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Finance Act 1998

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121 Taper relief for CGT.E+W+S+N.I.

(1)The following section shall be inserted after section 2 of the M1Taxation of Chargeable Gains Act 1992—

2A Taper relief.

(1)This section applies where, for any year of assessment—

(a)there is, in any person’s case, an excess of the total amount referred to in subsection (2) of section 2 over the amounts falling to be deducted from that amount in accordance with that subsection; and

(b)the excess is or includes an amount representing the whole or a part of any chargeable gain that is eligible for taper relief.

(2)The amount on which capital gains tax is taken to be charged by virtue of section 2(2) shall be reduced to the amount computed by—

(a)applying taper relief to so much of every chargeable gain eligible for that relief as is represented in the excess;

(b)aggregating the results; and

(c)adding to the aggregate of the results so much of every chargeable gain not eligible for taper relief as is represented in the excess.

(3)Subject to the following provisions of this Act, a chargeable gain is eligible for taper relief if—

(a)it is a gain on the disposal of a business asset with a qualifying holding period of at least one year; or

(b)it is a gain on the disposal of a non-business asset with a qualifying holding period of at least three years.

(4)Where taper relief falls to be applied to the whole or any part of a gain on the disposal of a business or non-business asset, that relief shall be applied by multiplying the amount of that gain or part of a gain by the percentage given by the table in subsection (5) below for the number of whole years in the qualifying holding period of that asset.

(5)That table is as follows—

Gains on disposals of business assetsGains on disposals of non-business assets
Number of whole years in qualifying holding periodPercentage of gain chargeableNumber of whole years in qualifying holding period
Percentage of gain chargeable
192.5
285
377.5395
470490
562.5585
655680
747.5775
840870
932.5965
10 or more2510 or more60

(6)The extent to which the whole or any part of a gain on the disposal of a business or non-business asset is to be treated as represented in the excess mentioned in subsection (1) above shall be determined by treating deductions made in accordance with section 2(2)(a) and (b) as set against chargeable gains in such order as results in the largest reduction under this section of the amount charged to capital gains tax under section 2.

(7)Schedule A1 shall have effect for the purposes of this section.

(8)Subject to paragraph 2(4) of that Schedule, references in this section to the qualifying holding period of an asset are references—

(a)except in the case of an asset falling within subsection (9) below, to the period after 5th April 1998 for which that asset had been held at the time of its disposal; and

(b)in the case of an asset falling within that subsection, to the period mentioned in paragraph (a) above plus one year.

(9)An asset falls within this subsection if—

(a)the time which, for the purposes of paragraph 2 of Schedule A1, is the time when the asset is taken to have been acquired by the person making the disposal is a time before 17th March 1998; and

(b)there is no period which in the case of that asset is a period which by virtue of paragraph 11 or 12 of that Schedule does not count for the purposes of taper relief.

(2)Before Schedule 1 to the M2Taxation of Chargeable Gains Act 1992 there shall be inserted, as Schedule A1 to that Act, the Schedule set out in Schedule 20 to this Act.

(3)Schedule 21 to this Act (which makes incidental and consequential provision in connection with the introduction of taper relief) shall have effect.

(4)This section and those two Schedules have effect for the year 1998-99 and subsequent years of assessment.

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