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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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No gain/no loss transfers in groups: the main rule

TCGA92/S171(1)

The no gain/no loss rule in TCGA92/S171(1) ensures that assets can generally be moved around a group of companies without any immediate capital gains consequences. ). This recognises that business activities carried on within the overall economic ownership of a corporate group, within the charge to corporation tax, should, in broad terms, be tax neutral. This is achieved by fixing both the consideration received for the asset by the transferor and the consideration given for the asset by the transferee. The transferor has neither chargeable gain nor allowable loss. The transferee effectively takes over the transferor’s capital gains cost, augmented by indexation allowance as appropriate.

The transferor and transferee companies are referred to as companies A and B in the legislation“ and the rule is subject to the conditions in TCGA92/S171(1A), see CG45410.

Therefore a chargeable gain or allowable loss will accrue only when an asset is disposed of outside the group (or the part of the group that is chargeable to corporation tax on chargeable gains) and that gain or loss will reflect the economic gain or loss throughout the group’s period of ownership.

Corporation tax group relief does not apply to allowable losses so the ability to make no gain/no loss transfers allows groups to bring together gains and losses so that only the overall net gains of a group are taxed. An election under TCGA92/S171A achieves the same effect without the need for any actual transfer.

Note that where a company has changed groups it is possible for the use of allowable losses to be restricted under TCGA92/S184A - F (CG47000+) or TCGA92/SCH7A (CG47520+, or CG474000+ where a company joined a group on or after 19 July 2011.

Apart from the main no gain/no loss rule for intra-group disposals in TCGA92/S171(1), there are other no gain/no loss rules for companies in the provisions dealing with

  • schemes of reconstruction or amalgamation, see CG45630
  • EC Mergers Directive - transfer of a UK trade, see CG45705+
  • Public sector transfer schemes, see CG45750.