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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Rebasing for companies: halving relief for deferred charges: gains pre-31/3/82: gains rolled/held over


Halving relief is available where gains have been rolled over, held over or postponed on the acquisition of a new asset. The distinction being made between those rules that give relief by making an adjustment to the capital gains cost of the new asset and those that postpone a gain until the new asset is disposed of or there is some other trigger event.

The gains which may be subject to a claim for halving relief are listed in CG16989.

Rolled-over or held-over gains, TCGA92/SCH4/PARA2

Halving relief is available when the new asset is later disposed of and the following conditions are satisfied:-

  • the disposal of the asset is on or after 6 April 1988
  • the disposal is not a specified no gain/no loss disposal listed in CG16880, (so that any relief due is given on a subsequent disposal of the asset, see CG17002)
  • the person making the disposal acquired the asset after 31 March 1982
  • the cost of the asset is reduced for computational purposes because of a specified hold-over or roll-over relief claim, see CG16988
  • that reduction is attributable, directly or indirectly, in whole or in part, to a gain made before 6 April 1988 on an asset acquired before 31 March 1982

then, subject to a claim being made, see CG17010, the deferred gain is to be reduced by half thereby increasing the allowable expenditure, TCGA92/SCH4/PARA1 (a).

Postponed gains TCGA92/SCH4/PARA4

Halving relief is available when the postponed gain comes into charge and the following conditions are satisfied

  • the charging of a gain has been postponed under any of the provisions listed in CG17033
  • the gain accrues on the occurrence of an event on or after 6 April 1988
  • the gain is attributable, directly or indirectly, in whole or in part, to the disposal before 6 April 1988 of an asset acquired before 31 March 1982.

Then, subject to a claim being made, see CG17060, the amount of the gain accruing is simply reduced by half. If the gain is directly attributable to the disposal of an asset on or before 31 March 1982 refer to CG17060.

The words `directly or indirectly’ are to cover not only the straightforward situation where there has been a single deferral before 6 April 1988, but also cases in which there have been two or more deferrals in that period. `In whole or in part’ allows for the fact that part of the gain, in a multiple roll-over case, will be identifiable as being wholly post-1982.

An asset is to be regarded as having been acquired by a person before 31 March 1982 if it is derived from an asset acquired by him before that day, TCGA92/SCH4/PARA8.

No relief twice

Without a special provision double relief could be obtained: for example, by rolling over a gain which had already been reduced under these provisions, and then claiming relief on a disposal of the replacement asset, the same pre-1982 gain would again trigger a reduction. This is prevented by ensuring that relief is not available where, because of the previous operation of the relief, the deemed cost of an asset is more than it would otherwise be, TCGA92/SCH4/PARA2 (2).

1st disposal

There was a defect in the original legislation because it did not require that a claim should be made in respect of the first qualifying disposal. This was rectified in Finance Act 1991 for disposals on or after 19 March 1991. The effect of TCGA92/SCH4/PARA2 (3) is to deny relief on a disposal where relief could have been claimed on an earlier occasion. The legislation now applies only to gains rolled over or held over between 1982 and 1988.