Finance (No. 2) Act 2017

TCGA 1992 U.K.

43 U.K. TCGA 1992 is amended as follows.

44 U.K. In section 37 (consideration chargeable to tax on income), after subsection (1) insert—

“(1A) There is to be excluded from the consideration for a disposal of an asset taken into account in the computation of the gain a sum equal to any amount that is taken into account by the person making the disposal as a receipt under section 96A or 307E of ITTOIA 2005 (capital receipts under, or after leaving, cash basis) as a result of the operation of any deemed disposal provision in relation to the asset.

(1B) But subsection (1A) applies only to the extent that the sum has not been excluded from the consideration for an earlier disposal of the asset.

(1C) The following are “deemed disposal provisions”—

(a) in relation to trades, professions and vocations, subsections (4) and (5) of section 96A of ITTOIA 2005 (which provide for circumstances in which a person is to be regarded as disposing of an asset for the purposes of that section), and

(b) in relation to property businesses, section 307F of ITTOIA 2005 (which provides for circumstances in which a person is to be regarded as disposing of an asset for the purposes of section 307E of that Act).”

45 (1) Section 41 (restriction of losses by reference to capital allowances etc) is amended as follows. U.K.

(2) In subsection (4), after paragraph (a) insert—

“(zaa) any deduction allowable in respect of capital expenditure in calculating profits on the cash basis (see sections 33A and 307B of ITTOIA 2005),”.

(3) After subsection (6) insert—

“(6A) Where—

(a) capital allowances have been made or may be made in respect of expenditure, and

(b) the capital allowances include a deduction mentioned in subsection (4)(zaa),

the capital allowances to be taken into account under this section are to be regarded as equal to the total amount of expenditure which has qualified for capital allowances less any balancing charge to which the person making the disposal is liable under the Capital Allowances Act.”

(4) In subsection (7), after “Capital Allowances Act,” insert “ and subsection (6A) does not apply, ”.

(5) After subsection (8) insert—

“(9) In this section—

(a) in relation to a trade, profession or vocation, references to calculating profits on the cash basis are to calculating the profits of a trade, profession or vocation in relation to which an election under section 25A of ITTOIA 2005 (cash basis for trades) has effect, and

(b) in relation to a property business, references to calculating profits on the cash basis are to be construed in accordance with section 271D of that Act (calculation of profits of property businesses on the cash basis).

(10) In this section—

• “capital expenditure” means expenditure of a capital nature incurred on, or in connection with, the creation, construction, acquisition, alteration or disposal of an asset, and

• “property business” means a UK property business or an overseas property business within the meaning of Part 3 of ITTOIA 2005 (see sections 264 and 265 of that Act).”

46 (1) Section 47A (exemption for disposals by persons using cash basis) is amended as follows. U.K.

(2) For the heading substitute “ Exemption for certain disposals under, or after leaving, cash basis ”.

(3) In subsection (1), for “A to D” substitute “ A, B and D ”.

(4) For subsection (2) substitute—

“(2) Condition A is that the asset is not land.”

(5) In subsection (3), for “or vocation” substitute “ , vocation or property business ”.

(6) Omit subsection (4).

(7) For subsection (5) substitute—

“(5) Condition D is that relevant disposal proceeds—

(a) are brought into account as a receipt (whether or not on the cash basis) under section 96A(3I) of ITTOIA 2005 in calculating the profits of a trade, profession or vocation (capital receipts under, or after leaving, cash basis: trades, professions and vocations), or

(b) are brought into account as a receipt (whether or not on the cash basis) under section 307E(12) of that Act in calculating the profits of a property business (capital receipts under, or after leaving, cash basis: property businesses).

(5A) “Relevant disposal proceeds” means disposal proceeds as mentioned in section 96A(3F) of ITTOIA 2005 or (as the case may be) section 307E(9) of that Act which arise from the disposal mentioned in subsection (1).”

(8) For subsection (6) substitute—

“(6) Subsection (7) applies in the case of the disposal of, or of an interest in, an asset—

(a) which, in the period of ownership of the person making the disposal—

(i) has been used partly for the purposes of the trade, profession or vocation and partly for other purposes, or

(ii) has been used for the purposes of the trade, profession or vocation for part of that period, or

(b) expenditure on which by the person has qualified in part only for capital allowances.”

(9) In subsection (7)—

(a) in paragraph (a), for “was, or (as the case may be)” to the end substitute “ qualified for capital allowances ”, and

(b) in paragraph (c), at the end insert “, or to the expenditure qualifying for capital allowances.

(10) After subsection (7) insert—

“(8) In this section “property business” means a UK property business or an overseas property business within the meaning of Part 3 of ITTOIA 2005 (see sections 264 and 265 of that Act).”

47 U.K. Section 47B (disposals made by persons after leaving cash basis) is omitted.