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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Rebasing: deferred gains: SP1/89

CG16980+ gives guidance on the rules in TCGA92/S36 and TCGA92/Sch4 which apply in cases where

  • the gain on an asset which was owned on 31 March 1982 and disposed of before 6 April 1988 has been deferred or held over, for example, under the provisions for hold-over relief or roll-over relief, and
  • the gain was recovered on a disposal on or after 6 April 1988.

The rules operate to reduce the deferred gain by one half.

The relief, referred to as ‘halving relief’, is extended to apply where the deferred gain relates to an asset that was acquired as a result of a statutory no gain/ no loss transfer from a person who held the asset on 31 March 1982, see CG17002.

SP1/89 part of which is reproduced below enables partners to benefit from halving relief by treating a transfer of an interest in a partnership asset that results in neither a gain nor a loss, see CG27500 and the example at CG27540, as a statutory no gain/no loss transfer for the purposes of TCGA92/Sch4:

A disposal of a share of partnership assets to which paragraph 4 of the statement of practice D12 applies so that neither a chargeable gain nor an allowable loss accrues (before indexation, for disposals before 6 April 1988) may be treated for the purposes of TCGA92/S36 and TCGA92/Sch 4 as if it were a no gain/no loss disposal within TCGA92/Sch 3 para 1.

Under the simplification of CGT rules in FA2008 halving relief is no longer available for disposals on or after 6 April 2008 by non-corporate partners whose gains are chargeable to Capital Gains Tax, see CG16980.