The rebasing provisions in TCGA92/S35 and TCGA92/SCH3 apply where there is
- a disposal on or after 6 April 1988 of
- an asset which was held on 31 March 1982 by the person making the disposal.
They apply to all customers whether they are individuals, trustees, personal representatives or companies. The result of rebasing is that only gains or losses accruing since 31 March 1982 are to be brought into account.
This guidance was revised in 2014 and rebasing is achieved by deeming any asset held at 31 March 1982 to have been sold and immediately reacquired at its market value on that date. Unlike the provisions for assets held when the charge on capital gains was introduced in 1965 (which may still be relevant for companies), time-apportionment is not available as an option.
Mandatory rebasing could lead in some circumstances to odd-looking results. For example, if -
- an individual bought an asset (at arm’s length) for £10,000 in 1978;
- the market value of the asset at 31 March 1982 was £8,000;
- the asset was sold (at arm’s length) in 1993 for £16,000,
the gain accruing since 31 March 1982 would be more than the gain over the full period of ownership. The rebasing rules therefore included a `kink-test’ to determine when the rebasing rules should not be applied, see CG16730.
Alternatively a customer could elect within certain specified time limits to use the 31 March 1982 market value for all computational purposes, see CG16760. This election is irrevocable and normally it will apply to all disposals of all assets held at 31 March 1982. However certain assets are specifically excluded, see CG16780.
CGT Simplification applies for disposals on or after 6 April 2008. As part of CGT Simplification, the allowable cost of assets held at 31 March 1982 is their value on that date and the ‘kink test’ is not applied to disposals on or after 6 April 2008.
CGT Simplification does not apply to companies who pay corporation tax on their chargeable gains. Therefore the ‘kink test’ still applies to disposals of assets held at 31 March 1982 by any company that has not elected to use market value in all cases.
Asset acquired after 31/3/82 and disposed of on or after 6 April 2008
A company which who acquired an asset after 31 March 1982 may still benefit from rebasing on its disposal if
- it was acquired by way of a specified no gain/no loss transfer from someone who held the asset on 31 March 1982
- after a series of such transfers.
From 6 April 2008 this rule will only apply to companies and will mainly be relevant where an asset has been transferred between companies in that same group The specified no gain/no loss transfers are listed at CG16880
Deferred charges on gains before 31/3/82
Lastly there are cases where the above rebasing provisions do not apply but, nevertheless, gains or losses accruing on the disposal of an asset on or after 6 April 1988 can be related, in whole or in part, to gains or losses accruing in a period before 31 March 1982. For example where
- the cost of an asset acquired after 31 March 1982 has been reduced by hold-over relief or roll-over relief, and the deferred gain relates in whole or in part to a period before 31 March 1982, or
- a charge deferred before 6 April 1988 until the happening of some later event is triggered on or after 6 April 1988, and the deferred charge relates in whole or in part to a period before 31 March 1982.
TCGA92/SCH4 provides a measure of relief subject to the making of a valid claim, see CG16980.