1.This section amends section 45 Taxation of Chargeable Gains Act 1992 (TCGA) to ensure that the exemption for wasting assets is only available for assets used as plant in a business where the asset has been used by a person as plant in their own business. This amendment has effect on or after 1 April 2015 for corporation tax purposes and on or after 6 April 2015 for capital gains tax purposes.
2.Subsection (1) provides for changes to be made to section 45 TCGA, by inserting new subsections (3A) to (3D).
3.New subsection (3A) provides that section 45(3) TCGA does not apply to disposals where new subsection (3B) disapplies section 45(1) TCGA.
4.New subsection (3B) provides that subsection 45(1) TCGA does not apply where a person disposes of an asset, or an interest in an asset:
where the asset has been used for the purposes of a trade, profession or vocation carried on by another person; and
because of that use it has become plant for the purposes of section 44(1)(c) TCGA but was not otherwise a wasting asset at disposal; and
new subsection (3C) does not apply.
5.New Subsections (3C) and (3D) apply to long funding leasing and deemed disposals made under section 25A TCGA. They ensure that such disposals do not fall within new subsection (3B).
6.Subsection (2) provides that this amendment has effect on or after 1 April 2015 for corporation tax purposes and on or after 6 April 2015 for capital gains tax purposes.
7.Capital gains tax applies to gains accruing on the disposal of assets. However, a gain or loss which arises on the disposal of certain wasting assets is exempt from capital gains tax. This includes plant or machinery where capital allowances cannot be claimed.
8.This amendment is designed to make clear that the exemption applies for assets used as plant in a business only where the asset has been used by a disponor as plant for the purposes of his own business. It closes a loophole that allows a person who plans to dispose of an asset to claim the exemption if a third party uses the asset as plant in their business.