Taxation of Chargeable Gains Act 1992

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210 Life assurance and deferred annuities.

(1) This section has effect in relation to any policy of insurance or contract for a deferred annuity on the life of any person. (2) A gain accruing on a disposal of, or of an interest in, the rights conferred by the policy of insurance or contract for a deferred annuity is not a chargeable gain unless subsection (3) below applies. (3) This subsection applies if— (a) (in the case of a disposal of the rights) the rights or any interest in the rights, or (b) (in the case of a disposal of an interest in the rights) the rights, the interest or any interest from which the interest directly or indirectly derives (in whole or in part), have or has at any time been acquired by any person for actual consideration (as opposed to consideration deemed to be given by any enactment relating to the taxation of chargeable gains). (4) For the purposes of subsection (3) above — (a) (in the case of a policy of insurance) amounts paid under the policy by way of premiums, and (b) (in the case of a contract for a deferred annuity) amounts paid under the contract, whether by way of premiums or as lump sum consideration, do not constitute actual consideration. (5) And for those purposes actual consideration for— (a) a disposal which is made by one spouse or civil partner to the other or is an approved post-marriage disposal or an approved post-civil partnership disposal, or (b) a disposal to which section 171(1) applies, is to be treated as not constituting actual consideration. (6) For the purposes of subsection (5)(a) above a disposal is an approved post-marriage disposal or an approved post-civil partnership disposal if— (a) it is made in consequence of the dissolution or annulment of a marriage or civil partnership by one person who was a party to the marriage or civil partnership to the other, (b) it is made with the approval, agreement or authority of a court (or other person or body) having jurisdiction under the law of any country or territory or pursuant to an order of such a court (or other person or body), and (c) the rights disposed of were, or the interest disposed of was, held by the person by whom the disposal is made immediately before the marriage or civil partnership was dissolved or annulled. (7) Subsection (8) below applies for the purposes of tax on chargeable gains where— (a) (if that subsection did not apply) a loss would accrue on a disposal of, or of an interest in, the rights conferred by the policy of insurance or contract for a deferred annuity, but (b) if sections 37 and 39 were disregarded, there would accrue on the disposal a loss of a smaller amount, a gain or neither a loss nor a gain. (8) If (disregarding those sections) a loss of a smaller amount would accrue, that smaller amount is to be taken to be the amount of the loss accruing on the disposal; and in any other case, neither a loss nor a gain is to be taken to accrue on the disposal. (9) But subsection (8) above does not affect the treatment for the purposes of tax on chargeable gains of the person who acquired rights, or an interest in rights, on the disposal. (10) The occasion of— (a) the receipt of the sum or sums assured by the policy of insurance, (b) the transfer of investments or other assets to the owner of the policy of insurance in accordance with the policy, or (c) the surrender of the policy of insurance, is for the purposes of tax on chargeable gains an occasion of a disposal of the rights (or of all of the interests in the rights) conferred by the policy of insurance. (11) The occasion of— (a) the receipt of the first instalment of the annuity under the contract for a deferred annuity, or (b) the surrender of the rights conferred by the contract for a deferred annuity, is for the purposes of tax on chargeable gains an occasion of a disposal of the rights (or of all of the interests in the rights) conferred by the contract for a deferred annuity. (12) Where there is a disposal on the occasion of the receipt of the first instalment of the annuity under the contract for a deferred annuity— (a) in the case of a disposal of the rights conferred by the contract, the consideration for the disposal is the aggregate of the amount or value of the first instalment and the market value at the time of the disposal of the right to receive the further instalments of the annuity, and (b) in the case of a disposal of an interest in the rights, the consideration for the disposal is such proportion of that aggregate as is just and reasonable; and no gain accruing on any subsequent disposal of, or of any interest in, the rights is a chargeable gain (even if subsection (3) above applies). (13) In this section “interest”, in relation to rights conferred by a policy of insurance or contract for a deferred annuity, means an interest as a co-owner of the rights (whether the rights are owned jointly or in common and whether or not the interests of the co-owners are equal).

210A Ring-fencing of losses

(1) Section 2A(1) has effect in relation to insurance companies subject to the provisions of this section. (2) Non-BLAGAB allowable losses accruing to an insurance company are allowable as a deduction from the shareholders' share (if any) of the BLAGAB chargeable gains accruing to the company as permitted by subsection (2A) (but are not otherwise allowable as a deduction from the BLAGAB chargeable gains accruing to the company). (2A) The following deductions may be made from the shareholders’ share of the BLAGAB chargeable gains accruing to the company in an accounting period— (a) any available non-BLAGAB allowable losses accruing to the company in the period may be deducted under section 2A(1)(a), and (b) after making any deductions within paragraph (a), any available non-BLAGAB allowable losses previously accruing to the company, which have not been allowed as a deduction from chargeable gains accruing in the period or in any previous accounting period, may (subject to section 269ZFC of CTA 2010) be deducted under section 2A(1)(b). (2B) But those deductions may not reduce the shareholders’ share of BLAGAB chargeable gains below nil. (2C) The amount of “available non-BLAGAB allowable losses” accruing to a company in an accounting period is the amount by which the non-BLAGAB allowable losses accruing to the company in the accounting period exceed the non-BLAGAB chargeable gains so accruing. (3) BLAGAB allowable losses accruing to an insurance company are allowable as a deduction from non-BLAGAB chargeable gains accruing to the company as permitted by the following provisions of this section (and not otherwise). (4) They are allowable as a deduction from only so much of non-BLAGAB chargeable gains accruing to the company in an accounting period as exceeds the aggregate of— (a) non-BLAGAB allowable losses accruing to the company in the accounting period, and (b) non-BLAGAB allowable losses previously accruing to the company which have not been allowed as a deduction from chargeable gains accruing in any previous accounting period. (5) And they are allowable as a deduction from non-BLAGAB chargeable gains accruing to the company in an accounting period only to the extent that they do not exceed the permitted amount for the accounting period. (6) The permitted amount for the first accounting period of an insurance company in relation to which this section has effect is the aggregate of— (a) the ... shareholders' share for that accounting period of BLAGAB allowable losses accruing to the company in the accounting period ..., and (b) the shareholder’s share for the immediately preceding accounting period of BLAGAB allowable losses previously accruing to the company which have not been allowed as a deduction from chargeable gains accruing in that immediately preceding accounting period or any earlier accounting period. (7) The permitted amount for any subsequent accounting period of the company is arrived at by— (a) deducting from the permitted amount for the immediately preceding accounting period the amount of any BLAGAB allowable losses allowed as a deduction from non-BLAGAB chargeable gains accruing to the company in the immediately preceding accounting period, and (b) adjusting the result in accordance with subsection (8) or (9) below. (8) If there are BLAGAB chargeable gains accruing to the company in the subsequent accounting period ..., the amount arrived at under subsection (7)(a) above is reduced by a fraction of which— (a) the denominator is the BLAGAB allowable losses accruing to the company in any previous accounting period which have not been allowed as a deduction from chargeable gains accruing to the company in any previous accounting period, and (b) the numerator is so many of those allowable losses as are allowed as a deduction, under step 2 of section 75(1) of FA 2012, from BLAGAB chargeable gains accruing to the company in the accounting period. (9) If there are BLAGAB allowable losses accruing to the company in the subsequent accounting period, the amount arrived at under subsection (7)(a) is increased by the shareholders’ share of the amount of those allowable losses. (10) For the purposes of this section the “shareholders' share” of BLAGAB chargeable gains or BLAGAB allowable losses accruing to an insurance company in an accounting period is determined as follows. (10A) If the company has an I - E profit for the accounting period— (a) find the percentage (including, if applicable, nil) of the I - E profit that is not represented by the policyholders' share of that profit as determined in accordance with section 103 of the Finance Act 2012, and (b) then multiply that percentage by the amount of the BLAGAB chargeable gains or BLAGAB allowable losses. The result is the shareholder's share of the BLAGAB chargeable gains or BLAGAB allowable losses. (10B) If the company does not have an I - E profit for the accounting period, the shareholders' share of the BLAGAB chargeable gains or BLAGAB allowable losses is nil. (10C) For the purposes of subsections (10A) and (10B), assume that non-BLAGAB allowable losses cannot be deducted to any extent from BLAGAB chargeable gains (and, accordingly, assume that section 95 is not included in the Finance Act 2012). (11) In arriving at the shareholders' share of chargeable gains accruing to an insurance company under subsections (10) to (10C) above there is to be ignored— (a) any deduction under section 202(9) (mineral leases: capital losses), (b) any reduction under section 213(3) (spreading of losses from deemed disposal of holdings of unit trust etc), and (c) any amount carried back under section 389(1) of CTA 2009 (non-trading deficit on loan relationships). (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) In this section— “BLAGAB allowable losses”, in relation to an insurance company, means allowable losses referable, in accordance with Chapter 4 of Part 2 of the Finance Act 2012, to the company’s basic life assurance and general annuity business, but excluding any allowable losses deducted under step 2 of section 75(1) of FA 2012 in determining the BLAGAB chargeable gains of the company for an accounting period, “BLAGAB chargeable gains”, in relation to an insurance company, means chargeable gains (as adjusted for allowable losses in accordance with section 75 of FA 2012) referable, in accordance with Chapter 4 of Part 2 of the Finance Act 2012, to the company’s basic life assurance and general annuity business, “non-BLAGAB allowable losses”, in relation to an insurance company, means allowable losses of the company which are not BLAGAB allowable losses, “non-BLAGAB chargeable gains”, in relation to an insurance company, means chargeable gains of the company which are not BLAGAB chargeable gains, ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

210B Disposal and acquisition of section 119 or 120 securities

(1) Subsections (2) to (4) below apply in a case where, within a period of 10 days, an insurance company disposes of a number of section 119 or 120 securities and (whether subsequently or previously) acquires a number of section 119 or 120 securities if— (a) the securities disposed of decrease the size of a chargeable section 119 or 120 holding, (b) the securities acquired increase the size of the same chargeable section 119 or 120 holding, and (c) (apart from this section) an allowable loss would accrue on the disposal. (2) The securities disposed of shall be identified with the securities acquired. (3) The securities disposed of shall be identified with securities acquired before the disposal rather than securities acquired after the disposal and— (a) in the case of securities acquired before the disposal, with those acquired later rather than those acquired earlier, and (b) in the case of securities acquired after the disposal, with those acquired earlier rather than those acquired later. (4) Where securities acquired could be identified with securities disposed of either at an earlier or at a later date, they shall be identified with the former rather than the latter; and the identification of securities acquired with securities disposed of on any occasion shall preclude their identification with securities comprised in a later disposal. (5) Subsections (2) to (4) above have effect subject to section 105(1). (6) Subsections (2) to (4) above do not apply to— (a) securities which are assets within section 212(1). ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) Subsections (2) to (4) above do not apply if— (a) the securities disposed of are assets wholly matched to BLAGAB liabilities and the assets are appropriated to a BLAGAB internal linked fund, (b) the securities acquired are, on acquisition, appropriated to that or another internal linked fund, and (c) the disposal and acquisition are made with a view to adjusting the value of the assets of that fund, or of those funds, in order to match its or their liabilities. (8) In this section— “BLAGAB internal linked fund” means an internal linked fund all the assets appropriated to which are matched wholly to BLAGAB liabilities, “chargeable section 119 or 120 holding” means a holding which is a separate holding as a result of section 119(1)(a), (c) or (d) or section 120(1)(a), (c) or (d) of the Finance Act 2012 (and section 121(1) and (2) of that Act), “internal linked fund”, in relation to an insurance company, means an account— to which assets matched to the company's life assurance liabilities are appropriated by the company, and which may be divided into units the value of which is determined by the company by reference to the value of those assets, and “section 119 or 120 securities” means securities within the meaning of section 119 or 120 of the Finance Act 2012 (see section 121(6)).

210C Losses on disposal of authorised investment fund assets to connected manager

(1) Section 18(3) does not apply in relation to a loss accruing on the disposal by an insurance company of authorised investment fund assets to the manager of the authorised investment fund. (2) In this section— “authorised investment fund assets” means assets held by the company for the purposes of its long-term business that consist of— rights under an authorised unit trust, rights under an authorised contractual scheme which is a co-ownership scheme, or shares in an open-ended investment company, “the manager of the authorised investment fund” means— in the case of an authorised unit trust, the person who is the manager of the unit trust scheme for the purposes of Chapter 3 of Part 17 of the Financial Services and Markets Act 2000, ... in the case of an authorised contractual scheme which is a co-ownership scheme, means the person who is the operator of the scheme for the purposes of that Part, and in the case of an open-ended investment company, a director or other person having responsibility for the management of its scheme property, and “open-ended investment company” means a company incorporated in the United Kingdom to which section 236 of the Financial Services and Markets Act 2000 applies.

211 Transfers of business.

(1) This section applies where an insurance business transfer scheme has effect to transfer business which consists of the effecting or carrying out of contracts of long-term insurance from one person (“the transferor”) to another (“the transferee”). (1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) Where this section applies the transferor and the transferee are treated for the purposes of corporation tax on chargeable gains as if any assets included in the transfer which— (a) immediately before they are acquired by the transferee, were assets held by the transferor for the purposes of its long-term business, and (b) immediately after they are so acquired are assets held by the transferee for the purposes of its long-term business, were acquired for a consideration of such amount as would secure that neither a gain nor a loss would accrue to the transferor on the disposal. (2A) The reference in subsection (2) above to assets included in the transfer does not include assets which formed part of the long-term business fixed capital of the company in question. (3) Subsection (2) above is subject to section 212. (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Subsection (2) does not apply in relation to assets which are referable to the long-term business of the transferor if all the income of the transferor's long-term business is chargeable to corporation tax on income under section 35 of CTA 2009.

211ZA Transfers of business: transfer of unused losses

(1) This section applies where— (a) an insurance business transfer scheme has effect to transfer business consisting of or including basic life assurance and general annuity business from one person (“the transferor”) to another (“the transferee”) or more than one others (“the transferees”), and (b) the transferor has relevant unused losses. (2) For the purposes of subsection (1)(b) above the transferor has relevant unused losses if— (a) BLAGAB allowable losses accrue to the transferor in the accounting period ending with the day of the transfer or have so accrued in any earlier accounting period, and (b) they are not deducted from chargeable gains accruing to the transferor in that accounting period and have not been deducted from chargeable gains so accruing in any previous accounting period. (2A) For the purposes of subsection (2) above, where there is no accounting period of the transferor ending with the day of the transfer— (a) there is deemed to be such an accounting period, (b) BLAGAB allowable losses which would have accrued to the transferor in that accounting period are deemed to have accrued to the transferor in that accounting period, and (c) if those BLAGAB allowable losses would not have been deducted from chargeable gains accruing to the transferor in that accounting period, they are deemed to be relevant unused losses. (3) Subject as follows— (a) for the purposes of ascertaining the transferor’s total profits for any accounting period ending after that in which the transfer takes place, the relevant unused losses are deemed not to have accrued to the transferor, but (b) (instead) they are treated as accruing to the transferee (in accordance with subsection (4) below). (4) The losses treated as accruing to the transferee under subsection (3)(b) above shall be deemed to be BLAGAB allowable losses accruing to the transferee in the accounting period of the transferee in which the transfer takes place. (5) But those losses are not allowable as a deduction from chargeable gains accruing before the transfer takes place. (6) For the purposes of section 210A (ring-fencing of losses), the shareholders' share of those losses is to be taken to be the same proportion as would be the shareholders' share of them if they had remained losses of the transferor. (7) If only part of the transferor’s basic life assurance and general annuity business is transferred, subsection (3) above applies as if the references to the relevant unused losses were to such part of the relevant unused losses as is appropriate. (8) If the transfer is to more than one others, subsection (3)(b) above applies as if the reference to the relevant unused losses being treated as accruing to the transferee were to such part of the relevant unused losses as is appropriate being treated as accruing to each of the transferees. (9) Any question arising as to the operation of subsection (7) or (8) above shall be determined in the same manner as an appeal, and both the transferor and the transferee shall be entitled to be a party to any proceedings. (10) In this section “BLAGAB allowable losses” means allowable losses referable, in accordance with Chapter 4 of Part 2 of the Finance Act 2012, to the transferor’s basic life assurance and general annuity business.

211A Gains of insurance company from venture capital investment partnership

Schedule 7AD to this Act has effect with respect to the gains of an insurance company from a venture capital investment partnership.

211B Transfers of assets to certain collective investment schemes

(1) Subsection (2) applies if— (a) an asset of an insurance company is made subject to a collective investment scheme which is— (i) an authorised contractual scheme which is a co-ownership scheme, ... (ia) a Reserved Investor Fund (Contractual Scheme), or (ii) a relevant offshore fund, (b) that is wholly in exchange for the company being issued with units in the scheme, and (c) the condition in subsection (3) is met. (2) For the purposes of corporation tax on chargeable gains, the company is to be treated— (a) as having disposed of the asset mentioned in subsection (1)(a) for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the company, and (b) as having acquired the units mentioned in subsection (1)(b) for a consideration of the same amount. (3) The condition is that— (a) immediately before the asset mentioned in subsection (1)(a) is made subject to the scheme, the asset was an asset held by the company for the purposes of its long-term business within one of the long-term business categories, and (b) immediately after the asset is made subject to the scheme, the units mentioned in subsection (1)(b) are assets held by the company for the purposes of its long-term business within the same category. (4) For the purposes of subsection (3), a “long-term business category” is— (a) if the company is a UK life insurance company, a long-term business category set out in section 116(2) of the Finance Act 2012 (subject to section 116(3)), or (b) if the company is an overseas life insurance company, a UK long-term business category set out in section 117(2) of that Act (subject to section 117(3)). (5) In subsection (1), “relevant offshore fund” means an offshore fund that is a transparent fund within the meaning given by regulation 11 of the Offshore Funds (Tax) Regulations 2009. (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

212 Annual deemed disposal of holdings of unit trusts etc.

(1) Where at the end of an accounting period the assets held by an insurance company for the purposes of its long-term business include— (a) rights under an authorised unit trust, or (b) interests in an offshore fund ... , or (ba) units in an authorised contractual scheme which is a co-ownership scheme, or (bb) units in a Reserved Investor Fund (Contractual Scheme), or (c) shares in a company which is, or is a member of, a UK REIT within the meaning of Part 12 of CTA 2010 (Real Estate Investment Trusts), or, (d) shares in a company which is, or is a member of, a QAHC within the meaning of Schedule 2 to the Finance Act 2022 (qualifying asset holding companies), then, subject to the following provisions of this section and to section 213, the company shall be deemed for the purposes of corporation tax on capital gains to have disposed of and immediately reacquired each of the assets concerned at its market value at that time. (1A) For the purposes of computing the gain accruing on a deemed disposal under subsection (1) of units in an authorised contractual scheme which is a co-ownership scheme or of units in a Reserved Investor Fund (Contractual Scheme), subsections (3A) and (9) of section 103D (application of Act to tax transparent funds) do not apply. (1B) But subsection (1A) does not affect the application of those subsections in the event of any other disposal of units in such a scheme by an insurance company, and in such a case— (a) section 103D(3A) applies in respect of all allowances under Part 2A of CAA 2001 to which the company has been entitled during the period it has held units in the scheme, and (b) section 103D(9) applies in respect of all capital allowances and renewal allowances that have been, or may be, made to expenditure incurred during that period. (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9) This section applies to an overseas life insurance company as if references in subsection (1) to assets were to such of the assets concerned as are UK assets. (10) Assets (whether situated in the United Kingdom or elsewhere) are “UK assets” if, in accordance with the provision made by or under Chapter 4 of Part 2 of CTA 2009, they fall to be attributed to the permanent establishment in the United Kingdom through which the company carries on life assurance business.

213 Spreading of gains and losses under section 212.

(1) Any chargeable gains or allowable losses which would otherwise accrue on disposals deemed by virtue of section 212 to have been made at the end of a company’s accounting period shall be treated as not accruing to it, but instead— (a) there shall be ascertained the difference (“the net amount”) between the aggregate of those gains and the aggregate of those losses, and (b) one-seventh of the net amount shall be treated as a chargeable gain or, where it represents an excess of losses over gains, as an allowable loss accruing to the company at the end of the accounting period, and (c) a further one-seventh shall be treated as a chargeable gain or, as the case may be, as an allowable loss accruing at the end of each succeeding accounting period until the whole amount has been accounted for. (1A) Subsection (1) above shall not apply to chargeable gains or allowable losses except so far as they are gains or losses which— (a) are referable, in accordance with Chapter 4 of Part 2 of the Finance Act 2012, to basic life assurance and general annuity business ... (2) For any accounting period of less than one year, the fraction of one-seventh referred to in subsection (1)(c) above shall be proportionately reduced; and where this subsection has had effect in relation to any accounting period before the last for which subsection (1)(c) above applies, the fraction treated as accruing at the end of that last accounting period shall also be adjusted appropriately. (3) Subject to subsection (8H) below, Where— (a) the net amount for an accounting period of an insurance company represents an excess of gains over losses, (b) the net amount for either of the next 2 accounting periods (after taking account of any reductions made by virtue of this section) represents an excess of losses over gains, (c) there is (after taking account of any such reductions) no net amount for the intervening accounting period (if there is one), (ca) the intervening accounting period (if there is one) is not an accounting period in which the company joined a group of companies, and (d) within 2 years after the end of the later accounting period the company makes a claim for the purpose in respect of the whole or part of the net amount for that period, the net amounts for both the earlier and the later period shall be reduced by the amount in respect of which the claim is made. (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Subject to subsection (5) below, where a company ceases to carry on long-term business before the end of the last of the accounting periods for which subsection (1)(c) above would apply in relation to a net amount, the fraction of that amount that is treated as accruing at the end of the accounting period ending with the cessation shall be such as to secure that the whole of the net amount has been accounted for. (4ZA) Subsection (4) applies in relation to an overseas life insurance company with the insertion after “long-term business” of the words “in the United Kingdom through a permanent establishment”. (4ZB) Subject to subsection (5) below, where a company— (a) acquired units in a collective investment scheme where section 211B(2) applied in relation to that acquisition, and (b) other than by virtue of section 212, disposes of some or all of those units during the period of three years after the end of the accounting period of the company in which the acquisition took place, the fraction of any net amount that is treated as accruing at the end of the accounting period of the company in which the disposal occurs is to be adjusted so as to secure that the whole of the chargeable gain or allowable loss attributable to the units disposed of which has been taken into account in determining the net amount has been accounted for; and fractions of the net amount treated as accruing at the end of subsequent accounting periods are to be adjusted accordingly. (4ZC) For the purposes of subsection (4ZB) (notwithstanding the provisions of Chapter 1 of Part 4 (shares, securities, options etc))— (za) units in a collective investment scheme acquired as mentioned in subsection (4ZB)(a) at any time are treated as constituting a class of securities different from all other units in the scheme and from all other classes of securities arising as a result of this paragraph in respect of units acquired at different times, (a) units in a collective investment scheme acquired as mentioned in subsection (4ZB)(a) are treated as being disposed of before other units in the scheme or, where there are different classes of unit in the scheme, units of the same class held by the company, and (b) where units are acquired as mentioned in subsection (4ZB)(a) at different times, units acquired at a later time are treated as disposed of before units acquired at an earlier time or, where there are different classes of unit in the scheme, units of the same class acquired at an earlier time. (4ZD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4ZE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4A) The following provisions apply where an insurance business transfer scheme has effect to transfer business which consists of the effecting or carrying out of contracts of long-term insurance from one person (“the transferor”) to another (“the transferee”). (5) Subject to subsections (5A) to (7) below, any chargeable gain or allowable loss which (making the assumptions in subsection (5ZA) below) would have accrued to the transferor by virtue of subsection (1) above after the transfer shall instead be deemed to accrue to the transferee. (5ZA) The assumptions referred to in subsection (5) above are— (a) that the transferor had continued to carry on the business transferred after the transfer, and (b) where there is no accounting period of the transferor ending with the day of the transfer, that for the purposes of section 212 and this section, there was such an accounting period. (5A) Subsection (5) above shall not apply where the transferee is resident outside the United Kingdom unless the business to which the transfer relates is carried on by the transferee, for a period beginning with the time when the transfer takes effect, through a permanent establishment in the United Kingdom. (6) Where subsection (5) above has effect, the amount of the gain or loss accruing at the end of the first accounting period of the transferee ending after the day when the transfer takes place shall be calculated as if that accounting period began with the day after the transfer. (7) Where the transfer is of part only of the transferor’s long-term business, subsection (5) above shall apply only to such part of any amount to which it would otherwise apply as is appropriate. (8) Any question arising as to the operation of subsection (7) above shall be determined in the same manner as an appeal, and both the transferor and the transferee shall be entitled to be a party to any proceedings. (8A) Subsection (8B) below applies where— (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) the transferor and the transferee are, at the time of the transfer, members of the same group, (c) the transferred assets net amount for the accounting period of the transferor ending with the day of the transfer, or for the immediately preceding accounting period of the transferor, (“the relevant pre-transfer period of the transferor”) represents an excess of gains over losses, (d) the transferred assets net amount for the accounting period of the transferee in which the transfer takes place, or for the immediately following accounting period of the transferee, (“the relevant post-transfer period of the transferee”) represents an excess of losses over gains (after taking account of any reductions made by virtue of this section), and (e) within 2 years after the end of the relevant post-transfer period of the transferee, the transferor and the transferee make a joint election in respect of the whole or part of the net amount for that period by notice to an officer of the Board. (8B) Subject to subsections (8C) to (8E) and (8H) below, the transferred assets net amounts for both the relevant pre-transfer period of the transferor and the relevant post-transfer period of the transferee shall be reduced by the amount in respect of which the election is made. (8C) Subsection (8B) above does not apply if— (a) the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and (b) the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer. (8D) If— (a) the relevant post-transfer period of the transferee is the accounting period immediately following that in which the transfer takes place, and (b) the relevant pre-transfer period of the transferor is the accounting period ending with the day of the transfer, subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferee in which the transfer takes place. (8E) If— (a) the relevant post-transfer period of the transferee is the accounting period in which the transfer takes place, and (b) the relevant pre-transfer period of the transferor is the accounting period immediately preceding that ending with the day of the transfer, subsection (8B) above applies only if the conditions in subsection (8F) below are satisfied in relation to the accounting period of the transferor ending with the day of the transfer. (8F) The conditions referred to in subsections (8D) and (8E) above are that— (a) there is (after taking account of any reductions made by virtue of this section) no transferred assets net amount for the accounting period, and (b) the company whose accounting period it is did not join a group of companies in the accounting period. (8G) A copy of the notice containing an election under subsection (8A)(e) above must accompany the tax return for the relevant post-transfer period of the transferee; and paragraphs 54 to 60 of Schedule 18 to the Finance Act 1998 (claims and elections for corporation tax purposes) do not apply to such an election. (8H) Subsection (3) above has effect where the company, or the transferee, in question joins a group of companies in the accounting period for which the net amount represents an excess of losses over gains as if a claim or election could not be made in respect of that net amount except to the extent (if any) that the net amount would still arise even if losses accruing after the date on which the company or transferee joined the group of companies were disregarded. (8HA) Subsections (8A) and (8B) above have effect where the company, or the transferee, in question joins a group of companies in the accounting period for which the transferred assets net amount represents an excess of losses over gains as if a claim or election could not be made in respect of that net amount except to the extent (if any) that the transferred assets net amount would still arise even if losses accruing after the date on which the company or transferee joined the group of companies were disregarded. (8I) References in this section to a company joining a group of companies are to be construed in accordance with section 184C as if those references were contained in that section; and in subsection (8A)(b) above “group” has the same meaning as in that section. (8J) “Transferred assets net amount” means a net amount ascertained in accordance with section 213(1)(a) but only in relation to those assets referred to in section 212(1) which are transferred by the insurance business transfer scheme from the transferor to the transferee. (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

213A Power to modify ss. 212 and 213 etc in case of CFCs that are offshore funds

(1) The Treasury may make regulations for the purpose mentioned in subsection (2) in any case where— (a) an insurance company to which the I - E rules apply is deemed to make a disposal under section 212 of an interest in an offshore fund, (b) the offshore fund is a CFC, and (c) there is (or, but for the regulations, would be) a CFC charge on the insurance company referable to its relevant interest in the CFC for the accounting period in which the disposal is deemed to have been made. (2) The regulations are to be made for the purpose of modifying the operation of— (a) section 212 or 213, (b) the CFC rules, or (c) the I - E rules, in relation to any accounting period of the insurance company so as to reduce the charge to tax. (3) The regulations may— (a) make different provision for different cases or circumstances, and (b) contain incidental, supplementary, consequential, transitional, transitory or saving provision. (4) The provision that may be made as a result of subsection (3)(b) includes provision modifying any other provision of the Corporation Tax Acts. (5) In this section— “CFC” and “CFC charge” have the same meanings as in Part 9A of TIOPA 2010 (see section 371VA), “the CFC rules” means the rules contained in that Part, and “offshore fund” has the meaning given by section 355 of TIOPA 2010.

214 Transitional provisions.

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214A Further transitional provisions.

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214B Modification of Act in relation to overseas life insurance companies.

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214BA Interpretation

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214C Gains not eligible for taper relief.

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215 Disposal of assets on amalgamation of building societies etc.

If, in the course of or as part of an amalgamation of 2 or more building societies or a transfer of engagements from one building society to another, there is a disposal of an asset by one society to another, both shall be treated for the purposes of corporation tax on chargeable gains as if the asset were acquired from the one making the disposal for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the one making the disposal.

216 Assets transferred from society to company.

(1) This section and section 217 apply where there is a transfer of the whole of a building society’s business to a company (“the successor company”) in accordance with section 97 and the other applicable provisions of the Building Societies Act 1986. (2) Where the society and the successor company are not members of the same group at the time of the transfer— (a) they shall be treated for the purposes of corporation tax on capital gains as if any asset disposed of as part of the transfer were acquired by the successor company for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to the society, and (b) if because of the transfer any company ceases to be a member of the same group as the society, that event shall not cause section ... 179 to have effect as respects any asset acquired by the company from the society or any other member of the same group. (3) Where the society and the successor company are members of the same group at the time of the transfer but later cease to be so, that later event shall not cause section ... 179 to have effect as respects— (a) any asset acquired by the successor company on or before the transfer from the society or any other member of the same group, or (b) any asset acquired from the society or any other member of the same group by any company other than the successor company which is a member of the same group at the time of the transfer. (4) Subject to subsection (6) below, where a company which is a member of the same group as the society at the time of the transfer— (a) ceases to be a member of that group and becomes a member of the same group as the successor company, and (b) subsequently ceases to be a member of that group, section ... 179 shall have effect on that later event as respects any relevant asset acquired by the company otherwise than from the successor company as if it had been acquired from the successor company. (5) In subsection (4) above “relevant asset” means any asset acquired by the company— (a) from the society, or (b) from any other company which is a member of the same group at the time of the transfer, when the company and the society, or the company, the society and the other company, were members of the same group. (6) Subsection (4) above shall not apply if the company which acquired the asset and the company from which it was acquired (one being a 75 per cent. subsidiary of the other) cease simultaneously to be members of the same group as the successor company but continue to be members of the same group as one another. (7) For the purposes of this section “group” shall be construed in accordance with section 170.

217 Shares, and rights to shares, in successor company.

(1) Where, in connection with the transfer, there are conferred on members of the society— (a) any rights to acquire shares in the successor company in priority to other persons, or (b) any rights to acquire shares in that company for consideration of an amount or value lower than the market value of the shares, or (c) any rights to free shares in that company, any such right so conferred on a member shall be regarded for the purposes of tax on chargeable gains as an option (within the meaning of section 144) granted to, and acquired by, him for no consideration and having no value at the time of that grant and acquisition. (2) Where, in connection with the transfer, shares in the successor company are issued by that company, or disposed of by the society, to a member of the society, those shares shall be regarded for the purposes of tax on chargeable gains— (a) as acquired by the member for a consideration of an amount or value equal to the amount or value of any new consideration given by him for the shares (or, if no new consideration is given, as acquired for no consideration); and (b) as having, at the time of their acquisition by the member, a value equal to the amount or value of the new consideration so given (or, if no new consideration is given, as having no value); but this subsection is without prejudice to the operation of subsection (1) above, where applicable. (3) Subsection (4) below applies in any case where— (a) in connection with the transfer, shares in the successor company are issued by that company, or disposed of by the society, to the trustees of a settlement on terms which provide for the transfer of those shares to members of the society for no new consideration; ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) Where this subsection applies, then, for the purposes of tax on chargeable gains— (a) the shares shall be regarded as acquired by the trustees for no consideration; (b) the interest of any member in the settled property constituted by the shares shall be regarded as acquired by him for no consideration and as having no value at the time of its acquisition; (c) where a member becomes absolutely entitled as against the trustees to any of the settled property, both the trustees and the member shall be treated as if, on his becoming so entitled, the shares in question had been disposed of and immediately reacquired by the trustees, in their capacity as trustees within section 60(1), for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss would accrue to the trustees (and accordingly section 71 shall not apply in relation to that occasion); and (d) on the disposal by a member of an interest in the settled property, other than the disposal treated as occurring for the purposes of paragraph (c) above, any gain accruing shall be a chargeable gain (and accordingly section 76(1) shall not apply in relation to the disposal). (5) Where, in connection with the transfer, the society disposes of any shares in the successor company, then, for the purposes of this Act, any gains accruing on the disposal shall not be chargeable gains. (6) In this section— “free shares”, in relation to a member of the society, means any shares issued by the successor company, or disposed of by the society, to that member in connection with the transfer but for no new consideration; “member”, in relation to the society, means a person who is or has been a member of it, in that capacity, and any reference to a member includes a reference to a member of any particular class or description; “new consideration” means consideration other than— consideration provided directly or indirectly out of the assets of the society; or consideration derived from a member’s shares or other rights in the society. (7) References in this section to the case where a member becomes absolutely entitled to settled property as against the trustees shall be taken to include references to the case where he would become so entitled but for being an infant or otherwise under disability.

217A Transfer of assets on incorporation of registered friendly society.

(1) This section and section 217B apply where a registered friendly society is incorporated under the Friendly Societies Act 1992 (“the 1992 Act"). (2) In this section and section 217B— (a) “the registered society” means the society before the incorporation, and (b) “the incorporated society” means the society after the incorporation. (3) For the purposes of corporation tax on chargeable gains— (a) any asset of the registered society that by virtue of section 6(2) or (3) of the 1992 Act is transferred to the incorporated society, (b) any asset of a branch of the registered society that by virtue of section 6(4) of the 1992 Act is transferred to the incorporated society, and (c) any asset of a branch of the registered society that is identified in a scheme under section 6(5) of the 1992 Act, shall be taken to be disposed of by the registered society or branch and acquired by the incorporated society on the incorporation for a consideration of such amount as to secure that on the disposal neither a gain nor a loss accrues to the registered society or branch.

217B Rights of members in registered society equated with rights in incorporated society.

(1) In this section, “change of membership” means a change effected by Schedule 4 to the 1992 Act whereby a member of the registered society or of a branch of the registered society becomes a member of the incorporated society or of a branch of the incorporated society. (2) For the purposes of this Act, a change of membership shall not be taken to involve any disposal or acquisition of an asset by the member concerned, but all the interests and rights in the incorporated society or a branch of the incorporated society that he has immediately after the change, taken together, shall be treated as a single asset which— (a) was acquired by the first relevant acquisition, and (b) was added to by any subsequent relevant acquisitions. (3) In subsection (2) above, “relevant acquisition” means an acquisition by which the member acquired any interest or right in the registered society or a branch of the registered society that he had immediately before the change of membership.

217C Subsequent disposal of assets by incorporated society etc.

(1) Where any asset acquired on a disposal to which section 217A(3) applies is subsequently disposed of by the incorporated society, section 41 shall apply as if any capital allowance made to the registered society in respect of the asset had been made to the incorporated society. (2) If the disposal by the incorporated society is in the circumstances mentioned in subsection (8) of section 41, the disposal to which section 217A(3) applies shall for the purposes of that subsection be taken to have been a previous transfer of the asset in such circumstances.

217D Disposal of assets on union, amalgamation or transfer of engagements

(1) Subsection (2) applies if— (a) there is a union or amalgamation of two or more relevant bodies or a transfer of engagements from one relevant body to another, and (b) in the course of, or as part of, that union, amalgamation or transfer there is a disposal of an asset by one relevant body to another. (2) Both bodies are treated for the purposes of corporation tax on chargeable gains as if the asset were acquired from the body making the disposal for a consideration which is of the amount needed to secure that on the disposal neither a gain nor a loss accrues to the body making the disposal. (3) In this section “relevant body” means— (a) a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014 or a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969, (aa) a society registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 (S.I. 1985/1205 (N.I. 12)), (b) an SCE formed in accordance with Council Regulation (EC) No 1435/2003 on the Statute for a European Co-Operative Society, or (c) a UK agricultural or fishing co-operative, as defined in section 1058 of CTA 2010.

218 Disposals of land between the Regulator of Social Housing, the Secretary of State or Scottish Homes and housing associations.

(1) Where— (a) in accordance with a scheme approved under section 5 of the Housing Act 1964 or paragraph 5 of Schedule 7 to the Housing Associations Act 1985, or in accordance with a requirement imposed under section 253 of the Housing and Regeneration Act 2008,, the Regulator of Social Housing acquires from a housing association the association’s interest in all the land held by the association for carrying out its objects, or (b) after the Regulator of Social Housing has so acquired from a housing association all the land so held by it the Regulator disposes to a single housing association of the whole of that land (except any part previously disposed of or agreed to be disposed of otherwise than to a housing association), together with all related assets, then both parties to the disposal of the land to or, as the case may be, by the Regulator of Social Housing shall be treated for the purposes of corporation tax in respect of chargeable gains as if the land and any related assets disposed of therewith (and each part of that land and those assets) were acquired from the party making the disposal for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss accrued to that party. (2) In subsection (1) above, “housing association” has the same meaning as in the Housing Associations Act 1985, and “related assets” means, in relation to an acquisition of land by the Regulator of Social Housing, assets acquired by the Regulator in accordance with the same scheme as that land, and in relation to a disposal of land by the Regulator of Social Housing, assets held by the Regulator for the purposes of the same scheme as that land. (3) This section shall also have effect with the substitution of the words “the Secretary of State” for the words “the Regulator of Social Housing” and “the Regulator” in each place where they occur. (4) This section shall also have effect with the substitution of the words “ Scottish Homes ” for the words “the Regulator of Social Housing” and “the Regulator” in each place where they occur.

219 Disposals by housing related bodies.

(1) In any case where— (a) a housing regulator or the Homes and Communities Agency disposes of any land to a relevant housing provider, or (b) a relevant housing provider disposes of any land to another relevant housing provider, or (c) in pursuance of a direction of a housing regulator given under section 167 of the Housing and Regeneration Act 2008, section 106 of the Housing (Scotland) Act 2010, Part I of the Housing Act 1996 or Part I of the Housing Associations Act 1985 (as the case may be) requiring it to do so, a relevant housing provider disposes of any of its property, other than land, to another relevant housing provider, or (d) a relevant housing provider or an unregistered self-build society disposes of any land to a housing regulator, the Homes and Communities Agency or the Greater London Authority, both parties to the disposal shall be treated for the purposes of tax on chargeable gains as if the land or property disposed of were acquired from the housing regulator, the Homes and Communities Agency, relevant housing provider or unregistered self-build society making the disposal for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss accrued to the housing regulator, the Homes and Communities Agency or, as the case may be, that relevant housing provider or society. (2) In this section— “housing regulator” means the Regulator of Social Housing, the Scottish Housing Regulator, the Secretary of State or Scottish Homes; “relevant housing provider” means— a non-profit registered provider of social housing, a registered social landlord within the meaning of Part 1 of the Housing Act 1996, or a body registered in the register maintained under section 20(1) of the Housing (Scotland) Act 2010. “unregistered self-build society” has the same meaning as in the Housing Associations Act 1985.

220 Disposals by Northern Ireland housing associations.

(1) In any case where— (a) a registered Northern Ireland housing association disposes of any land to another such association, or (b) in pursuance of a direction of the Department of the Environment for Northern Ireland given under Chapter II of Part VII of the Housing (Northern Ireland) Order 1981 requiring it to do so, a registered Northern Ireland housing association disposes of any of its property, other than land, to another such association, both parties to the disposal shall be treated for the purposes of tax on chargeable gains as if the land or property disposed of were acquired from the association making the disposal for a consideration of such an amount as would secure that on the disposal neither a gain nor a loss accrued to that association. (2) In subsection (1) above “registered Northern Ireland housing association” means a registered housing association within the meaning of Part VII of the Order referred to in paragraph (b) of that subsection.

221 Harbour authorities.

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222 Relief on disposal of private residence.

(1) This section applies to a gain accruing to an individual so far as attributable to the disposal of, or of an interest in— (a) a dwelling-house or part of a dwelling-house which is, or has at any time in his period of ownership been, his only or main residence, or (b) land which he has for his own occupation and enjoyment with that residence as its garden or grounds up to the permitted area. (2) In this section “the permitted area” means, subject to subsections (3) and (4) below, an area (inclusive of the site of the dwelling-house) of 0.5 of a hectare. (3) Where the area required for the reasonable enjoyment of the dwelling-house (or of the part in question) as a residence, having regard to the size and character of the dwelling-house, is larger than 0.5 of a hectare, that larger area shall be the permitted area. (4) Where part of the land occupied with a residence is and part is not within subsection (1) above, then (up to the permitted area) that part shall be taken to be within subsection (1) above which, if the remainder were separately occupied, would be the most suitable for occupation and enjoyment with the residence. (5) So far as it is necessary for the purposes of this section to determine which of 2 or more residences is an individual’s main residence for any period— (a) the individual may conclude that question by notice to an officer of the Board given within 2 years from the beginning of that period but subject to a right to vary that notice by a further notice to an officer of the Board as respects any period beginning not earlier than 2 years before the giving of the further notice, (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5A) But a notice or further notice under subsection (5)(a) determining which of 2 or more residences is an individual’s main residence for any period may be given more than 2 years from the beginning of the period if during the period the individual has not held an interest of more than a negligible market value in more than one of the residences. (6) In the case of an individual living with his spouse or civil partner— (a) there can only be one residence or main residence for both, so long as living together and, where a notice under subsection (5)(a) above affects both the individual and his spouse or civil partner, it must be given by both, ... (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6A) Where an individual has determined, by giving notice under subsection (5)(a), that a residence is the individual's main residence, that determination does not cease to be effective at any time by reason only of the fact that, at that time, another of the individual's residences is treated by section 222B(1) as not being occupied as a residence (or, having been so treated, is no longer so treated). (7) In this section and sections 222A to 226, “the period of ownership” where the individual has had different interests at different times shall be taken to begin from the first acquisition taken into account in arriving at the expenditure which under Chapter III of Part II is allowable as a deduction in the computation of the gain to which this section applies, and in the case of an individual living with his spouse or civil partner— (a) if the one disposes of, or of his or her interest in, a dwelling-house or part of a dwelling-house ... to the other, and in particular if it passes on death to the other as legatee, the other’s period of ownership shall begin with the beginning of the period of ownership of the one making the disposal, and (b) if paragraph (a) above applies, but the dwelling-house or part of a dwelling-house was not the only or main residence of both throughout the period of ownership of the one making the disposal, account shall be taken of any part of that period during which it was his only or main residence as if it was also that of the other. (8) If at any time during an individual’s period of ownership of a dwelling-house or part of a dwelling-house he— (a) resides in living accommodation which is for him job-related ..., and (b) intends in due course to occupy the dwelling-house or part of a dwelling-house as his only or main residence, this section and sections 223 to 226 shall apply as if the dwelling-house or part of a dwelling-house were at that time occupied by him as a residence. (8A) Subject to subsections (8B), (8C) and (9) below, for the purposes of subsection (8) above living accommodation is job-related for a person if— (a) it is provided for him by reason of his employment, or for his spouse or civil partner by reason of the spouse’s or civil partner's employment, in any of the following cases— (i) where it is necessary for the proper performance of the duties of the employment that the employee should reside in that accommodation; (ii) where the accommodation is provided for the better performance of the duties of the employment, and it is one of the kinds of employment in the case of which it is customary for employers to provide living accommodation for employees; (iii) where, there being a special threat to the employee’s security, special security arrangements are in force and the employee resides in the accommodation as part of those arrangements; or (b) under a contract entered into at arm’s length and requiring him or his spouse or civil partner to carry on a particular trade, profession or vocation, he or his spouse or civil partner is bound— (i) to carry on that trade, profession or vocation on premises or other land provided by another person (whether under a tenancy or otherwise); and (ii) to live either on those premises or on other premises provided by that other person; or (c) an armed forces accommodation allowance for or towards costs of the accommodation is paid to, or in respect of, the person or the person's spouse or civil partner. (8B) If the living accommodation is provided by a company and the employee is a director of that or an associated company, subsection (8A)(a)(i) or (ii) above shall not apply unless— (a) the company of which the employee is a director is one in which he or she has no material interest; and (b) either— (i) the employment is as a full-time working director, or (ii) the company is non-profit making, that is to say, it does not carry on a trade nor do its functions consist wholly or mainly in the holding of investments or other property, or (iii) the company is a charitable company. (8C) Subsection (8A)(b) above does not apply if the living accommodation concerned is in whole or in part provided by— (a) a company in which the borrower or his spouse or civil partner has a material interest; or (b) any person or persons together with whom the borrower or his spouse or civil partner carries on a trade or business in partnership. (8D) For the purposes of this section— (a) a company is an associated company of another if one of them has control of the other or both are under the control of the same person; and (b) “employment”, “director”, “full-time working director”, “material interest” and “control”, in relation to a body corporate, have the meanings given by Chapter 2 of Part 3 of ITEPA 2003; and (c) “armed forces accommodation allowance” means an allowance which is exempt from income tax by reason of section 297D of ITEPA 2003. (9) Subsections (8A)(b) and (8C) above shall apply for the purposes of subsection (8) above only in relation to residence on or after 6th April 1983 in living accommodation which is job-related for the purposes of that subsection. (10) Apportionments of consideration shall be made wherever required by this section or sections 223 to 226 and, in particular, where a person disposes of a dwelling-house only part of which is his only or main residence.

222A Determination of main residence: non-resident CGT disposals

(1) This section applies where— (a) an individual (“P”) makes a disposal of, or of an interest in— (i) a dwelling-house, or part of a dwelling-house, which was at any time in P's period of ownership occupied by P as a residence, or (ii) land (as mentioned in section 222(1)(b)) which P had for P's own occupation and enjoyment with that residence as its garden or grounds, and (b) the disposal is— (i) a disposal on which a gain 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, had a gain accrued, would be within sub-paragraph (i). In the remainder of this section the residence concerned is referred to as “the dwelling-house”. (2) So far as it is necessary for the purposes of section 222, P may determine, by a notice under this section, which of 2 or more residences (of which one is the dwelling-house) was P's main residence for any period within P's period of ownership of the dwelling-house. (3) A notice under this section may vary, as respects any period within P's period of ownership of the dwelling-house, a notice previously given under section 222(5)(a). See also subsections (4) and (7). (4) A notice under this section may not vary a notice previously given under section 222(5)(a) as respects any period for which the previous notice had the effect of determining whether or not a disposed of residence was P's main residence. (5) In subsection (4) “disposed of residence” means one of P's residences which was disposed of (in whole or in part) before the date of the disposal mentioned in subsection (1)(a). (6) A notice under this section— (a) must be given in the return under Schedule 2 to the Finance Act 2019 in respect of the disposal mentioned in subsection (1)(a), and (b) may not subsequently be varied, whether by a notice under this section or section 222(5)(a). (7) Where a notice under this section affects both P and an individual (“X”) who was, in the period to which the notice relates (“the relevant period”), P's spouse or civil partner living with P— (a) in a case where each of P and X is required to make a return under Schedule 2 to the Finance Act 2019 in respect of the disposal of an interest in the dwelling-house, notice given by P under this section is effective as respects any part of the relevant period when P and X were living together as spouses or civil partners only if notice to the same effect is also given under this section by X in respect of that period; (b) in any other case, notice given by P under this section is effective as respects any part of the relevant period when P and X were living together as spouses or civil partners only if it is accompanied by written notification from X agreeing to the terms of the notice in respect of that period. (8) Nothing in subsection (2) affects the application of section 222(5) in relation to P.

222B Non-qualifying tax years

(1) For the purposes of sections 222 to 226 the dwelling-house or part of a dwelling-house mentioned in section 222(1) is treated as not being occupied as a residence by the individual so mentioned (“P”) at any time in P's period of ownership which falls within— (a) a non-qualifying tax year, or (b) a non-qualifying partial tax year. In the remainder of this section the dwelling-house or part of a dwelling-house is referred to as “the dwelling-house”. (2) Except where the disposal mentioned in section 222(1) is a disposal falling within section 222A(1)(b) (non-resident disposals), subsection (1) does not have effect in respect of any tax year or partial tax year before the tax year 2015-16. (3) A tax year the whole of which falls within P's period of ownership is “a non-qualifying tax year” in relation to the dwelling-house if— (a) neither P nor P's spouse or civil partner was resident for that tax year in the territory in which the dwelling-house is situated, and (b) the day count test was not met by P with respect to the dwelling-house for that tax year (see section 222C). (4) A partial tax year is “a non-qualifying partial tax year” in relation to the dwelling-house if— (a) neither P nor P's spouse or civil partner was resident for the tax year in question in the territory in which the dwelling-house is situated, and (b) the day count test was not met by P with respect to the dwelling-house for that partial tax year. (5) Where part only of a tax year falls within P's period of ownership, that part is a “partial tax year” for the purposes of this section. (6) For the purposes of this section an individual is resident in a territory outside the United Kingdom (“the overseas territory”) for a tax year (“year X”) in relation to which condition A or B is met. (7) Condition A is that the individual is, in respect of a period or periods making up more than half of year X, liable to tax in the overseas territory under the law of that territory by reason of the individual's domicile or residence. (8) Condition B is that the individual would be resident in the overseas territory for year X in accordance with the statutory residence test in Part 1 of Schedule 45 to the Finance Act 2013, if in Parts 1 and 2 of that Schedule— (a) any reference to the United Kingdom (however expressed) were read as a reference to the overseas territory, (b) “overseas” meant anywhere outside that territory, and (c) in paragraph 26 (meaning of “work”), sub-paragraphs (2) to (4), (6) and (7) were disregarded. (9) In applying the statutory residence test in accordance with subsection (8), any determination of whether— (a) the individual was resident in the overseas territory for a tax year preceding year X, or (b) another individual is resident in the overseas territory for year X, is to be made in accordance with the statutory residence test, as modified by subsection (8). (10) Section 271ZA(2) (visiting forces etc) is to be disregarded in determining for the purposes of this section whether or not an individual is resident in the United Kingdom. (11) Subsection (1) is subject to— (a) section 222(8) (job-related accommodation), and (b) section 223(3) (absence reliefs).

222C Day count test

(1) This section explains how P meets the day count test (see section 222B) with respect to the dwelling-house or part of a dwelling-house mentioned in section 222(1) for a full or partial tax year. In the remainder of this section the dwelling-house or part of a dwelling-house is referred to as “the dwelling-house”. (2) P meets that test for a tax year with respect to the dwelling-house if, during that year, P spends at least 90 days in one or more qualifying houses. (3) P meets that test for a partial tax year with respect to the dwelling-house if, during that partial tax year, P spends at least the relevant number of days in one or more qualifying houses. (4) To find the relevant number of days for the purposes of subsection (3), multiply 90 days by the relevant fraction and round up the result to the nearest whole number of days if necessary. (5) The relevant fraction is— X Y where— “X” is the number of days in the partial tax year; “Y” is the number of days in the tax year. (6) For the purposes of subsections (2) and (3) the days need not be consecutive, and days spent in different qualifying houses may be aggregated. (7) A day spent by P's spouse or civil partner in a dwelling-house or part of a dwelling-house which is a qualifying house in relation to P counts as a day spent by P in the qualifying house (but no day is to be counted twice as a result of this subsection). (8) For the purposes of this section, a day counts as a day spent by an individual in a qualifying house if— (a) the individual is present at the house at the end of the day, or (b) the individual— (i) is present in the house for some period during the day, and (ii) the next day, has stayed overnight in the house. (9) For the purposes of this section— (a) the dwelling-house is a qualifying house in relation to P, and (b) any other dwelling-house or part of a dwelling-house which is situated in the same territory as the dwelling-house is a qualifying house in relation to P at any particular time if at that time any of the following has an interest in it— (i) P, (ii) an individual who is P's spouse or civil partner at that time, and (iii) an individual who is P's spouse or civil partner at the time of disposal of the dwelling-house. (10) In this section “partial tax year” has the meaning given by section 222B(5).

223 Amount of relief.

(1) No part of a gain to which section 222 applies shall be a chargeable gain if the dwelling-house or part of a dwelling-house has been the individual’s only or main residence throughout the period of ownership, or throughout the period of ownership except for all or any part of the last 9 months of that period. (2) Where subsection (1) above does not apply, a fraction of the gain shall not be a chargeable gain, and that fraction shall be— (a) the length of the part or parts of the period of ownership during which the dwelling-house or the part of the dwelling-house was the individual’s only or main residence, but inclusive of the last 9 months of the period of ownership in any event, divided by (b) the length of the period of ownership. (3) For the purposes of sections 222(5) and 222A and subsections (1) and (2) above— (a) a period of absence not exceeding 3 years (or periods of absence which together did not exceed 3 years), and in addition (b) any period of absence throughout which the individual worked in an employment or office all the duties of which were performed outside the United Kingdom or lived with a spouse or civil partner who worked in such an employment or office, and in addition (c) any period of absence not exceeding 4 years (or periods of absence which together did not exceed 4 years) throughout which the individual was prevented from residing in the dwelling-house or part of the dwelling-house in consequence of the situation of his place of work or in consequence of any condition imposed by his employer requiring him to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of his duties, and in addition, (d) any period of absence not exceeding 4 years (or periods of absence which together did not exceed 4 years) throughout which the individual lived with a spouse or civil partner in respect of whom paragraph (c) applied in respect of that period (or periods), shall be treated as if in that period of absence the dwelling-house or the part of the dwelling-house were occupied by the individual as a residence if conditions A and B are met. (3A) Condition A is that before the period there was a time when the dwelling-house was the individual’s only or main residence. (3B) Condition B is that after the period— (a) in a case falling within paragraph (a), (b), (c) or (d) of subsection (3), there was a time when the dwelling-house was the individual’s only or main residence, (b) in a case falling within paragraph (b), (c) or (d) of that subsection, the individual was prevented from resuming residence in the dwelling-house in consequence of the situation of the individual’s place of work or a condition imposed by the terms of the individual’s employment requiring the individual to reside elsewhere, being a condition reasonably imposed to secure the effective performance by the employee of his duties, or (c) in a case falling within paragraph (b), (c) or (d) of that subsection, the individual lived with a spouse or civil partner to whom paragraph (b) of this subsection applied. (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7) In this section “period of ownership”— (a) does not include any period before 31 March 1982, and (b) where the whole or part of the gain to which section 222 applies is a gain which is chargeable to capital gains tax because of section 1A(3)(b), does not include any period before 6 April 2015 (but see subsection (7A)). (7A) Paragraph (b) of the definition of “period of ownership” does not apply in a case where paragraph 8 or 14 of Schedule 4AA applies (the individual has made an election for the retrospective basis of computation to apply). (7B) In this section “period of absence” means a period during which the dwelling-house or the part of the dwelling-house was not occupied by the individual as a residence. (8) This section is subject to— (a) section 224 (amount of relief: further provisions), (aa) section 225D (private residence of adult placement carer), ... (ab) section 225E (disposals by disabled persons or persons in care homes etc), and (b) section 226A (private residence relief: cases where relief obtained under section 260).

223ZA Amount of relief: individual’s residency delayed by certain events

(1) Subsection (4) below applies where— (a) a gain to which section 222 applies accrues to an individual on the disposal of, or of an interest in, a dwelling-house or part of a dwelling-house, (b) the time at which the dwelling-house or the part of the dwelling-house first became the individual’s only or main residence (“the moving-in time”) was within the first 24 months of the individual’s period of ownership, (c) at no time during the period beginning with the individual’s period of ownership and ending with the moving-in time was the dwelling-house or the part of the dwelling-house another person’s residence, and (d) during the period beginning with the individual’s period of ownership and ending with the moving-in time a qualifying event occurred. (2) The following are qualifying events— (a) the completion of the construction, renovation, redecoration or alteration of the dwelling-house or the part of the dwelling-house mentioned in subsection (1); (b) the disposal by the individual of, or of an interest in, any other dwelling-house or part of a dwelling-house that immediately before the disposal was the individual’s only or main residence. (3) In determining whether and, if so, when a qualifying event within subsection (2)(b) occurred, ignore section 28 (time of disposal where asset disposed of under contract). (4) For the purposes of subsections (1) and (2) of section 223, as they have effect in relation to the gain, the dwelling-house or the part of the dwelling-house mentioned in subsection (1) above is to be treated as having been the individual’s only or main residence from the beginning of the individual’s period of ownership until the moving-in time.

223A Amount of relief: non-resident CGT disposals

(1) This section applies where— (a) the individual mentioned in section 223(1) (“P”) acquired the asset to which the gain mentioned in section 222(1) is attributable before 6 April 2015, and (b) P's period of ownership for the purposes of section 223 begins on that date because of section 223(7)(b). (2) Times before 6 April 2015 are to be ignored in determining whether or not condition A in section 223 is met in relation to a period of absence, unless P elects that this subsection is not to apply in relation to the period. (3) An election under subsection (2)— (a) must specify which day before 6 April 2015 P relies on in relation to the period of absence for the purpose of meeting condition A in section 223, and (b) must be made in the return under Schedule 2 to the Finance Act 2019 in respect of the disposal. (4) Where P has made an election under subsection (2), section 223 applies as if relevant prior periods of absence counted against the maximum periods (and maximum aggregate periods) specified in subsection (3)(a), (c) and (d) of that section. (5) In relation to a maximum period (or maximum aggregate period) specified in paragraph (a), (c) or (d) of section 223(3), “relevant prior period of absence” means a period of absence which would have counted against that maximum period (or maximum aggregate period) if the bridge period were included in the period of ownership. (6) In subsection (5) “the bridge period” means the period beginning with the day specified in the election and ending with 5 April 2015. (7) In this section “period of absence” has the same meaning as in section 223.

223B Additional relief: part of private residence let out

(1) Where— (a) a gain to which section 222 applies accrues to an individual on the disposal of, or of an interest in, a dwelling-house or part of a dwelling-house, and (b) at any time in the individual’s period of ownership the condition in subsection (2) is met in respect of the dwelling-house, the part of the gain that is within subsection (3) is a chargeable gain only to the extent, if any, to which it exceeds the amount in subsection (4). (2) The condition is that— (a) part of the dwelling-house is the individual’s only or main residence, and (b) another part of the dwelling-house is being let out by the individual as residential accommodation. (3) The part of the gain that is within this subsection is the part that (but for subsection (1)) would be a chargeable gain by reason of the fact that, at the times in the individual’s period of ownership when the condition in subsection (2) is met, the individual’s only or main residence does not include the part of the dwelling-house that is being let out as residential accommodation. (4) The amount is whichever is the lesser of— (a) the amount of the gain that is not a chargeable gain by virtue of section 223, and (b) £40,000. (5) Where by reason of section 222(7)(a) the individual’s period of ownership mentioned in subsection (1) begins with the beginning of the period of ownership of another person, any question whether the condition in subsection (2) is met at a time that is within both those periods of ownership is to be determined as if the references in subsection (2) to the individual were to that other person.

224 Relief under sections 223 and 223B: further provisions.

(1) If a gain to which section 222 applies accrues on the disposal of a dwelling-house or part of a dwelling-house part of which is used exclusively for the purpose of a trade or business, or of a profession or vocation, the gain shall be apportioned and sections 223 and 223B shall apply in relation to the part of the gain apportioned to the part which is not exclusively used for those purposes. (2) If at any time in the period of ownership there is a change in what is occupied as the individual’s residence, whether on account of a reconstruction or conversion of a building or for any other reason, or there have been changes as regards the use of part of the dwelling-house for the purpose of a trade or business, or of a profession or vocation, or for any other purpose, the relief given by sections 223 and 223B may be adjusted in a manner which is just and reasonable. (3) Sections 223 and 223B shall not apply in relation to a gain if the acquisition of, or of the interest in, the dwelling-house or the part of a dwelling-house was made wholly or partly for the purpose of realising a gain from the disposal of it, and shall not apply in relation to a gain so far as attributable to any expenditure which was incurred after the beginning of the period of ownership and was incurred wholly or partly for the purpose of realising a gain from the disposal. (4) This section is subject to section 225D (private residence of adult placement carer).