CG17909 - Taper relief: qualifying holding period: assets derived from other assets

TCGA92/SCHA1/PARA14, TCGA92/S43

TCGA92/SCHA1/PARA14 modifies the qualifying holding period where assets are derived from other assets. This paragraph applies when there is the same type of event as described in TCGA92/S43. For general guidance on the operation of TCGA92/S43, where assets are derived from other assets, see CG15230+.

Where as a result of any merger or division of assets the value of an asset disposed of is derived to some extent from any asset acquired previously by the same person the qualifying holding period begins with the earlier acquisition, or with 6 April 1998 if later.

- EXAMPLE

Lease of land acquired 8 January 1995.

Freehold of same land acquired 4 February 1999.

The lease is extinguished by merger with the freehold.

Disposal of freehold 3 May 2001.

The value of the freehold is derived to some extent from the extinguished lease and so the qualifying holding period for taper relief begins on 6 April 1998. The asset is treated as having been acquired before 17 March 1998 and so the disposal qualifies for the bonus year if this was a disposal of a non-business asset, see CG17930+.

Taper relief is based on 4 whole years = 3 whole years in the qualifying holding period post 5 April 1998 + bonus year.