies, or would apart from this section apply, in |
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relation to a gain or part of a gain accruing to an individual |
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or the trustees of a settlement (“the transferor”) on a disposal |
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(b) | in computing the chargeable gain which would, apart from |
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section 223, accrue to the transferor on the later disposal, the |
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allowable expenditure would fall to be reduced, and |
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(c) | that reduction would to any extent fall to be made in |
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consequence, directly or indirectly, of a claim or claims under |
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section 260 in respect of one or more earlier disposals |
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(whether or not made to the transferor). |
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(2) | If a claim for relief under section 260 in respect of— |
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(a) | the earlier disposal, or |
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(b) | if there were two or more such disposals, any of them, |
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| is made on or before the making of the later disposal, section 223 |
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shall not apply in relation to the gain or part of a gain accruing on the |
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(3) | If a claim for relief under section 260 in respect of— |
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(a) | the earlier disposal, or |
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(b) | if there were two or more such disposals, any of them, |
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| is made after the making of the later disposal and subsection (2) |
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above does not apply, it is to be assumed for the purposes of capital |
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gains tax that section 223 never applied in relation to the gain or part |
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of a gain accruing on the later disposal. |
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(4) | All such adjustments shall be made, whether by discharge or |
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repayment of tax, the making of assessments or otherwise, as are |
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required to give effect to subsection (3) above (notwithstanding any |
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limitation on the time within which any adjustment may be made). |
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(5) | Where the later disposal is made by the trustees of a settlement, the |
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references in subsections (2) and (3) above to the making of the later |
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disposal shall be read as references to the making of a claim for relief |
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under section 223 in respect of the gain or part of a gain accruing on |
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(6) | If a claim for relief under section 260 in respect of an earlier disposal |
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is revoked, this section shall apply as if the claim had never been |
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(7) | This section is subject to section 226B (exception for maintenance |
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funds for historic buildings). |
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226B | Exception to section 226A |
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(1) | Section 226A shall not apply in relation to a later disposal made by |
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the trustees of a settlement if the trustees have elected that section |
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691(2) of the Taxes Act (certain income of maintenance funds for |
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historic buildings not to be income of settlor etc) shall have effect in |
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(b) | any part of the settlement, |
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| in relation to each year of assessment in which a relevant earlier |
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(2) | In this section “relevant earlier disposal”, in relation to a later |
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disposal, means an earlier disposal in respect of which a claim |
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mentioned in section 226A(1)(c) is made. |
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(3) | This section is to be construed as one with section 226A.”. |
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7 (1) | The amendments in paragraphs 1(2) and 4(4)(a) of this Schedule have effect |
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in relation to any notice given on or after 10th December 2003. |
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(2) | The amendments in paragraphs 2(2), 3(2), 4(2), (3), (4)(b) and (5) and 5 of this |
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Schedule have effect in relation to disposals made on or after 10th December |
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(3) | Subject to paragraph 8 of this Schedule, the amendments in paragraphs 2(3) |
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and 6 of this Schedule have effect in relation to gains or parts of gains |
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accruing on later disposals (within the meaning of the section 226A inserted |
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by paragraph 6 of this Schedule) made on or after 10th December 2003 |
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(whenever any relevant earlier disposal was made). |
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(4) | In sub-paragraph (3) above “relevant earlier disposal”, in relation to a later |
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disposal (within the meaning of the section 226A inserted by paragraph 6 of |
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this Schedule), means an earlier disposal in respect of which a claim |
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mentioned in subsection (1)(c) of that section is made. |
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8 (1) | This paragraph has effect where section 226A of the Taxation of Chargeable |
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Gains Act 1992 (c. 12) (as inserted by paragraph 6 of this Schedule) (“section |
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226A”) applies in circumstances in which— |
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(a) | the relevant earlier disposal, or |
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(b) | if there were two or more such disposals, each of them, |
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| was made before 10th December 2003. |
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(2) | Section 226A shall have effect subject to the following modifications. |
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(3) | In subsection (2), omit “not” and at the end insert “subject to the |
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modifications set out in subsections (2A) to (2C) below”. |
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(4) | After subsection (2) insert— |
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“(2A) | Section 223(1) shall not apply. |
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(2B) | For the purposes of section 223(2)(a) and (3)— |
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(a) | the dwelling-house or the part of the dwelling-house in |
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question is to be taken not to have been the individual’s only |
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or main residence during the post-commencement period or |
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any part of that period, and |
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(b) | the words “but inclusive of the last 36 months of the period of |
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ownership in any event” shall not have effect in respect of so |
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much of that period of 36 months as falls within the post- |
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(2C) | In subsection (2B) above “post-commencement period” means the |
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period beginning on 10th December 2003 and ending on the date of |
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(5) | In subsection (3), omit “never” and at the end insert “subject to the |
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modifications set out in subsections (2A) to (2C) above”. |
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(6) | In this paragraph “relevant earlier disposal”, in relation to a later disposal, |
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means an earlier disposal in respect of which a claim mentioned in |
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subsection (1)(c) of section 226A is made. |
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(7) | This paragraph is to be construed as one with section 226A. |
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(8) | Subsections (5) and (6) of section 223 of the Taxation of Chargeable Gains Act |
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1992 apply in relation to the subsection (2B)(b) treated as inserted by sub- |
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paragraph (4) above as they apply in relation to subsections (1) and (2)(a) of |
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Finance leasebacks: transitional provision |
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1 | Sections 228B to 228E of the Capital Allowances Act 2001 (c. 2) (as inserted |
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by section 127) are subject to this Schedule in their application in relation to |
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2 (1) | This paragraph applies if the pre-commencement rentals are greater than the |
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total of the actual rental deductions for periods of account up to, but |
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excluding, the transitional period of account. |
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(2) | Section 228B shall not apply in relation to— |
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(a) | the transitional period of account if the lessee’s excess rentals are |
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greater than the notional rental deduction for that period, or |
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(b) | a subsequent period of account if the unrelieved portion of the |
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lessee’s excess rentals is greater than the notional rental deduction |
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(3) | Section 228B is subject to sub-paragraph (4) in its application to— |
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(a) | the transitional period of account if the lessee’s excess rentals are not |
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greater than the notional rental deduction for that period, or |
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(b) | a subsequent period of account if the unrelieved portion of the |
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lessee’s excess rentals is not greater than the notional rental |
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deduction for that period. |
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(4) | The permitted maximum for that period of account is the total of— |
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(a) | the lessee’s excess rentals (in the case of the transitional period of |
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account) or the unrelieved portion of the lessee’s excess rentals (in |
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the case of a subsequent period of account), and |
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(b) | the amount given by this calculation—![equation: times[char[B],char[a],char[s],char[i],char[c],string[" "],char[A],char[m],char[o],
char[u],char[n],cross[char[t],over[id[plus[times[char[N],char[o],char[t],char[i],
char[o],char[n],char[a],char[l],string[" "],char[R],char[e],char[n],char[t],char[
a],char[l],string[" "],char[R],char[e],char[d],char[u],char[c],char[t],char[i],char[
o],char[n]],minus[times[char[D],char[e],char[d],char[u],char[c],char[t],char[i],
char[b],char[l],char[e],string[" "],char[E],char[x],char[c],char[e],char[s],char[
s]]]]],times[char[N],char[o],char[t],char[i],char[o],char[n],char[a],char[l],string[
" "],char[R],char[e],char[n],char[t],char[a],char[l],string[" "],char[R],char[e],
char[d],char[u],char[c],char[t],char[i],char[o],char[n],string[" "]]]]]](missing.gif) |
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| “Basic Amount” means the amount calculated in accordance with |
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| “Notional Rental Deduction” means the notional rental deduction for |
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the period of account in question, and |
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|
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|
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| “Deductible Excess” means the amount included in the permitted |
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maximum by virtue of sub-paragraph (4)(a). |
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(5) | But where, in relation to the transitional period of account, the amount given |
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by sub-paragraph (4) is less than the appropriate fraction of the notional |
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rental deduction for that period, the permitted maximum shall be that |
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fraction of that deduction. |
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(a) | “the lessee’s excess rentals” means— |
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(i) | the pre-commencement rentals, minus |
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(ii) | the total of the actual rental deductions referred to in sub- |
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(b) | “the unrelieved portion of the lessee’s excess rentals”, in relation to a |
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period of account, means— |
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(i) | the lessee’s excess rentals, minus |
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(ii) | the total of the actual rental deductions for periods of account |
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from and including the transitional period up to, but |
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excluding, the period in question. |
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| “actual rental deduction”, in relation to a period of account, means the |
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amount that may be deducted in respect of amounts payable under |
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the existing leaseback in calculating the lessee’s income or profits |
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for that period of account for the purpose of income tax or |
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| “notional rental deduction”, in relation to a period of account, means |
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the amount that could, if section 228B did not apply, be deducted in |
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respect of amounts payable under the existing leaseback in |
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calculating the lessee’s income or profits for that period of account |
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for the purpose of income tax or corporation tax. |
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(8) | Nothing in sub-paragraphs (3) to (5) prevents the inclusion of an amount in |
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the permitted maximum by virtue of section 228B(3) and (4). |
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(9) | This paragraph does not apply in relation to any period of account later than |
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a period of account for which the permitted maximum has been determined |
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in accordance with sub-paragraph (3) to (5). |
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3 (1) | This paragraph applies where— |
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(a) | the existing leaseback terminates, and |
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(b) | in the period of account immediately following that in which it |
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terminates, paragraph 2(2)(b) or 2(3)(b) would apply were it not for |
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(2) | The permitted maximum for the period of account in which the leaseback |
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terminates shall also include an amount equal to the amount that the |
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unrelieved portion of the lessee’s excess rentals would have been in the |
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period of account immediately following. |
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4 | Section 228C shall not apply where the existing leaseback terminates before |
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5 (1) | This paragraph applies if— |
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(a) | the existing leaseback terminates otherwise than by expiry of its |
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|
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|
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(b) | upon the termination of the leaseback, or during the period of one |
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month beginning with the date of termination, the lessee becomes |
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the owner of the plant of machinery by acquiring it— |
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(ii) | where no person other than the lessor or a person connected |
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with the lessee has owned the plant or machinery at any time |
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since the termination of the leaseback, from a person |
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connected with the lessee, |
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(c) | the person who first acquires the plant or machinery from the lessor |
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does so as a result of incurring capital expenditure equal (at least) to |
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the market value of the plant or machinery at the termination of the |
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(d) | the amount of the lessee acquisition expenditure that counts as |
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qualifying expenditure is restricted under section 226. |
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(2) | If the section 226 restriction is greater than the amount calculated in |
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accordance with section 228C(3)— |
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(a) | section 228C(2) to (4) shall not apply, but |
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(b) | if there is a taxable disposal, section 228C(2) to (4) shall apply subject |
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(3) | If the section 226 restriction is not greater than the amount calculated in |
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accordance with section 228C(3)— |
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(a) | the amount by which profits or income are increased in accordance |
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with section 228C(2) shall be reduced by the section 226 restriction, |
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(b) | if there is a taxable disposal, section 228C(2) to (4) shall apply again |
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subject to sub-paragraph (5). |
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(4) | For the purposes of sub-paragraphs (2) and (3) there is a taxable disposal if |
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the lessee ceases to own the plant or machinery during the period of six |
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years beginning with the date of termination of the leaseback. |
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(5) | Where section 228C(2) to (4) applies subject to this sub-paragraph— |
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(a) | a reference to the termination shall be treated as a reference to the |
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cessation of ownership of the plant or machinery, and |
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(b) | the amount by which profits or income are increased in accordance |
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with section 228C(2) shall be this fraction of the amount calculated in |
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accordance with section 228C(3) (or, in a case where sub-paragraph |
| 35 |
(3) applied, that amount reduced by the section 226 restriction)—![equation: over[(*s12.00s*)id[plus[times[char[D],char[i],char[s],char[p],char[o],char[s],char[
a],char[l],string[" "],char[P],char[r],char[o],char[c],char[e],char[e],char[d],char[
s]],minus[times[char[R],char[e],char[s],char[t],char[r],char[i],char[c],char[t],
char[e],char[d],string[" "],char[Q],char[u],char[a],char[l],char[i],char[f],char[
y],char[i],char[n],char[g],string[" "],char[E],char[x],char[p],char[e],char[n],char[
d],char[i],char[t],char[u],char[r],char[e]]]]],id[plus[times[char[L],char[e],char[
s],char[s],char[e],char[e],string[" "],char[A],char[c],char[q],char[u],char[i],char[
s],char[i],char[t],char[i],char[o],char[n],string[" "],char[E],char[x],char[p],char[
e],char[n],char[d],char[i],char[t],char[u],char[r],char[e]],minus[times[char[R],
char[e],char[s],char[t],char[r],char[i],char[c],char[t],char[e],char[d],string[" "],
char[Q],char[u],char[a],char[l],char[i],char[f],char[y],char[i],char[n],char[g],
string[" "],char[E],char[x],char[p],char[e],char[n],char[d],char[i],char[t],char[
u],char[r],char[e]]]]]]](missing.gif) |
| |
(6) | In sub-paragraph (5) “Disposal Proceeds” means the consideration due to |
| |
the lessee under the transaction as a result of which he ceases to own the |
| |
plant or machinery or, if higher, the market value of the plant or machinery |
| |
at the time of that transaction; but— |
| 40 |
(a) | where that amount is greater than the lessee acquisition expenditure, |
| |
the Disposal Proceeds shall be the amount of the lessee acquisition |
| |
| |
(b) | where that amount is less than the Restricted Qualifying |
| |
Expenditure, the Disposal Proceeds shall be the amount of the |
| 45 |
Restricted Qualifying Expenditure. |
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| |
|
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|