Taxation of Chargeable Gains Act 1992

[F1 169SC Election by individual where company ceases to be personal company U.K.

(1) If the following conditions are met, an individual may elect for this section to have effect.

(2) The first condition is that, as a result of a relevant share issue, the company ceases to be the individual's personal company.

(3) The second condition is that—

(a) if, immediately before the relevant share issue, the individual had made a disposal at their relevant value of all assets consisting of shares in or securities of the company, the disposal would have been a material disposal of business assets, and

(b) if a claim for [F2 business asset disposal relief] had been made in respect of that disposal, a chargeable gain would have been treated by section 169N(2) as accruing to the individual.

(4) Where this section has effect, the individual is to be treated for the purposes of this Act—

(a) as having made a disposal immediately before the relevant share issue of all assets consisting of shares in or securities of the company, and

(b) immediately after that event, as having reacquired those assets,

at their relevant value.

(5) In this section—

• “material disposal of business assets” and “personal company” have the same meanings as in Chapter 3 (see section 169S),

• “relevant share issue” means an issue of shares by the company where—

  (a)

  the shares are issued by the company for consideration consisting wholly of cash, and

  (b)

  the shares are subscribed, and issued, for genuine commercial reasons and not as part of arrangements the main purpose, or one of the main purposes, of which is to secure a tax advantage to any person, and

• “relevant value” means—

  (a)

  in relation to an asset consisting of shares, an amount equal to the consideration that would be apportioned to the asset if, immediately before the relevant share issue, the whole of the issued share capital of the company were sold for a consideration equal to its market value at that time, or

  (b)

  in relation to any other asset, its market value at the time of the relevant share issue.

(6) For the purposes of the definition of “relevant share issue” in subsection (5)—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and

• “tax advantage” means—

  (a)

  relief or increased relief from tax,

  (b)

  repayment or increased repayment of tax,

  (c)

  the avoidance or reduction of a charge to tax or an assessment to tax, or

  (d)

  the avoidance of a possible assessment to tax,

  and for the purposes of this definition “tax” means capital gains tax, corporation tax or income tax.

(7) In this Chapter—

(a) references to “the notional disposal” are references to the disposal mentioned in subsection (4)(a),

(b) references to “the notional gain” are references to the chargeable gain mentioned in subsection (3)(b), and

(c) references to shares in or securities of a company include references to interests in such shares or securities.]

Textual Amendments

F1 Pt. 5 Ch. 3A inserted (with effect in accordance with Sch. 16 para. 4(5) of the amending Act) by Finance Act 2019 (c. 1), Sch. 16 para. 3

F2 Words in Act substituted (with effect for the tax year 2020-21 and subsequent tax years) by Finance Act 2020 (c. 14), Sch. 3 paras. 7(2)(a), 8 (with Sch. 3 para. 7(3))