CG73986 | NRCG and the exemptions: disposals from 6 April 2019: interactions with gift hold-over and other reliefs

The basic principles that applied on the introduction of non-resident CG continue to apply with the extension of the scope non-resident CG.

Gifts hold-over relief

TCGA92/S165 is concerned with cases where business assets are disposed of as a gift (see CG66880P). It is extended to cover assets involved in a non-resident CGT disposal from a non-UK resident to a UK resident. Non-resident CGT gains may therefore be included as held-over gains.

TCGA92/S167A modifies the rules in TCGA92/S165 on relief for gifts of business assets. It is concerned with cases where assets are disposed of as a gift from a UK resident to a non-UK resident, and the disposal relates to an asset within S1A(3) (b) or (c). It provides that hold-over relief is not denied where the asset is chargeable to non-resident CGT in the hands of the person to whom the asset is transferred. The full amount of the held-over gain accrues as a chargeable non-resident CGT gain for that person at the point when they subsequently dispose of it.

TCGA92/S260 is concerned with cases where gifts are exempt or potentially exempt from inheritance tax (see CG67030P). This is amended, so that where the asset involved in disposal is a direct or indirect disposal of UK land which meets the non-residence condition as a gift from a non-UK resident to a UK resident, non-resident CGT gains may be included as held-over gains under this provision.

TCGA92/S261ZA is concerned with cases where assets are disposed of as a gift from a UK resident to a non-UK resident in the circumstances envisaged by TCGA92/S260, and the disposal is of an asset within S1A(3) (b) or (c). It provides that hold-over relief is not denied where the asset is chargeable to non-resident CGT in the hands of the person to whom the asset is transferred. The full amount of the held-over gain accrues as a chargeable non-resident CGT gain for the transferee when they subsequent dispose of the asset.

Share Reorganisation, Share Exchange and Reconstructions

TCGA92/S127, S135 and S136 are concerned with share reorganisations, share exchanges and reconstructions where there is the issue of new securities. These are commonly known as ‘paper for paper’ exchanges. These provisions can apply for indirect disposals subject to their operational conditions being satisfied.

Reconstruction involving transfer of business

TCGA92/S139 is concerned with company reconstructions involving the transfer of a business. It allows companies to dispose of assets for no gain and no loss on a scheme of reconstruction (see CG52800+). This is extended so that assets which would remain chargeable to corporation tax on a subsequent disposal are included among the assets to which this provision applies.

Roll-over relief

TCGA92/S159A modifies the provisions on roll-over relief in TCGA92/S152. It provides that relief does not apply to a person chargeable to non-resident CG on a gain relating to the original assets, unless the replacement assets represent interests in UK land within the scope of the non-resident CG rules at the time they are acquired (see CG60250).