LAM03330 - Calculation of ‘I’ Income and chargeable gains: Spreading of deemed disposal gains: TCGA92/S212
TCGA92/S213(1) and (1A) spread the aggregate of the chargeable gains and allowable losses on deemed disposals (called the net amount) referable to BLAGAB in an accounting period over seven years. Special rules apply where there are net allowable losses.
Example
Company A acquires OEICs during the accounting period ended 31 December 2017 valued at £3.5billion which are wholly backing BLAGAB business.
There is a net chargeable gain the ’net amount’ arising across the OEIC portfolio of £700M in 2017 and £1,050M in 2018.
| - | Net Amount Million | 2017 Million | 2018 Million | 2019 Million | 2020 Million | 2021 Million | 2022 Million | 2023 Million | 2024 Million |
|---|---|---|---|---|---|---|---|---|---|
| 2017 | 700 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | - |
| 2018 | 1050 | - | 150 | 150 | 150 | 150 | 150 | 150 | 150 |
| Chargeable | - | 100 | 250 | 250 | 250 | 250 | 250 | 250 | 150 |
The chargeable gain of £700m in 2017 would result in chargeable gains from the deemed disposal of £100M in 2017 and £100M each year through to 2023. The gain of £1,050M in 2018 would result in a chargeable gain of £150M each year from 2018 through to 2024.
Any subsequent net BLAGAB chargeable gains or allowable losses in 2019 and later would be similarly spread and added to the amounts for 2017 and 2018. This is subject to any loss carry back (LAM03340).
The resulting chargeable amount would then be added to any other BLAGAB chargeable gains or could be offset by BLAGAB allowable losses. Any apportionment, where assets are partly backing BLAGAB and partly backing non-BLAGAB, would be carried out before any spreading.
For the current accounting period, in the example 2017, 1/7th is brought into account regardless of the accounting period length. For subsequent accounting periods of less than a year the fraction of 1/7th is proportionately reduced.
Where there is an actual disposal of an asset in an accounting period, the chargeable gain or allowable loss is not spread. The gain or loss is calculated with reference to the last deemed disposal. The gain or loss from previous deemed disposals continues to unwind as before.