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HMRC internal manual

Capital Gains Manual

The degrouping charge: companies leaving a group before 19 July 2011: roll-over relief

CG45410 explains the special rule that applies where an asset is transferred within a group, then disposed of at a gain and that gain is rolled over into a second asset that is owned by a group company (special rule 8).

Applying roll-over relief to an actual degrouping charge is a separate matter. FA 2002 introduced TCAG92/S179B which allowed a gain accruing as a result of a degrouping charge to be rolled over under the provisions of TCGA92/S152 and TCGA92/S153. TCGA92/SCH7AB contains the modifications to the sections and related provisions.

Where there is an election under TCGA92/179A (see CG45455) any claim for relief must be made by the company to whom the gain is transferred.

This extension of roll-over relief to degrouping gains ended when the degrouping charge was amended by Finance Act 2011. It applied to gains accruing under a degrouping charge from 1 April 2002 and before 19 July 2011. From that date most degrouping charge gains and losses on trade assets for which a roll-over relief claim under section 179B could be made would result in an adjustment to consideration on a disposal of shares, the chargeable gain on which would fall to be exempted under the Substantial Shareholding Exemption.

Note that it was possible for a group to elect to apply the changes to degrouping charge rules made in Finance Act 2011 from 1 April 2011. Whenever the above guidance refers to 19 July 2011 it should be taken as referring to 1 April 2011 for a company in a group that has made such an election.