Taxation of Chargeable Gains Act 1992, section 24

Disposals where assets lost or destroyed, or become of negligible value

Part II General Provisions relating to computation of gains and acquisitions and disposals of assets

(1)Subject to the provisions of this Act and, in particular to [F64sections 140A(1D), 140E(7) and 144F64] , the occasion of the entire loss, destruction, dissipation or extinction of an asset shall, for the purposes of this Act, constitute a disposal of the asset whether or not any capital sum by way of compensation or otherwise is received in respect of the destruction, dissipation or extinction of the asset.

[F65 (1A) A negligible value claim may be made by the owner of an asset (“P”) if condition A or B is met.

(1B)Condition A is that the asset has become of negligible value while owned by P.

(1C)Condition B is that—

(a)the disposal by which P acquired the asset was a no gain/no loss disposal,

(b)at the time of that disposal the asset was of negligible value, and

(c)between the time when the asset became of negligible value and the disposal by which P acquired it, each other disposal (if any) of the asset was a no gain/no loss disposal.F65]

[F66 (2)[F67 Where a negligible value claim is made:F67]

(a)this Act shall apply as if the claimant had sold, and immediately reacquired, the asset at the time of the claim or (subject to paragraphs (b) and (c) below) at any earlier time specified in the claim, for a consideration of an amount equal to the value specified in the claim.

(b)An earlier time may be specified in the claim if:

(i)the claimant owned the asset at the earlier time; and

(ii)the asset had become of negligible value at the earlier time; and either

(iii)for capital gains tax purposes the earlier time is not more than two years before the beginning of the year of assessment in which the claim is made; or

(iv)for corporation tax purposes the earlier time is on or after the first day of the earliest accounting period ending not more than two years before the time of the claim.

(c)Section 93 of and Schedule 12 to the Finance Act 1994 (indexation losses and transitional relief) shall have effect in relation to an asset to which this section applies as if the sale and reacquisition occurred at the time of the claim and not at any earlier time.F66]

(3)For the purposes of [F68this sectionF68] , a building and any permanent or semi-permanent structure in the nature of a building may be regarded as an asset separate from the land on which it is situated, but [F69where a building or structure is so regarded,F69] the person deemed to make the disposal of the building or structure shall be treated as if he had also sold, and immediately reacquired, the site of the building or structure (including in the site any land occupied for purposes ancillary to the use of the building or structure) for a consideration equal to its market value at that time.

[F70 (3A)Subsection (3C) applies, for the purposes of this section, in relation to an asset which is a leasehold interest in a building or structure by reference to which a person is entitled to an allowance under Part 2A of CAA 2001 (structures and buildings allowances).

(3B) For the purposes of subsection (3A), “leasehold interest” is to be construed in accordance with section 270IH of CAA 2001.

(3C)Where this subsection applies—

(a)the building or structure is to be regarded, for the purposes of this section, as an asset separate from the land on which it is situated, and

(b)subsection (3) does not apply.

(3D)But subsection (3C) does not apply if the person deemed to make the disposal of the building or structure makes an election under this subsection.

(3E)An election under subsection (3D), in respect of a deemed disposal, must be made by a notice given to an officer of Revenue and Customs—

(a)in the case of an election by a person within the charge to corporation tax, within the period of two years from the end of the accounting period in which the disposal is deemed to be made; and

(b)in any other case, on or before the first anniversary of the 31 January following the year of assessment in which the disposal is deemed to be made.

(3F)An election under subsection (3D) is irrevocable. F70]

[F71 (4)For the purposes of subsection (1C), a no gain/no loss disposal is one which, by virtue of any of the no gain/no loss provisions, neither a gain nor a loss accrues to the person making the disposal.F71]

Definitions used in section 24 10

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
tax

and for the purposes of this definition “tax” means capital gains tax, corporation tax or income tax.

Defined in s.16A(2) · see it in the full Act
year of assessment

“year of assessment” means tax year;

Defined in s.288(1) · see it in the full Act
building

“building” includes part of a building and references to a building may include references to land occupied therewith and used for the same purposes;

Defined in Sch.2 para.15 · see it in the full Act
land

“land” includes messuages, tenements, and hereditaments, houses and buildings of any tenure;

Defined in s.288(1) · see it in the full Act

(b) “land” includes buildings.

Defined in Sch.2 para.9(5) · see it in the full Act
market value

(5AA) In this Act “market value” in relation to shares of a given class in an open-ended investment company the prices of which are published regularly by the authorised corporate director of that company (whether or not those shares are also quoted in The Stock Exchange Daily Official List) shall mean an amount equal to the price so published on the relevant date, or if no price was published on that date, on the latest date before that date.

Defined in s.272(5AA) · see it in the full Act

(5) In this Act “market value” in relation to any rights of unit holders in any unit trust scheme the buying and selling prices of which are published regularly by the managers of the scheme shall mean an amount equal to the buying price (that is the lower price) so published on the relevant date, or if none were published on that date, on the latest date before.

Defined in s.272(5) · see it in the full Act

(1) In this Act “market value” in relation to any assets means the price which those assets might reasonably be expected to fetch on a sale in the open market.

Defined in s.272(1) · see it in the full Act

(4) In particular, for the purposes of paragraphs 5 and 7 of this Schedule “market value” has the meaning given by paragraph 92 of Schedule 2 to that Act (determination of market value); and Part 8 of this Act has effect subject to this paragraph.

Defined in Sch.7D para.1(4) · see it in the full Act
the deemed disposal

(5) If the number of replacement securities is less than the number of securities which B is treated as having acquired, L is to be treated for the purposes of this Act as having made a disposal, at the insolvency date, of the difference (“the deemed disposal”).

Defined in s.263CA(5) · see it in the full Act
notice

“notice” means notice in writing;

Defined in s.288(1) · see it in the full Act
the no gain/no loss provisions

(3A) For the purposes of this Act, the following are “the no gain/no loss provisions”—

(a)sections 58, 73, 139, 140A, 140E, 171, 211, 211B, 215, 216, 217A, 217D, 218 to 220 , 257(3), 258(4), 264 and 267(2) of this Act;

(b)section 148 of the 1979 Act;

(c)section 148 of the Finance Act 1982;

(d)section 130(3) of the Transport Act 1985;

(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f)paragraph 2(1) of Schedule 7 to the Broadcasting Act 1996;

(g)paragraphs 3 and 9 of Schedule 26 to the Transport Act 2000;

(h)paragraphs 3, 18, 29 and 32 of Schedule 9 to the Energy Act 2004;

(i)paragraph 9 of Schedule 4 to the Consumers, Estate Agents and Redress Act 2007;

(j)Schedule 7 to the Housing and Regeneration Act 2008;

(k)paragraph 4 of Schedule 4 to the Budget Responsibility and National Audit Act 2011;

(l)paragraph 1(2) or 4 of Schedule 2 to the Postal Services Act 2011;

(m)paragraph 6(1) of Schedule 24 to the Localism Act 2011.

Defined in s.288(3A) · see it in the full Act

Cases considering section 24 3

Little and Others v Messrs George Little Sebire & Co.

[2001] EWCA Civ 894 · 14 June 2001

The court applied the statutory condition that the Inspector be satisfied that the shares’ value had become negligible. It held that the condition would have been met for 1993/94 because negligible value was accepted at 30 April 1994 and there was no material difference 25 days earlier.

DMWSHNZ Ltd v HM Revenue and Customs

[2015] EWCA Civ 1036 · 20 October 2015

Cited as an example of a statutory deemed disposal without a corresponding acquisition; it supports the conclusion that section 171A’s wording requires an acquisition by C. (see paras [10], [36])

Strand Futures and Options Ltd. v HM Inspector of Taxes

[2003] EWHC 67 (Ch) · 7 February 2003Limits

Confirms that the deemed-disposal provision does not apply where the shares were actually sold under a contract before cancellation. (see paras [16], [21])

What each judgment says about section 24 is in the case-law panel in the full Act.

Amendments and notes

14 notes from legislation.gov.uk

Amendments

  1. F64Words in s. 24(1) substituted (with effect in accordance with reg. 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 2 para. 3 (with S.I. 2008/1579, reg. 4(1))
  2. F65S. 24(1A)-(1C) inserted (with effect in accordance with art. 4(6) of the amending S.I.) by The Enactment of Extra-Statutory Concessions Order 2009 (S.I. 2009/730), arts. 1(1), 4(2)
  3. F66S. 24(2) substituted (with effect in accordance with Sch. 39 para. 4(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 39 para. 4(1)
  4. F67Words in s. 24(2) substituted (with effect in accordance with art. 4(6) of the amending S.I.) by The Enactment of Extra-Statutory Concessions Order 2009 (S.I. 2009/730), arts. 1(1), 4(3)
  5. F68Words in s. 24(3) substituted (with effect in accordance with art. 4(6) of the amending S.I.) by The Enactment of Extra-Statutory Concessions Order 2009 (S.I. 2009/730), arts. 1(1), 4(4)(a)
  6. F69Words in s. 24(3) substituted (with effect in accordance with art. 4(6) of the amending S.I.) by The Enactment of Extra-Statutory Concessions Order 2009 (S.I. 2009/730), arts. 1(1), 4(4)(b)
  7. F70S. 24(3A)-(3F) inserted (5.7.2019) by The Capital Allowances (Structures and Buildings Allowances) Regulations 2019 (S.I. 2019/1087), regs. 1, 4(2)
  8. F71S. 24(4) inserted (with effect in accordance with art. 4(6) of the amending S.I.) by The Enactment of Extra-Statutory Concessions Order 2009 (S.I. 2009/730), arts. 1(1), 4(5)

Modifications

  1. C96S. 24 excluded by Finance Act 1996 (c. 8), Sch. 9 para. 12B(5) (as substituted (with effect in accordance with reg. 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 2 para. 8 (with S.I. 2008/1579, reg. 4(1)))
  2. C97S. 24 excluded by Finance Act 1996 (c. 8), Sch. 9 para. 12D(5) (as inserted (with effect in accordance with reg. 3(1) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 1 para. 16 (with S.I. 2008/1579, reg. 4(1)))
  3. C98S. 24 excluded by Finance Act 2002 (c. 23), Sch. 26 para. 30D(5) (as inserted (with effect in accordance with reg. 3(1) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 1 para. 19 (with S.I. 2008/1579, reg. 4(1)))
  4. C99S. 24 excluded by Finance Act 2002 (c. 23), Sch. 26 para. 85(1D) (as inserted (with effect in accordance with reg. 3(1) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 1 para. 21(2) (with S.I. 2008/1579, reg. 4(1)))
  5. C100S. 24 excluded by Finance Act 2002 (c. 23), Sch. 26 para. 30B(5) (as substituted (with effect in accordance with reg. 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 2 para. 10 (with S.I. 2008/1579, reg. 4(1)))
  6. C101S. 24 excluded by Finance Act 2002 (c. 23), Sch. 29 para. 85A(6) (as substituted (with effect in accordance with reg. 3(2) of the amending S.I.) by The Corporation Tax (Implementation of the Mergers Directive) Regulations 2007 (S.I. 2007/3186), reg. 1(2), Sch. 2 para. 11 (with S.I. 2008/1579, reg. 4(1)))