CG17911 - Taper relief: qualifying holding period: postponed gains

TCGA92/SCHA1/PARA16

Where a gain on an asset would have accrued on a disposal or other event, but is postponed because of one of the specific provisions listed below, special rules are provided to determine the extent to which the gain will qualify for taper relief.

The specific provisions referred to by Paragraph 16(2) TCGA92/SCHA1 are:

• charge to Capital Gains Tax on temporary non residents;

• TCGA92/S116(10)

• qualifying corporate bonds;

• TCGA92/S134

• compensation stock;

• TCGA92/S154(2) & TCGA92/S154(4)

• roll-over relief where new assets are depreciating assets;

• TCGA92/SCH5B

• EIS deferral relief;

• TCGA92/SCH5C

• VCT deferral relief;

• FA96/SCH15/PARA27

• qualifying indexed securities.
• 
  Taper relief in relation to the gain that has been postponed will only be available for the period from 6 April 1998, or the date of acquisition of the asset if later, until the time of the disposal or other event on which the gain is calculated. Taper relief is not available for the further period running from the time of disposal or other event to the date the gain accrues under the deferral provisions listed in TCGA92/SCHA1/PARA16(2).
  
  
• EXAMPLE
• Taxpayer acquires shares in his qualifying company in August 1997. The company is taken over in May 1999 and the taxpayer exchanges his shares for a new issue of QCBs. The gain computed in accordance with TCGA92/S116(10)(a) is £50,000. In July 2005 the taxpayer disposes of the QCBs so that the postponed gain of £50,000 is deemed to accrue at that time. In this example the shares will qualify for the greater business asset taper. There will be 2 complete years in the qualifying holding period for taper relief, consisting of the one complete year of ownership between 6 April 1998 and May 1999 and the bonus year (para 2.18), as the asset was held on both 17 March 1998 and 5 April 1998. The period from June 1999 to July 2005 will have no bearing on the extent of taper relief available. As the disposal giving rise to the postponed gain was before 6 April 2000 taper relief is calculated using the percentage rates applying before that date.