Schedule 8B | Hold-over relief for gains re-invested in social enterprises ^F1

When does the Schedule apply?^F1

(1)This Schedule applies if—^F1

(a)a chargeable gain accrues to an individual (“the investor”),^F1

(b)the investor acquires one or more assets (“the social holding”),^F1

(c)the investor is eligible for SI relief under Part 5B of ITA 2007 in respect of the consideration given for the social holding, and^F1

(d)conditions A, B, C, D and E are met.^F1

(2)Condition A is that the gain is one that accrues—^F1

(a)on the disposal by the investor of an asset,^F1

(b)in accordance with section 169N (but see sub-paragraph (7)), or^F1

(c)as a result of the operation of paragraph 5 in connection with a chargeable event within paragraph 6(1)(c) or (d).^F1

(3)Condition B is that the gain is one that accrues—^F1

(a)on or after 6 April 2014, and^F1

(b)before 6 April 2023 (but see sub-paragraph (8)).^F1F2

(4)Condition C is that the investor is resident in the United Kingdom—^F1

(a)when the gain accrues, and^F1

(b)when the social holding is acquired.^F1

(5)Condition D is that the social holding is acquired by the investor on the investor's own behalf.^F1

(6)Condition E is that the social holding is acquired—^F1

(a)in the 3 years beginning with the day when the gain accrues, or^F1

(b)in the year that ends at the beginning of that day.^F1

(7)The reference in sub-paragraph (2)(b) to a gain accruing in accordance with section 169N does not include such a gain so far as it is chargeable to capital gains tax at the rate in section 169N(3) (rate where business asset disposal relief is available).^F1F3

(8)The Treasury may by order substitute a later date for the date for the time being specified in sub-paragraph (3)(b).^F1

(1)This Schedule also applies if—^F1

(a)a chargeable gain accrues to an individual (“the investor”),^F1

(b)the gain accrues as a result of the operation of paragraph 5 in connection with a chargeable event within paragraph 6(1)(a), (b) or (c),^F1

(c)the chargeable event is either—^F1

(i)a disposal to a social enterprise of shares in or debentures of the social enterprise, or^F1

(ii)the cancellation, extinguishment, redemption or repayment by a social enterprise of shares in or debentures of the social enterprise,^F1

(d)as part of the chargeable event or in connection with it, and in place of the shares or debentures, the investor acquires one or more assets (“the social holding”) from the social enterprise,^F1

(e)other than the investor's ceasing to hold the shares or debentures, no detriment is suffered in return for the acquisition of the social holding,^F1

(f)the asset acquired, or each of the assets acquired, is a share in or debenture of the social enterprise,^F1

(g)but for section 257LA of ITA 2007 (consideration for acquisition must be wholly in cash and fully paid) the investor would be eligible for SI relief under Part 5B of ITA 2007 in respect of the consideration given for the social holding, and^F1

(h)conditions F, G, H and J are met.^F1

(2)Condition F is that the gain is one that accrues—^F1

(a)on or after 6 April 2014, and^F1

(b)before 6 April 2023 (but see sub-paragraph (6)).^F1F4

(3)Condition G is that the investor is resident in the United Kingdom—^F1

(a)when the gain accrues, and^F1

(b)when the social holding is acquired.^F1

(4)Condition H is that the social holding is acquired by the investor on the investor's own behalf.^F1

(5)Condition J is that the social holding is acquired—^F1

(a)in the 3 years beginning with the day when the gain accrues, or^F1

(b)in the year that ends at the beginning of that day.^F1

(6)The Treasury may by order substitute a later date for the date for the time being specified in sub-paragraph (2)(b).^F1

(7)In this paragraph “debenture” includes any instrument creating or acknowledging indebtedness.^F1

(8)A reference in this paragraph to a social enterprise is a reference to a body that is a social enterprise for the purposes of Part 5B of ITA 2007 (see section 257J of that Act).^F1

Interpretation of Schedule^F1

(1)In the following provisions of this Schedule—^F1

“the amount invested” means, in a case where this Schedule applies because of paragraph 1, the consideration mentioned in paragraph 1(1)(c),

“the investor” means the individual mentioned in paragraph 1(1)(a) or, as the case may be, paragraph 2(1)(a),

“the original gain” means the chargeable gain mentioned in paragraph 1(1)(a) or, as the case may be, paragraph 2(1)(a), and

“the social holding” means the asset or assets mentioned in paragraph 1(1)(b) or, as the case may be, paragraph 2(1)(d).

(2)In this Schedule, a “disposal within marriage or civil partnership” is a disposal to which section 58 (certain disposals between spouses or civil partners) applies.^F1

Claim to hold gain over while invested in a social enterprise^F1

(1)The investor may make a claim for the original gain to be reduced—^F1

(a)in a case within paragraph 1, by the amount invested, or by a part of that amount specified in the claim, or^F1

(b)in a case within paragraph 2, to the extent specified in the claim,^F1

but, in either case, subject as follows.

(2)The reduction may not be more than the original gain or, if the original gain has already been reduced under one or more of the listed provisions, the reduction may not be more than the reduced gain.^F1

(3)In a case within paragraph 1, the claim may not relate to any part of the amount invested that under any of the listed provisions has already been set against a chargeable gain.^F1

(4)The “listed provisions” are—^F1

(a)sub-paragraph (1),^F1

(b)Schedule 5B, and^F1

(c)paragraph 1(5) of Schedule 5BB.^F1

(5)The total of all reductions claimed by the investor under sub-paragraph (1) in any tax year must not be more than £1,000,000.^F1

(6)If there is relief by way of a reduction under sub-paragraph (1) then, for the purposes of this Schedule, that relief—^F1

(a)is attributable to the asset or assets that form the social holding, but^F1

(b)ceases to be attributable to any particular asset, or to any particular part of a particular asset, when—^F1

(i)a chargeable event occurs in relation to that asset or part, or^F1

(ii)the person holding the asset or part dies.^F1

Held-over gain treated as accruing on disposal etc of the qualifying investment^F1

(1)This paragraph applies if there has been a reduction under paragraph 4(1).^F1

(2)A chargeable gain equal to the amount of the reduction is treated as accruing when a chargeable event occurs in relation to the social holding without any chargeable event having previously occurred in relation to any of the holding.^F1

(3)When a chargeable event occurs in relation to part only of the social holding without any chargeable event having previously occurred in relation to any of that part, a chargeable gain calculated in accordance with sub-paragraph (4) is treated as accruing.^F1

(4)The calculation is—^F1

Step 1 Subtract from the amount of the reduction any chargeable gains previously treated as accruing as a result of the operation of sub-paragraph (3).

Step 2 Attribute a proportionate part of the amount calculated at Step 1 to each part of the social holding held, immediately before the occurrence of the chargeable event in question, by the investor or a person who has acquired any part of the holding from the investor on a disposal within marriage or civil partnership.

Step 3 The amount attributed at Step 2 to the part of the social holding in relation to which that chargeable event occurs is the chargeable gain treated as accruing as a result of the operation of subparagraph (3) on the occurrence of that event.

Chargeable events^F1

(1)A chargeable event occurs in relation to an asset that forms the whole or any part of the social holding if (after the acquisition of the holding)—^F1

(a)the investor disposes of the asset otherwise than by way of a disposal within marriage or civil partnership,^F1

(b)the asset is disposed of, otherwise than by way of a disposal to the investor, by a person who acquired the asset on a disposal made within marriage or civil partnership,^F1

(c)the asset is cancelled, extinguished, redeemed or repaid, or^F1

(d)any of the conditions in Chapters 3 and 4 of Part 5B of ITA 2007 for the investor's eligibility for SI relief under that Part in respect of the amount invested fails to be met.^F1

In this sub-paragraph “asset” includes part of an asset.

(2)In the event of the death of—^F1

(a)the investor, or^F1

(b)a person who, on a disposal within marriage or civil partnership, has acquired the whole or any part of the social holding,^F1

nothing which occurs at or after the time of death is a chargeable event in relation to any part of the holding held by the deceased person immediately before the time of death.

(3)If a person makes a disposal of assets of a particular class while retaining other assets of that class—^F1

(a)assets of that class acquired by the person on an earlier day are treated for the purposes of this Schedule as disposed of before assets of that class acquired by the person on a later day, and^F1

(b)assets of that class acquired by the person on the same day are treated for the purposes of this Schedule as disposed of in the following order—^F1

(i)first, any to which neither relief under this Schedule, nor SI relief under Part 5B of ITA 2007, is attributable,^F1

(ii)next, any to which relief under this Schedule, but not SI relief under that Part, is attributable,^F1

(iii)next, any to which SI relief under that Part, but not relief under this Schedule, is attributable, and^F1

(iv)finally, any to which both SI relief under that Part, and relief under this Schedule, are attributable.^F1

(4)For the purposes of sub-paragraph (3), assets—^F1

(a)to which relief under this Schedule is attributable, and^F1

(b)which have not been held continuously by the investor since the social holding was acquired,^F1

are treated as having been acquired when the social holding was acquired if SI relief under Part 5B of ITA 2007 is not also attributable to them.

(5)For the purposes of sub-paragraph (3), assets—^F1

(a)to which SI relief under Part 5B of ITA 2007 is attributable, and^F1

(b)which were transferred to an individual as mentioned in section 257T of ITA 2007 (transfers between spouses or civil partners),^F1

are treated as having been acquired when the social holding was acquired.

(6)Chapter 1 of Part 4 of this Act has effect subject to sub-paragraphs (3) to (5).^F1

(7)Sections 104, 105 and 106A do not apply to assets to which relief under this Schedule is attributable if SI relief under Part 5B of ITA 2007 is not also attributable to them.^F1

(8)Where, at the time of a chargeable event, an asset that formed the whole or any part of the social holding is treated for the purposes of this Act as represented by assets which consist of or include assets other than that asset—^F1

(a)so much of the original gain as is attributable to the asset is treated, in determining for the purposes of this paragraph the amount of the original gain to be treated as attributable to each of those assets, as apportioned in such manner as may be just and reasonable between those assets, and^F1

(b)as between different assets treated as representing the same asset, sub-paragraphs (3) to (5) apply with the necessary modifications in relation to those assets as they would apply in relation to the asset.^F1

(9)In order to determine, for the purposes of sub-paragraph (8), the amount of the original gain attributable to any asset, a proportionate part of the amount of the original gain is to be attributed to each asset that forms the whole or any part of so much of the social holding as is held, immediately before the occurrence of the chargeable event in question, by the investor or a person who has acquired any part of the social holding from the investor on a disposal within marriage or civil partnership.^F1

(10)In subsections (8) and (9) references to the original gain are to so much of the original gain as remains after deduction from it of the amount of any chargeable gain treated as accruing as a result of the previous operation of paragraph 5.^F1

Person to whom held-over gain is treated as accruing^F1

(1)This paragraph applies where a chargeable gain is treated as accruing as a result of the operation of paragraph 5.^F1

(2)If the chargeable event is a disposal, that chargeable gain is treated as accruing to the person who makes the disposal.^F1

(3)If the chargeable event occurs—^F1

(a)when an asset, or part of an asset, is cancelled, extinguished, redeemed or repaid, or^F1

(b)when a condition, for eligibility for relief in respect of the consideration given for the acquisition of an asset, fails to be met,^F1

that chargeable gain is treated as accruing to the person who holds the asset, or part, when the chargeable event occurs.

Claims: procedure^F1

(1)Sections 257P(1), 257PA(1) and 257PB to 257PD of ITA 2007—^F1

(a)apply in relation to a claim under this Schedule in respect of the social holding as they apply in relation to a claim under Part 5B to ITA 2007 in respect of an investment, and^F1

(b)as they so apply, have effect as if any reference to the requirements for relief under that Part were a reference to the conditions for the application of this Schedule.^F1

(2)In section 257PE(2) of ITA 2007 (power to make consequential amendments etc when amending provision about claims for SI relief) “enactment” includes (in particular) sub-paragraph (1).^F1