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HMRC internal manual

Capital Gains Manual

No gain/no loss transfers in groups: outline and history

This guidance focuses on the rules for no gain/no loss transfers within a capital gains group as at 2011. There was a significant change when non-UK resident companies were admitted to capital gains groups in 2000. If you need to consider the detailed guidance applying before the changes or on the transitional rules for that change then this is available from commercial tax information packages or directly from Capital Gains Technical Group.

The ability to transfer assets within a group of company without triggering an immediate chargeable gain or allowable loss has been a feature of the capital gains regime since its creation. The legislation is in TCGA92/S171A. The guidance at CG45300+ deals with actual asset transfers and transfers by election (TCGA92/S171A). Guidance on what constitutes a capital gains group can be found at CG45100+ and CG45000 and CG45001 give an overview of the rules that apply to capital gains groups. In particular, the transfer of an asset within a group may give rise to a degrouping charge when the transferee company later leaves the group, TCGA92/S179, CG45400+.

There have been some significant changes to the rules:

The concept of “chargeable assets” was introduced when it became possible for non-UK resident companies to be members of a group in 2000.

The ability to make an election to achieve a deemed transfer for capital gains purposes was also introduced in 2000.

The election procedure was changed so as to result in the transfer of a gain or loss, rather than the deemed transfer of an asset, in 2009.

The guidance on no gain/no loss transfers is set out as follows:

The no gain/no loss rule, TCGA92/S171(1), CG45305.

How the rule applies to non-UK resident companies, TCGA92/S171(1A), CG45310.

Applying the rule to dividends in kind, CG45315.

Exceptions to the no gain/no loss rule, TCGA92/S171(2), CG45320.

Part disposals and leases, CG45325.

Transfers by election, TCGA92/S171A - TCGA92/S171C, CG45355 - CG45359.

Note that CTA10/S692 restricts the set-off of certain deductions when a company with investment business disposes of an asset that has previously been transferred at no gain/no loss under TCGA92/S171(1). See CTM8880+.