53 The indexation allowance and interpretative provisions.
(1) Subject to any provision to the contrary, if on the disposal of an asset there is an unindexed gain, an allowance (“the indexation allowance”) shall be allowed against the unindexed gain—
(a) so as to give the gain for the purposes of this Act, or
(b) if the indexation allowance equals or exceeds the unindexed gain, so as to extinguish it (in which case the disposal shall be one on which, after taking account of the indexation allowance, neither a gain nor a loss accrues);
and any reference in this Act to an indexation allowance or to the making of an indexation allowance shall be construed accordingly.
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1B) Indexation allowance is not allowed in respect of changes shown by the retail prices indices for months after December 2017.
(2) For the purposes of this Chapter, in relation to any disposal of an asset—
(a) “unindexed gain” means the amount of the gain on the disposal computed in accordance with this Part; and
(b) “relevant allowable expenditure” means, subject to subsection (3) below, any sum which, in the computation of the unindexed gain was taken into account by virtue of paragraph (a) or paragraph (b) of section 38(1).
(2A) Notwithstanding anything in section 16 of this Act, this section shall not apply to a disposal on which a loss accrues.
(3) In determining what sum (if any) was taken into account as mentioned in subsection (2)(b) above, account shall be taken of any provision of any enactment which, for the purpose of the computation of the gain, increases, excludes or reduces the whole or any part of any item of expenditure falling within section 38 or provides for it to be written-down.
(4) Sections 54 and 108 and this section have effect subject to sections 56, 57, 109, 110 ... , 113, 131 and 145.
(1) Subject to any provision to the contrary, the indexation allowance is the aggregate of the indexed rise in each item of relevant allowable expenditure; and, in relation to any such item of expenditure, the indexed rise is a sum produced by multiplying the amount of that item by a figure expressed as a decimal and determined, subject to subsections (2) and (3) below, by the formula—
(
RD
-
RI
)
RI
where—
RD is the retail prices index for December 2017; and
RI is the retail prices index for March 1982 or the month in which the expenditure was incurred, whichever is the later.
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1B) The references in subsection (1) to an item of allowable expenditure do not include any item of expenditure incurred on or after 1 January 2018.
(2) If, in relation to any item of expenditure—
(a) the expenditure is attributable to the acquisition of relevant securities, within the meaning of section 108, which are disposed of within the period of 10 days beginning on the day on which the expenditure was incurred, or
(b) RD, as defined in subsection (1) above, is equal to or less than RI, as so defined,
the indexed rise in that item is nil.
(3) If, in relation to any item of expenditure, the figure determined in accordance with the formula in subsection (1) above would, apart from this subsection, be a figure having more than 3 decimal places, it shall be rounded to the nearest third decimal place.
(4) For the purposes of this section—
(a) relevant allowable expenditure falling within paragraph (a) of subsection (1) of section 38 shall be assumed to have been incurred at the time when the asset in question was acquired or provided; and
(b) relevant allowable expenditure falling within paragraph (b) of that subsection shall be assumed to have been incurred at the time when that expenditure became due and payable.
55 Assets owned on 31st March 1982 or acquired on a no gain/no loss disposal.
(1) For the purpose of computing the indexation allowance on a disposal of an asset where, on 31st March 1982, the asset was held by the person making the disposal, it shall be assumed that on that date the asset was sold by the person making the disposal and immediately reacquired by him at its market value on that date.
(2) Except where an election under section 35(5) has effect, neither subsection (1) above nor section 35(2) shall apply for the purpose of computing the indexation allowance in a case where that allowance would be greater if they did not apply.
(3) If under subsection (1) above it is to be assumed that any asset was on 31st March 1982 sold by the person making the disposal and immediately reacquired by him, sections 41 and 47 shall apply in relation to any capital allowance or renewals allowance made in respect of the expenditure actually incurred by him in providing the asset as if it were made in respect of expenditure which, on that assumption, was incurred by him in reacquiring the asset on 31st March 1982.
(4) Where, after 31st March 1982, an asset which was held on that date has been merged or divided or has changed its nature or rights in or over the asset have been created, then, subject to subsection (2) above, subsection (1) above shall have effect to determine for the purposes of section 43 the amount of the consideration for the acquisition of the asset which was so held.
(5) Subsection (6) below applies to a disposal of an asset which is not a no gain/no loss disposal if—
(a) the person making the disposal acquired the asset after 31st March 1982; and
(b) the disposal by which he acquired the asset and any previous disposal of the asset after 31st March 1982 was a no gain/no loss disposal;
and for the purposes of this subsection a no gain/no loss disposal is one on which, by virtue of section 257(2) or 259(2) or any of the no gain/no loss provisions, neither a gain nor a loss accrues (or accrued) to the person making the disposal.
(5A) For the purposes of subsection (5), a disposal is also a no gain/no loss disposal if it is one on which, by virtue of section 195B, 195C or 195E, neither a gain nor a loss accrues to the person making the disposal; but, in such a case, subsection (6)(b) below does not apply.
(6) Where this subsection applies to a disposal of an asset—
(a) the person making the disposal shall be treated for the purpose of computing the indexation allowance on the disposal as having held the asset on 31st March 1982; ...
(aa) in the case of a disposal to which paragraph 1A of Schedule 3 applies (certain holdings of shares or securities), the market value of the asset on that date is to be determined in accordance with that paragraph; and
(b) for the purpose of determining any gain or loss on the disposal, the consideration which, apart from this subsection, that person would be treated as having given for the asset shall be taken to be reduced by deducting therefrom any indexation allowance brought into account by virtue of section 56(2) on any disposal falling within subsection (5)(b) above.
(7) The rules in subsection (8) below apply (after the application of section 53 but before the application of section 35(3) or (4)) to give the gain or loss for the purposes of this Act where—
(a) subsection (6) above applies to the disposal (the “disposal in question”) of an asset by any person (the “transferor”), and
(b) but for paragraph (b) of that subsection, the consideration the transferor would be treated as having given for the asset would include an amount or amounts of indexation allowance brought into account by virtue of section 56(2) on any disposal made before 30th November 1993.
(8) The rules are as follows—
(a) where (apart from this subsection) there would be a loss, an amount equal to the rolled-up indexation shall be added to it so as to increase it,
(b) where (apart from this subsection) the unindexed gain or loss would be nil, there shall be a loss of an amount equal to the rolled-up indexation, and
(c) where (apart from this subsection)—
(i) there would be an unindexed gain, and
(ii) the gain or loss would be nil but the amount of the indexation allowance used to extinguish the gain would be less than the rolled-up indexation,
the difference shall constitute a loss.
(9) In this section the “rolled-up indexation” means, subject to subsections (10) and (11) below, the amount or, as the case may be, the aggregate of the amounts referred to in subsection (7)(b) above; and subsections (10) and (11) below shall, as well as applying on the disposal in question, be treated as having applied on any previous part disposal by the transferor.
(10) Where, for the purposes of any disposal of the asset by the transferor, any amount falling within any, or any combination of, paragraphs (a) to (c) of section 38(1) is required by any enactment to be excluded, reduced or written down, the amount or aggregate referred to in subsection (9) above (or so much of it as remains after the application of this subsection and subsection (11) below on a previous part disposal) shall be reduced in proportion to any reduction made in the amount falling within the paragraph, or the combination of paragraphs, in question.
(11) Where the transferor makes a part disposal of the asset at any time, then, for the purposes of that and any subsequent disposal, the amount or aggregate referred to in subsection (9) above (or so much of it as remains after the application of this subsection and subsection (10) above on a previous part disposal by him or after the application of subsection (10) above on the part disposal) shall be apportioned between the property disposed of and the property which remains in the same proportions as the sums falling within section 38(1)(a) and (b).
56 Part disposals and disposals on a no-gain/no-loss basis.
(1) For the purpose of determining the indexation allowance (if any) on the occasion of a part disposal of an asset, the apportionment under section 42 of the sums which make up the relevant allowable expenditure shall be effected before the application of section 54 and, accordingly, in relation to a part disposal—
(a) references in section 54 to an item of expenditure shall be construed as references to that part of that item which is so apportioned for the purposes of the computation of the unindexed gain ... on the part disposal; and
(b) no indexation allowance shall be determined by reference to the part of each item of relevant allowable expenditure which is apportioned to the property which remains undisposed of.
(2) On a no gain/no loss disposal by any person (“the transferor”)—
(a) the amount of the consideration shall be calculated for the purposes of this Act on the assumption that, on the disposal, an unindexed gain accrues to the transferor which is equal to the indexation allowance on the disposal, and
(b) the disposal shall accordingly be one on which, after taking account of the indexation allowance, neither a gain nor a loss accrues;
and for the purposes of the application of sections 53 and 54 there shall be disregarded so much of any enactment as provides that, on the subsequent disposal of the asset by the person acquiring the asset on the disposal (“the transferee”), the transferor’s acquisition of the asset is to be treated as the transferee’s acquisition of it.
(3) Where apart from this subsection—
(a) a loss would accrue on the disposal of an asset, and
(b) the sums allowable as a deduction in computing that loss would include an amount attributable to the application of the assumption in subsection (2) above on any no gain/no loss disposal made on or after 30th November 1993,
those sums shall be determined as if that subsection had not applied on any such disposal made on or after that date and the loss shall be reduced accordingly or, if those sums are then equal to or less than the consideration for the disposal, the disposal shall be one on which neither a gain nor a loss accrues.
(4) For the purposes of this section a no gain/no loss disposal is one which, by virtue of any enactment other than section 35(4), 53(1) or this section, is treated as a disposal on which neither a gain nor a loss accrues to the person making the disposal.
57 Receipts etc. which are not treated as disposals but affect relevant allowable expenditure.
(1) This section applies where, in determining the relevant allowable expenditure in relation to a disposal of an asset, account is required to be taken, as mentioned in section 53(3), of any provision of any enactment which, by reference to a relevant event, reduces the whole or any part of an item of expenditure as mentioned in that subsection.
(2) For the purpose of determining, in a case where this section applies, the indexation allowance (if any) to which the person making the disposal is entitled, no account shall in the first instance be taken of the provision referred to in subsection (1) above in calculating the indexed rise in the item of expenditure to which that provision applies but, from that indexed rise as so calculated, there shall be deducted a sum equal to the indexed rise (determined as for the purposes of the actual disposal) in a notional item of expenditure which—
(a) is equal to the amount of the reduction effected by the provision concerned; and
(b) was incurred on the date of the relevant event referred to in subsection (1) above.
(3) In this section “relevant event” means any event which does not fall to be treated as a disposal for the purposes of this Act.
(1A) If an individual (“A”) disposes of an asset to another individual (“B”) in circumstances where any of subsections (1B) to (1D) applies, A and B are to be treated as if B acquired the asset from A for a consideration of such amount as would secure that on the disposal neither a gain nor a loss would accrue to A.
(1B) This subsection applies where the disposal is made while A and B—
(a) are married to, or are civil partners of, each other, and
(b) are living together.
(1C) This subsection applies where the disposal is made—
(a) while A and B are married to, or are civil partners of, each other,
(b) at a time when A and B have ceased to live together, and
(c) on or before the earlier of—
(i) the last day of the third tax year after the tax year in which A and B ceased to live together, or
(ii) the day on which a court grants an order or decree for A and B’s divorce, the annulment of their marriage, the dissolution or annulment of their civil partnership, their judicial separation or, as the case may be, their separation in accordance with a separation order.
(1D) This subsection applies where—
(a) A and B have ceased to be, or are in the process of ceasing to be, married to, or civil partners of, each other, and
(b) the disposal of the asset is in accordance with an agreement or order within subsection (2)(a) or (b) of section 225B (disposals in connection with divorce etc), but as if, in subsection (2)(a), after “partner” there were inserted “, or former spouse or civil partner,”.
(2) This section shall not apply—
(a) if until the disposal the asset formed part of trading stock of a trade carried on by the one making the disposal, or if the asset is acquired as trading stock for the purposes of a trade carried on by the one acquiring the asset, ... or
(b) if the disposal is by way of donatio mortis causa, ...
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
but this section shall have effect notwithstanding the provisions of section 18 or 161, or of any other provisions of this Act fixing the amount of the consideration deemed to be given on a disposal or acquisition.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Where 2 or more persons carry on a trade or business in partnership—
(a) tax in respect of chargeable gains accruing to them on the disposal of any partnership assets shall, in Scotland as well as elsewhere in the United Kingdom, be assessed and charged on them separately, and
(b) any partnership dealings shall be treated as dealings by the partners and not by the firm as such, ...
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Subsection (3) applies if—
(a) a person resident in the United Kingdom (“the resident partner”) is a member of a partnership which resides outside the United Kingdom or which carries on any trade, profession or business the control and management of which is situated outside the United Kingdom, and
(b) by virtue of any arrangements that have effect under section 2(1) of TIOPA 2010 (“the arrangements”) any of the chargeable gains of the partnership are relieved from capital gains tax or corporation tax in the United Kingdom.
(3) The arrangements (so far as providing for that relief) do not affect any liability to capital gains tax or corporation tax in respect of the resident partner's share of any chargeable gains of the partnership.
(4) For the purposes of subsections (2) and (3) the members of a partnership include any person entitled to a share of chargeable gains of the partnership.
(1) Where a limited liability partnership carries on a trade or business with a view to profit—
(a) assets held by the limited liability partnership are treated for the purposes of tax in respect of chargeable gains as held by its members as partners, and
(b) any dealings by the limited liability partnership are treated for those purposes as dealings by its members in partnership (and not by the limited liability partnership as such);
and tax in respect of chargeable gains accruing to the members of the limited liability partnership on the disposal of any of its assets shall be assessed and charged on them separately.
(2) For all purposes, except as otherwise provided, in the enactments relating to tax in respect of chargeable gains—
(a) references to a partnership include a limited liability partnership in relation to which subsection (1) above applies,
(b) references to members of a partnership include members of such a limited liability partnership,
(c) references to a company do not include such a limited liability partnership, and
(d) references to members of a company do not include members of such a limited liability partnership.
(3) Subsection (1) above continues to apply in relation to a limited liability partnership which no longer carries on any trade or business with a view to profit—
(a) if the cessation is only temporary, or
(b) during a period of winding up following a permanent cessation, provided—
(i) the winding up is not for reasons connected in whole or in part with the avoidance of tax, and
(ii) the period of winding up is not unreasonably prolonged,
but subject to subsection (4) below.
(4) Subsection (1) above ceases to apply in relation to a limited liability partnership—
(a) on the appointment of a liquidator or (if earlier) the making of a winding-up order by the court, or
(b) on the occurrence of any event under the law of a country or territory outside the United Kingdom corresponding to an event specified in paragraph (a) above.
(5) Where subsection (1) above ceases to apply in relation to a limited liability partnership with the effect that tax is assessed and charged—
(a) on the limited liability partnership (as a company) in respect of chargeable gains accruing on the disposal of any of its assets, and
(b) on the members in respect of chargeable gains accruing on the disposal of any of their capital interests in the limited liability partnership,
it shall be assessed and charged on the limited liability partnership as if subsection (1) above had never applied in relation to it.
(6) Neither the commencement of the application of subsection (1) above nor the cessation of its application in relation to a limited liability partnership shall be taken as giving rise to the disposal of any assets by it or any of its members.
(1) This section applies where—
(a) a member of a limited liability partnership (the “LLP”) contributed an asset to the LLP in circumstances where section 59A(1) applied in relation to the LLP, and
(b) the LLP disposes of the asset, or part of the asset, to the member, or a person connected with the member, in circumstances where section 59A(1) has ceased to apply in relation to the LLP.
(2) The asset is deemed to have been disposed of and reacquired by the member—
(a) immediately before it was contributed to the LLP, and
(b) for a consideration equal to its market value at that time.
(3) But—
(a) any chargeable gain or allowable loss accruing under subsection (2) is to be treated as accruing at the time the asset, or part of the asset, is disposed of by the LLP (as described in subsection (1)(b)), and
(b) for the purposes of Schedule 2 to the Finance Act 2019 (returns for disposals of UK land), the disposal under subsection (2) is to be treated as completed at that time.
(4) Any chargeable gain accruing on the deemed disposal is to be reduced by an amount that is just and reasonable, having regard to any chargeable gain that has otherwise accrued to the member by reference to the asset or part of the asset.
(1) Subsection (2) applies if—
(a) under section 863I of ITTOIA 2005, a partner (“P”) in a partnership allocates to the partnership an amount of profit (“the allocated profit”) representing variable remuneration which, if it vests in P, will vest in the form of instruments,
(b) there is a disposal to P of instruments which are partnership assets of the partnership for the purposes of section 59, and
(c) by virtue of that disposal the variable remuneration vests in P.
(2) Both the persons making the disposal and P are to be treated as if the instruments were acquired by P from those persons for a consideration of an amount equal to the allocated profit net of the income tax for which the partnership is liable by virtue of section 863I of ITTOIA 2005 in respect of the allocated profit.
(3) Terms used in this section which are also used in section 863I or 863J of ITTOIA 2005 have the same meaning as in that section.
(1) Subsection (2) applies if—
(a) under section 863I of ITTOIA 2005, a partner (“P”) in a partnership allocates to the partnership an amount of profit (“the allocated profit”) representing variable remuneration which, if it vests in P, will vest in the form of instruments,
(b) there is a disposal to P of instruments by a company which is a partner in the partnership,
(c) by virtue of that disposal the variable remuneration vests in P, and
(d) the company would, as a partner in the partnership, have been charged to tax on the allocated profit but for adjustments made in the case of the company under section 1264A(2) of CTA 2009 or section 850C(5) of ITTOIA 2005.
(2) Both the company and P are to be treated as if the instruments were acquired by P from the company for a consideration of an amount equal to the allocated profit net of the income tax for which the partnership is liable by virtue of section 863I of ITTOIA 2005 in respect of the allocated profit.
(3) Terms used in this section which are also used in section 863I or 863J of ITTOIA 2005 have the same meaning as in that section.
(1) In relation to property held by a person as nominee for another person, or as trustee for another person absolutely entitled as against the trustee, or for any person who would be so entitled but for being an infant or other person under disability (or for 2 or more persons who are or would be jointly so entitled), this Act shall apply as if the property were vested in, and the acts of the nominee or trustee in relation to the property were the acts of, the person or persons for whom he is the nominee or trustee (acquisitions from or disposals to him by that person or persons being disregarded accordingly).
(2) It is hereby declared that references in this Act to any property held by a person as trustee for another person absolutely entitled as against the trustee are references to a case where that other person has the exclusive right, subject only to satisfying any outstanding charge, lien or other right of the trustees to resort to the property for payment of duty, taxes, costs or other outgoings, to direct how that property shall be dealt with.
(1) For the purposes of section 60, funds in court held by the Accountant General shall be regarded as held by him as nominee for the persons entitled to or interested in the funds, or as the case may be for their trustees.
(2) Where funds in court standing to an account are invested or, after investment, are realised, the method by which the Accountant General effects the investment or the realisation of investments shall not affect the question whether there is for the purposes of this Act an acquisition, or as the case may be a disposal, of an asset representing funds in court standing to the account, and in particular there shall for those purposes be an acquisition or disposal of shares in a court investment fund notwithstanding that the investment in such shares of funds in court standing to an account, or the realisation of funds which have been so invested, is effected by setting off, in the Accountant General’s accounts, investment in one account against realisation of investments in another.
(3) In this section “funds in court” means—
(a) money in the Senior Courts, money in the county court, money in the family court and statutory deposits described in section 40 of the Administration of Justice Act 1982, and
(b) money in the Court of Judicature and money in a county court in Northern Ireland,
and investments representing such money; and references in this section to the Accountant General are references to the Accountant General of the Senior Courts and, in relation to money within paragraph (b) above and investments representing such money, include references to the Accountant General of the Court of Judicature or any other person by whom such funds are held.
(1) For the purposes of this Act the assets of which a deceased person was competent to dispose—
(a) shall be deemed to be acquired on his death by the personal representatives or other person on whom they devolve for a consideration equal to their market value at the date of the death, but
(b) shall not be deemed to be disposed of by him on his death (whether or not they were the subject of a testamentary disposition).
(2) Allowable losses sustained by an individual in the year of assessment in which he dies may, so far as they cannot be deducted from chargeable gains accruing in that year, be deducted from chargeable gains accruing to the deceased in the 3 years of assessment preceding the year of assessment in which the death occurs, taking chargeable gains accruing in a later year before those accruing in an earlier year.
(2A) Amounts deductible from chargeable gains for any year in accordance with subsection (2) above shall not be so deductible from any such gains so far as they are—
(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) relevant non-resident gains (see subsection (11)).
(2AA) Where relevant non-resident losses (see subsection (11)) are sustained by an individual in the year of assessment in which the individual dies, the losses may, so far as they cannot be deducted from chargeable gains accruing to the individual in that year, be deducted from any gains such as are mentioned in subsection (2A)(b) that accrued to the deceased in the 3 years of assessment preceding the year of assessment in which the death occurs, taking chargeable gains accruing in a later year before those accruing in an earlier year.
(2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) In relation to property forming part of the estate of a deceased person the personal representatives shall for the purposes of this Act be treated as being a single and continuing body of persons (distinct from the persons who may from time to time be the personal representatives), and that body shall be treated as UK resident if the deceased was UK resident ... at the date of death.
(4) On a person acquiring any asset as legatee (as defined in section 64)—
(a) no chargeable gain shall accrue to the personal representatives, and
(b) the legatee shall be treated as if the personal representatives’ acquisition of the asset had been his acquisition of it.
(4A) The Treasury may by regulations make provision having effect in place of subsection (4)(b) above in a case where there has been a time when the personal representatives—
(a) held the asset acquired by the legatee, and
(b) would, if they had disposed of the asset at that time—
(i) by way of a bargain at arm's length, and
(ii) otherwise than to a legatee,
have been entitled as a result of regulations under section 151 (investments under plans) to relief from capital gains tax in respect of any chargeable gain accruing on the disposal.
(4B) Provision made by regulations under subsection (4A) above may (in particular) treat a person who acquires an asset as legatee as doing so at a time or for a consideration, or at a time and for a consideration, ascertained as specified by the regulations.
(5) Notwithstanding section 17(1) no chargeable gain shall accrue to any person on his making a disposal by way of donatio mortis causa.
(6) Subject to subsections (7) and (8) below, where within the period of 2 years after a person’s death any of the dispositions (whether effected by will, under the law relating to intestacy or otherwise) of the property of which he was competent to dispose are varied, or the benefit conferred by any of those dispositions is disclaimed, by an instrument in writing made by the persons or any of the persons who benefit or would benefit under the dispositions—
(a) the variation or disclaimer shall not constitute a disposal for the purposes of this Act, and
(b) this section shall apply as if the variation had been effected by the deceased or, as the case may be, the disclaimed benefit had never been conferred.
(7) Subsection (6) above does not apply to a variation unless the instrument contains a statement by the persons making the instrument to the effect that they intend the subsection to apply to the variation.
(8) Subsection (6) above does not apply to a variation or disclaimer made for any consideration in money or money’s worth other than consideration consisting of the making of a variation or disclaimer in respect of another of the dispositions.
(9) Subsection (6) above applies whether or not the administration of the estate is complete or the property has been distributed in accordance with the original dispositions.
(10) In this section references to assets of which a deceased person was competent to dispose are references to assets of the deceased which (otherwise than in right of a power of appointment or of the testamentary power conferred by statute to dispose of entailed interests) he could, if of full age and capacity, have disposed of by his will, assuming that all the assets were situated in England and, if he was not domiciled in the United Kingdom, that he was domiciled in England, and include references to his severable share in any assets to which, immediately before his death, he was beneficially entitled as a joint tenant.
(11) In this section—
“relevant non-resident gain” means—
a gain that falls to be dealt with by section 1A(3) because the asset disposed of is within paragraph (b) or (c) of that subsection, or
a gain that falls to be dealt with by section 1A(1) in accordance with section 1G(2) because the asset disposed of is within section 1A(3)(b) or (c), and
“relevant non-resident loss” means an allowable loss accruing on a disposal which, had a gain accrued instead, would have been a relevant non-resident gain.
(1) The provisions of this Act, so far as relating to the consequences of the death of ... a proper liferenter of any property, shall have effect subject to the provisions of this section.
(2) ... on the death of any such ... liferenter ... the person (if any) who, on the death of the liferenter, becomes entitled to possession of the property as fiar shall be deemed to have acquired all the assets forming part of the property at the date of the deceased’s death for a consideration equal to their market value at that date.
(1) The provisions of this Act, so far as relating to the consequences of the death of a person to whom property in Northern Ireland stands limited for life (“the deceased”), shall have effect subject to the provisions of this section.
(2) A person who acquires property in fee simple absolute or fee tail in possession as a consequence of the deceased's death shall be deemed to have acquired all the assets forming part of the property at the date of the deceased's death for a consideration equal to their market value at that date.
64 Expenses in administration of estates and trusts.
(1) In the case of a gain accruing to a person on the disposal of, or of a right or interest in or over, an asset held by another person as trustee, or as a personal representative of a deceased person, to which he became absolutely entitled as legatee or as against the trustee—
(a) any expenditure within section 38(2) incurred by him in relation to the transfer of the asset to him by the personal representative or trustee, and
(b) any such expenditure incurred in relation to the transfer of the asset by the personal representative or trustee,
shall be allowable as a deduction in the computation of the gain accruing to that person on the disposal.
(2) In this Act, unless the context otherwise requires, “legatee” includes any person taking under a testamentary disposition or on an intestacy or partial intestacy, whether he takes beneficially or as trustee, and a person taking under a donatio mortis causa shall be treated (except for the purposes of section 62) as a legatee and his acquisition as made at the time of the donor’s death.
(3) For the purposes of the definition of “legatee” above, and of any reference in this Act to a person acquiring an asset “as legatee”, property taken under a testamentary disposition or on an intestacy or partial intestacy includes any asset appropriated by the personal representatives in or towards satisfaction of a pecuniary legacy or any other interest or share in the property devolving under the disposition or intestacy.
65 Liability for tax of trustees or personal representatives.
(1) Subject to subsection (3) below, capital gains tax chargeable in respect of chargeable gains accruing to the trustees of a settlement or capital gains tax due from the personal representatives of a deceased person may be assessed and charged on and in the name of any one or more of the relevant trustees or the relevant personal representatives.
(2) Subject to section 60 and any other express provision to the contrary, chargeable gains accruing to the trustees of a settlement or to the personal representatives of a deceased person, and capital gains tax chargeable on or in the name of such trustees or personal representatives, shall not be regarded for the purposes of this Act as accruing to, or chargeable on, any other person, nor shall any trustee or personal representative be regarded for the purposes of this Act as an individual.
(3) Where section 80 applies as regards the trustees of a settlement (“the migrating trustees”), nothing in subsection (1) above shall enable any person—
(a) who ceased to be a trustee of the settlement before the end of the relevant period, and
(b) who shows that, when he ceased to be a trustee of the settlement, there was no proposal that the trustees might cease to be resident in the United Kingdom,
to be assessed and charged to any capital gains tax which is payable by the migrating trustees by virtue of section 80(2).
(4) In this section—
“the relevant period” has the same meaning as in section 82;
“the relevant trustees”, in relation to any chargeable gains, means the trustees in the year of assessment in which the chargeable gains accrue and any subsequent trustees of the settlement, and “the relevant personal representatives” has a corresponding meaning.
(1) In relation to assets held by a person as trustee or assignee in bankruptcy or under a deed of arrangement this Act shall apply as if the assets were vested in, and the acts of the trustee or assignee in relation to the assets were the acts of, the bankrupt or debtor (acquisitions from or disposals to him by the bankrupt or debtor being disregarded accordingly), and tax in respect of any chargeable gains which accrue to any such trustee or assignee shall be assessable on and recoverable from him.
(2) Assets held by a trustee or assignee in bankruptcy or under a deed of arrangement at the death of the bankrupt or debtor shall for the purposes of this Act be regarded as held by a personal representative of the deceased and—
(a) subsection (1) above shall not apply after the death, and
(b) section 62(1) shall apply as if any assets held by a trustee or assignee in bankruptcy or under a deed of arrangement at the death of the bankrupt or debtor were assets of which the deceased was competent to dispose and which then devolved on the trustee or assignee as if he were a personal representative.
(3) Assets vesting in a trustee in bankruptcy after the death of the bankrupt or debtor shall for the purposes of this Act be regarded as held by a personal representative of the deceased, and subsection (1) above shall not apply.
(4) The definition of “settled property” in section 68 shall not include any property as being property held by a trustee or assignee in bankruptcy or under a deed of arrangement.
(5) In this section—
“deed of arrangement” means a deed of arrangement to which an enactment forming part of the law of Scotland or Northern Ireland which corresponds to the Deeds of Arrangement Act 1914 applies, and
“trustee in bankruptcy” includes a trustee in a sequestration under the Bankruptcy (Scotland) Act 2016.
67 Provisions applicable where section 79 of the Finance Act 1980 has applied.
(1) In this section “a claim” means a claim under section 79 of the Finance Act 1980 (“section 79”) and “relief” means relief under that section (which provided general relief for gifts).
(2) Where a disposal in respect of which a claim is or has been made is or proves to be a chargeable transfer for inheritance tax purposes, there shall be allowed as a deduction in computing (for capital gains tax purposes) the chargeable gain accruing to the transferee on the disposal of the asset in question an amount equal to whichever is the lesser of—
(a) the inheritance tax attributable to the value of the asset; and
(b) the amount of the chargeable gain as computed apart from this subsection;
and in the case of a disposal which, being a potentially exempt transfer, proves to be a chargeable transfer, all necessary adjustments shall be made, whether by the discharge or repayment of capital gains tax or otherwise.
(3) Where an amount of inheritance tax—
(a) falls to be redetermined in consequence of the transferor’s death within 7 years of making the chargeable transfer in question; or
(b) is otherwise varied,
after it has been taken into account under subsection (2) above (or under section 79(5)), all necessary adjustments shall be made, whether by the making of an assessment to capital gains tax or by the discharge or repayment of such tax.
(4) Where—
(a) a claim for relief has been made in respect of the disposal of an asset to a trustee, and
(b) the trustee is deemed to have disposed of the asset, or part of it, by virtue of section 71(1) or 72(1)(a),
sections 72(1)(b) and 73(1)(a) shall not apply to the disposal of the asset, or part by the trustee, but any chargeable gain accruing to the trustee on the disposal shall be restricted to the amount of the held-over gain (or a corresponding part of it) on the disposal of the asset to him.
(5) Subsection (4) above shall not have effect in a case within section 73(2) but in such a case the reduction provided for by section 73(2) shall be diminished by an amount equal to the proportion there mentioned of the held-over gain.
(6) Section 168 shall apply where relief has been given—
(a) with the substitution for subsection (1) of the following—
(1) If—
(a) relief has been given under section 79 of the Finance Act 1980 in respect of a disposal made after 5th April 1981 to an individual (“the relevant disposal”); and
(b) at a time when he has not disposed of the asset in question, the transferee ceases to be resident in the United Kingdom,
then, subject to the following provisions of this section, a chargeable gain shall be deemed to have accrued to the transferee immediately before that time, and its amount shall be equal to the held-over gain (within the meaning of section 67) on the relevant disposal.
; and
(b) with the substitution in subsections (2), (6) and (10) for the references to section 165(4)(b) of references to section 79(1)(b).
(7) In this section “held-over gain”, in relation to a disposal, means the chargeable gain which would have accrued on that disposal apart from section 79, reduced where applicable in accordance with subsection (3) of that section, and references to inheritance tax include references to capital transfer tax.
In this Act, unless the context otherwise requires, “settled property” means any property held in trust other than property to which section 60 applies (and references, however expressed, to property comprised in a settlement are references to settled property).
(1) In this Act, unless the context otherwise requires—
(a) “settlor” in relation to a settlement means the person, or any of the persons, who has made, or is treated for the purposes of this Act as having made, the settlement, and
(b) a person is a settlor of property which—
(i) is settled property by reason of his having made the settlement (or by reason of an event which causes him to be treated under this Act as having made the settlement), or
(ii) derives from property to which sub-paragraph (i) applies.
(2) A person is treated for the purposes of this Act as having made a settlement if—
(a) he has made or entered into the settlement, directly or indirectly, or
(b) the settled property, or property from which the settled property is derived, is or includes property of which he was competent to dispose immediately before his death, and the settlement arose on his death, whether by will, on his intestacy, or otherwise.
(3) A person is, in particular, treated for the purposes of this Act as having made a settlement if—
(a) he has provided property directly or indirectly for the purposes of the settlement, or
(b) he has undertaken to provide property directly or indirectly for the purposes of the settlement.
(4) Where one person (A) makes or enters into a settlement in accordance with reciprocal arrangements with another person (B), for the purposes of this Act—
(a) B shall be treated as having made the settlement, and
(b) A shall not be treated as having made the settlement by reason only of the reciprocal arrangements.
(5) In subsection (2)(b) “property of which he was competent to dispose immediately before his death” shall be construed in accordance with section 62(10) (reading each reference to “assets” as a reference to “property”).
(6) A person who has been a settlor in relation to a settlement shall be treated for the purposes of this Act as having ceased to be a settlor in relation to the settlement if—
(a) no property of which he is a settlor is comprised in the settlement,
(b) he has not undertaken to provide property directly or indirectly for the purposes of the settlement in the future, and
(c) he has not made reciprocal arrangements with another person for that other person to enter into the settlement in the future.
(7) For the purpose of this section and sections 68B and 68C property is derived from other property—
(a) if it derives (directly or indirectly and wholly or partly) from that property or any part of it, and
(b) in particular, if it derives (directly or indirectly and wholly or partly) from income from that property or any part of it.
(8) In this section “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable.
68B Transfer between settlements: identification of settlor
(1) This section applies in relation to a transfer of property from the trustees of one settlement (“Settlement 1”) to the trustees of another (“Settlement 2”) otherwise than—
(a) for full consideration, or
(b) by way of a bargain made at arm's length.
(2) In this section “transfer of property” means—
(a) a disposal of property by the trustees of Settlement 1, and
(b) the acquisition by the trustees of Settlement 2 of—
(i) property disposed of by the trustees of Settlement 1, or
(ii) property created by the disposal;
and a reference to transferred property is a reference to property acquired by the trustees of Settlement 2 on the disposal.
(3) For the purposes of this Act, except where the context otherwise requires—
(a) the settlor (or each settlor) of the property disposed of by the trustees of Settlement 1 shall be treated from the time of the disposal as having made Settlement 2, and
(b) if there is more than one settlor of the property disposed of by the trustees of Settlement 1, each settlor shall be treated in relation to Settlement 2 as the settlor of a proportionate part of the transferred property.
(4) For the purposes of this Act, except where the context otherwise requires, if and to the extent that the property disposed of by the trustees of Settlement 1 was provided for the purposes of Settlement 1, or is derived from property provided for the purposes of Settlement 1, the transferred property shall be treated from the time of the disposal as having been provided for the purposes of Settlement 2.
(5) If transferred property is treated by virtue of subsection (4) as having been provided for the purposes of Settlement 2 —
(a) the person who provided the property disposed of by the trustees of Settlement 1, or property from which it was derived, for the purposes of Settlement 1 shall be treated as having provided the transferred property, and
(b) if more than one person provided the property disposed of by the trustees of Settlement 1, or property from which it was derived, for the purposes of Settlement 1, each of them shall be treated as having provided a proportionate part of the transferred property.
(6) But subsections (3) and (4) do not apply in relation to a transfer of property—
(a) which occurs by reason only of the assignment or assignation by a beneficiary under Settlement 1 of an interest in that settlement to the trustees of Settlement 2,
(b) which occurs by reason only of the exercise of a general power of appointment, or
(c) to which section 68C(6) applies.
(7) In determining whether this section applies in relation to a transfer of property between settlements, section 18(2) shall be disregarded.
68C Variation of will or intestacy, etc: identification of settlor
(1) This section applies where—
(a) a disposition of property following a person's death is varied, and
(b) section 62(6) applies in respect of the variation.
(2) Where property becomes settled property in consequence of the variation (and would not, but for the variation, have become settled property), a person mentioned in subsection (3) shall be treated for the purposes of this Act, except where the context otherwise requires—
(a) as having made the settlement, and
(b) as having provided the property for the purposes of the settlement.
(3) Those persons are—
(a) a person who immediately before the variation was entitled to the property, or to property from which it derives, absolutely as legatee,
(b) a person who would have become entitled to the property, or to property from which it derives, absolutely as legatee but for the variation,
(c) a person who immediately before the variation would have been entitled to the property, or to property from which it derives, absolutely as legatee but for being an infant or other person under a disability, and
(d) a person who would, but for the variation, have become entitled to the property, or to property from which it derives, absolutely as legatee if he had not been an infant or other person under a disability.
(4) In subsection (3) references to a person being entitled to property absolutely as legatee shall be construed in accordance with section 64(3) (reading the references to “an asset” and “any asset” as references to “property”).
(5) Where—
(a) property would have become comprised in a settlement—
(i) which arose on the deceased person's death (whether in accordance with his will, on his intestacy or otherwise), or
(ii) which was already in existence on the deceased person's death (whether or not the deceased person was a settlor in relation to that settlement), but
(b) in consequence of the variation the property, or property derived from it, becomes comprised in another settlement,
the deceased person shall be treated for the purposes of this Act, except where the context otherwise requires, as having made the other settlement.
(6) Where—
(a) immediately before the variation property is comprised in a settlement and is property of which the deceased person is a settlor, and
(b) immediately after the variation the property, or property derived from it, becomes comprised in another settlement,
the deceased person shall be treated for the purposes of this Act, except where the context otherwise requires, as having made the other settlement.
(7) If a person is treated as having made a settlement under subsection (5) or (6), for the purposes of this Act he shall be treated as having made the settlement immediately before his death.
(8) But subsection (7) does not apply in relation to a settlement which arose on the person's death.
(1) For the purposes of this Act the trustees of a settlement shall, unless the context otherwise requires, together be treated as if they were a single person (distinct from the persons who are trustees of the settlement from time to time).
(2) The deemed person referred to in subsection (1) shall be treated for the purposes of this Act as resident ... in the United Kingdom at any time when a condition in subsection (2A) or (2B) is satisfied.
(2A) Condition 1 is that all the trustees are resident in the United Kingdom.
(2B) Condition 2 is that—
(a) at least one trustee is resident in the United Kingdom,
(b) at least one is not resident in the United Kingdom, and
(c) a settlor in relation to the settlement was resident ... ... in the United Kingdom at a time which is a relevant time in relation to him.
(2C) In subsection (2B)(c) “relevant time” in relation to a settlor—
(a) means, where the settlement arose on the settlor's death (whether by will, intestacy or otherwise), the time immediately before his death, and
(b) in any other case, means a time when the settlor made the settlement (or was treated for the purposes of this Act as making the settlement);
and, in the case of a transfer of property from Settlement 1 to Settlement 2 in relation to which section 68B applies, “relevant time” in relation to a settlor of the transferred property in respect of Settlement 2 includes any time which, immediately before the time of the disposal by the trustees of Settlement 1, was a relevant time in relation to that settlor in respect of Settlement 1.
(2CA) In relation to a settlement—
(a) that arose before 6 April 2025 on the settlor’s death, or
(b) that the settlor made (or was treated for the purposes of this Act as making) before 6 April 2025,
subsection (2B)(c) has effect as if after “resident” there were inserted “or domiciled”.
(2D) A trustee who is not resident in the United Kingdom shall be treated for the purposes of subsections (2A) and (2B) as if he were resident in the United Kingdom at any time when he acts as trustee in the course of a business which he carries on in the United Kingdom through a branch, agency or permanent establishment there.
(2DA) A trustee who is resident in the United Kingdom for a tax year is to be treated for the purposes of subsections (2A) and (2B) as if he or she were not resident in the United Kingdom for that year if—
(a) the trustee is an individual,
(b) the individual becomes or ceases to be a trustee of the settlement during the tax year,
(c) that year is a split year as respects the individual, and
(d) in that year, the only period when the individual is a trustee of the settlement falls wholly within the overseas part of the year.
(2DB) Subsection (2DA) is subject to subsection (2D) and, accordingly, an individual who is treated under subsection (2DA) as not resident is, in spite of that, to be regarded as resident whenever the individual acts as mentioned in subsection (2D).
(2E) If the deemed person referred to in subsection (1) is not treated for the purposes of this Act as resident in the United Kingdom, then for the purposes of this Act it is treated as being not resident in the United Kingdom.
(2F) Section 835BA of ITA 2007 (deemed domicile) applies for the purposes of subsection (2CA).
(3) For the purposes of this section, and of sections 71(1) and 72(1), where part of the property comprised in a settlement is vested in one trustee or set of trustees and part in another (and in particular where settled land within the meaning of the Settled Land Act 1925 is vested in the tenant for life and investments representing capital money are vested in the trustees of the settlement), they shall be treated as together constituting and, in so far as they act separately, as acting on behalf of a single body of trustees.
(4) If tax assessed on the trustees, or any one trustee, of a settlement in respect of a chargeable gain accruing to the trustees is not paid within 6 months from the date when it becomes payable by the trustees or trustee, and before or after the expiration of that period of 6 months the asset in respect of which the chargeable gain accrued, or any part of the proceeds of sale of that asset, is transferred by the trustees to a person who as against the trustees is absolutely entitled to it, that person may at any time within 2 years from the time when the tax became payable be assessed and charged (in the name of the trustees) to an amount of capital gains tax not exceeding tax chargeable on an amount equal to the amount of the chargeable gain and, where part only of the asset or of the proceeds was transferred, not exceeding a proportionate part of that amount.
A transfer into settlement, whether revocable or irrevocable, is a disposal of the entire property thereby becoming settled property notwithstanding that the transferor has some interest as a beneficiary under the settlement and notwithstanding that he is a trustee, or the sole trustee, of the settlement.
71 Person becoming absolutely entitled to settled property.
(1) On the occasion when a person becomes absolutely entitled to any settled property as against the trustee all the assets forming part of the settled property to which he becomes so entitled shall be deemed to have been disposed of by the trustee, and immediately reacquired by him in his capacity as a trustee within section 60(1), for a consideration equal to their market value.
(2) Where, in any case in which a person (“the beneficiary”) becomes absolutely entitled to any settled property as against the trustee, an allowable loss would (apart from this subsection) have accrued to the trustee on the deemed disposal under subsection (1) above of an asset comprised in that property—
(a) that loss shall be treated, to the extent only that it cannot be deducted from pre-entitlement gains of the trustee, as an allowable loss accruing to the beneficiary (instead of to the trustee); but
(b) any allowable loss treated as accruing to the beneficiary under this subsection shall be deductible under this Act from chargeable gains accruing to the beneficiary to the extent only that it can be deducted from gains accruing to the beneficiary on the disposal by him of—
(i) the asset on the deemed disposal of which the loss accrued; or
(ii) where that asset is an estate, interest or right in or over land, that asset or any asset deriving from that asset.
(2A) In subsection (2) above “pre-entitlement gain”, in relation to an allowable loss accruing to a trustee on the deemed disposal of any asset comprised in any settled property, means a chargeable gain accruing to that trustee on—
(a) a disposal which, on the occasion on which the beneficiary becomes absolutely entitled as against the trustee to that property, is deemed under subsection (1) above to have taken place; or
(b) any other disposal taking place before that occasion but in the same year of assessment.
(2B) For the purposes of subsection (2)(b)(ii) above an asset (“the relevant asset”) derives from another if, in a case where—
(a) assets have merged,
(b) an asset has divided or otherwise changed its nature, or
(c) different rights or interests in or over any asset have been created or extinguished at different times,
the value of the relevant asset is wholly or partly derived (through one or more successive events falling within paragraphs (a) to (c) above but not otherwise) from the other asset.
(2C) The rules set out in subsection (2D) below shall apply (notwithstanding any other rules contained in this Act or in section 113(2) of the Finance Act 1995 (order of deduction))—
(a) for determining for the purposes of this section whether an allowable loss accruing to the trustee, or treated as accruing to the beneficiary, can be deducted from particular chargeable gains for any year of assessment; and
(b) for the making of deductions of allowable losses from chargeable gains in cases where it has been determined that such an allowable loss can be deducted from particular chargeable gains.
(2D) Those rules are as follows—
(a) allowable losses accruing to the trustee on a deemed disposal under subsection (1) above shall be deducted before any deduction is made in respect of any other allowable losses accruing to the trustee in that year;
(b) allowable losses treated as accruing to the beneficiary under this section, so far as they cannot be deducted in a year of assessment as mentioned in subsection (2)(b) above, may be carried forward from year to year until they can be so deducted; and
(c) allowable losses treated as accruing to the beneficiary for any year of assessment under this section, and allowable losses carried forward to any year of assessment under paragraph (b) above—
(i) shall be deducted before any deduction is made in respect of any allowable losses accruing to the beneficiary in that year otherwise than by virtue of this section; and
(ii) in the case of losses carried forward to any year, shall be deductible as if they were losses actually accruing in that year.
(3) References in this section to the case where a person becomes absolutely entitled to settled property as against the trustee shall be taken to include references to the case where a person would become so entitled but for being an infant or other person under disability.
72 Termination of life interest on death of person entitled.
(1) On the termination, on the death of the person entitled to it, of an interest in possession in all or any part of settled property—
(a) the whole or a corresponding part of each of the assets forming part of the settled property and not ceasing at that time to be settled property shall be deemed for the purposes of this Act at that time to be disposed of and immediately reacquired by the trustee for a consideration equal to the whole or a corresponding part of the market value of the asset; but
(b) no chargeable gain shall accrue on that disposal.
For the purposes of this subsection an interest which is a right to part of the income of settled property shall be treated as an interest in a corresponding part of the settled property.
(1A) Where the interest in possession mentioned in subsection (1) above is one to which the person becomes entitled on or after 22nd March 2006, the first sentence of that subsection applies in relation to that interest only if—
(a) immediately before the person's death, the interest falls within subsection (1B) below, or
(b) the person dies under the age of 18 years and, immediately before the person's death, section 71D of the Inheritance Tax Act 1984 (age 18-to-25 trusts) applies to the property in which the interest subsists.
(1B) An interest falls within this subsection if—
(a) the interest is—
(i) an immediate post-death interest, within the meaning given by section 49A of the Inheritance Tax Act 1984,
(ii) a transitional serial interest, within the meaning given by section 49B of that Act, or
(iii) a disabled person's interest, within the meaning given by section 89B of that Act, or
(b) section 71A of that Act (trusts for bereaved minors) applies to the property in which the interest subsists.
(1C) Subsection (1A) above does not have effect in relation to the operation of subsection (1) above as applied by subsection (2) below (but see subsection (2A) below).
(2) Subsection (1) above shall apply where the person entitled to an interest in possession in all or any part of settled property dies (although the interest does not then terminate) as it applies on the termination of such an interest.
(2A) Where the interest in possession mentioned in subsection (2) above is one to which the person becomes entitled on or after 22nd March 2006—
(a) subsection (2) above, and
(b) the first sentence of subsection (1) above as applied by subsection (2) above,
apply in relation to that interest only if, immediately before the person's death, the interest falls within subsection (1B)(a) above.
(3) This section shall apply on the death of the person entitled to any annuity payable out of, or charged on, settled property or the income of settled property as it applies on the death of a person whose interest in possession in the whole or any part of settled property terminates on his death.
(4) Where, in the case of any entitlement to an annuity created by a settlement some of the settled property is appropriated by the trustees as a fund out of which the annuity is payable, and there is no right of recourse to, or to the income of, settled property not so appropriated, then without prejudice to subsection (5) below, the settled property so appropriated shall, while the annuity is payable, and on the occasion of the death of the person entitled to the annuity, be treated for the purposes of this section as being settled property under a separate settlement.
(5) If there is an interest in a part of the settled property and, where that is an interest in income, there is no right of recourse to, or to the income of, the remainder of the settled property, the part of the settled property in which the ... interest subsists shall while it subsists be treated for the purposes of this section as being settled property under a separate settlement.
(6) An interest which is a disabled person's interest by virtue of section 89B(1)(a) or (b) of the Inheritance Tax Act 1984 is to be treated as an interest in possession for the purposes of this section.
73 Death of life tenant: exclusion of chargeable gain.
(1) Where, by virtue of section 71(1), the assets forming part of any settled property are deemed to be disposed of and reacquired by the trustee on the occasion when a person becomes (or would but for a disability become) absolutely entitled thereto as against the trustee, then, if that occasion is the death of a person entitled to an interest in possession in the settled property—
(a) no chargeable gain shall accrue on the disposal, and
(b) if on the death the property reverts to the disponer, the disposal and reacquisition under that subsection shall be deemed to be for such consideration as to secure that neither a gain nor a loss accrues to the trustee, and shall, if the trustee had first acquired the property at a date earlier than 31 March 1982, be deemed to be at that earlier date.
(1A) Subsection (1)(b) above shall be treated as having effect in relation to a sub-fund settlement if the property does not revert to the trustees of the principal settlement in relation to that sub-fund settlement by reason only that—
(a) a sub-fund election is or has been made in respect of another sub-fund of the principal settlement, and
(b) the property becomes comprised in that other sub-fund settlement on the death of the person entitled to the interest in possession.
(2) Where the ... interest referred to in subsection (1) above is an interest in part only of the settled property to which section 71 applies, subsection (1)(a) above shall not apply but any chargeable gain accruing on the disposal shall be reduced by a proportion corresponding to that represented by the part.
(2A) Where the interest in possession referred to in subsection (1) above is one to which the person becomes entitled on or after 22nd March 2006, subsections (1) and (2) above apply in relation to that interest only if—
(a) immediately before the person's death, the interest falls within section 72(1B), or
(b) the person dies under the age of 18 years and, immediately before the person's death, section 71D of the Inheritance Tax Act 1984 (age 18-to-25 trusts) applies to the property in which the interest subsists.
(3) The last sentence of subsection (1) of section 72 and subsections (3) to (6) of that section shall apply for the purposes of this section as they apply for the purposes of section 72(1).
74 Effect on sections 72 and 73 of relief under section 165 or 260.
(1) This section applies where—
(a) a claim for relief was made under section 165 or 260 in respect of the disposal of an asset to a trustee, and
(b) the trustee is deemed to have disposed of the asset, or part of it, by virtue of section 71(1) or 72(1)(a).
(2) Sections 72(1)(b) and 73(1)(a) shall not apply to the disposal of the asset or part by the trustee, but any chargeable gain accruing to the trustee on the disposal shall be restricted to the amount of the held-over gain (or a corresponding part of it) on the disposal of the asset to him.
(3) Subsection (2) above shall not have effect in a case within section 73(2) but in such a case the reduction provided for by section 73(2) shall be diminished by an amount equal to the proportion there mentioned of the held-over gain.
(4) In this section “held-over gain” has the same meaning as in section 165 or, as the case may be, 260.
(1) Subject to subsection (1A) below No chargeable gain shall accrue on the disposal of an interest created by or arising under a settlement (including, in particular, an annuity or life interest, and the reversion to an annuity or life interest) by the person for whose benefit the interest was created by the terms of the settlement or by any other person except one who acquired, or derives his title from one who acquired, the interest for a consideration in money or money’s worth, other than consideration consisting of another interest under the settlement.
(1A) Subject to subsection (3) below, subsection (1) above does not apply if—
(a) the settlement falls within subsection (1B) below; or
(b) the property comprised in the settlement is or includes property deriving directly or indirectly from a settlement falling within that subsection.
(1B) A settlement falls within this subsection if there has been a time when the trustees of that settlement—
(a) were not resident in the United Kingdom; or
(b) fell to be regarded for the purposes of any double taxation relief arrangements as resident in a territory outside the United Kingdom.
(2) Subject to subsection (1) above, where a person who has acquired an interest in settled property (including in particular the reversion to an annuity or life interest) becomes, as the holder of that interest, absolutely entitled as against the trustee to any settled property, he shall be treated as disposing of the interest in consideration of obtaining that settled property (but without prejudice to any gain accruing to the trustee on the disposal of that property deemed to be effected by him under section 71(1)).
(3) Subsection (1A) above shall not prevent subsection (1) above from applying where the disposal in question is a disposal in consideration of obtaining settled property that is treated as made under subsection (2) above.
76B Transfers of value by trustees linked with trustee borrowing.
Schedule 4B to this Act has effect with respect to transfers of value by trustees that are, in accordance with the Schedule, treated as linked with trustee borrowing.
(1) This section applies to a chargeable gain accruing to the trustees of a settlement where—
(a) in computing the gain, the allowable expenditure is reduced in consequence, directly or indirectly, of a claim to gifts relief in relation to an earlier disposal to the trustees;
(b) the transferor on that earlier disposal, or any person connected with the transferor, has at any time—
(i) acquired an interest in the settled property, or
(ii) entered into an arrangement to acquire such an interest; and
(c) in connection with that acquisition or arrangement any person has at any time received, or become entitled to receive, any consideration.
(2) Where this section applies to a chargeable gain, no allowable losses accruing to the trustees (in the year in which the gain accrues or any earlier year) may be set against the gain.
This applies to the whole of the chargeable gain (and not just the element deferred as a result of the claim to gifts relief).
(3) In this section—
(a) “gifts relief” means relief under section 165 or 260; and
(b) references to losses not being allowed to be set against a chargeable gain are to the losses not being allowed as a deduction against chargeable gains to the extent that they include that gain.
(4) The references in subsection (1)(b) above to an interest in settled property have the same meaning as in Schedule 4A.
79B Attribution to trustees of gains of non-resident companies.
(1) This section applies where the trustees of a settlement are participators—
(a) in a close company, or
(b) in a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom.
For this purpose “participator” has the same meaning as in section 3 (see section 3B).
(2) Where this section applies, nothing in any double taxation relief arrangements shall be read as preventing a charge to tax arising by virtue of the attribution to the trustees under section 3, by reason of their participation in the company mentioned in subsection (1) above, of any part of a chargeable gain accruing to a company that is not resident in the United Kingdom.
(3) Where this section applies and—
(a) a chargeable gain accrues to a company that is not resident in the United Kingdom but would be a close company if it were resident in the United Kingdom, and
(b) all or part of the chargeable gain is treated under section 3 as accruing to a close company which is not chargeable to corporation tax in respect of the gain by reason of double taxation relief arrangements, and
(c) had the company mentioned in paragraph (b) (and any other relevant company) not been resident in the United Kingdom, all or part of the chargeable gain would have been attributed to the trustees by reason of their participation in the company mentioned in subsection (1) above,
section 3(7) shall apply as if the company mentioned in paragraph (b) above (and any other relevant company) were not resident in the United Kingdom.
(4) The references in subsection (3) above to “any other relevant company" are to any other company which if it were not resident in the United Kingdom would be a company in relation to which section 3(7) applied with the result that all or part of the chargeable gain was attributed to the trustees as mentioned in that subsection.