Taxation of Chargeable Gains Act 1992, section 115

Exemptions for gilt-edged securities and qualifying corporate bonds etc

Part IV Shares, securities, options etc.

(1)A gain which accrues on the disposal by any person of—

(a)gilt-edged securities or qualifying corporate bonds, or

(b)any option or contract to acquire or dispose of gilt-edged securities or qualifying corporate bonds,

shall not be a chargeable gain.

(2)In subsection (1) above the reference to the disposal of a contract to acquire or dispose of gilt-edged securities or qualifying corporate bonds is a reference to the disposal of the outstanding obligations under such a contract.

(3)Without prejudice to section 143(5), where a person who has entered into any such contract as is referred to in subsection (1)(b) above closes out that contract by entering into another contract with obligations which are reciprocal to those of the first-mentioned contract, that transaction shall for the purposes of this section constitute the disposal of an asset, namely, his outstanding obligations under the first-mentioned contract.

Definitions used in section 115 5

gilt-edged securities

1 For the purposes of this Act “gilt-edged securities” means the securities specified in Part II of this Schedule, and such stocks and bonds issued under section 12 of the National Loans Act 1968 [1968 c. 13.] , denominated in sterling and issued after 15th April 1969, as may be specified by order made by the Treasury.

Defined in Sch.9 para.1 · see it in the full Act
qualifying

(a) is a “qualifying” corporate bond if it is issued after 13th March 1984; and

Defined in s.117(7) · see it in the full Act
the option

(a) a share option (“the option”) has been granted to an individual—

(i) in accordance with the provisions of a Schedule 4 CSOP scheme, and

(ii) by reason of the individual’s office or employment as a director or employee of a company, and

(b) shares (“the relevant shares”) are acquired by the exercise of the option.

Defined in Sch.7D para.11(3) · see it in the full Act
assets

(a) the reference to “assets” were a reference to “property”, and

Defined in Sch.4ZA para.22(2) · see it in the full Act
asset

In this sub-paragraph “asset” includes part of an asset.

Defined in Sch.8B para.6(1) · see it in the full Act

Cases considering section 115 10

Hancock and another v Commissioners for Her Majesty’s Revenue and Customs

[2019] UKSC 24 · 22 May 2019Limits

The qualifying-corporate-bond exemption was subject to the rollover carve-out applicable to qualifying-bond conversions connected with reorganisations. The appellants could not obtain the exemption for the accrued gain on the non-qualifying bonds (see paras [1]; [27]).

Trigg v HM Revenue & Customs

[2018] EWCA Civ 17 · 18 January 2018

The court treated this as the operative exemption from chargeable gains, with entitlement depending on whether the securities were QCBs under section 117. (see paras [1], [5]-[6], [40])

Hancock & Anor v Revenue & Customs

[2017] EWCA Civ 198 · 25 May 2017

Gains on the disposal of QCBs are exempt, but section 116(10)(c) excludes a frozen gain from that exemption. The court treated the exemption as applying only to gains attributable to the QCB itself, not to earlier gains on non-QCB securities. (see [22]-[24]; [67]-[71]; [85]-[87])

What each judgment says about section 115 is in the case-law panel in the full Act.