CG45308 - Group asset transfers: no gain/loss disposals: outline

The general effect of the no gain/no loss rule is to defer the chargeable gain which would otherwise arise on the disposal of an asset by company A to company B in the same group, provided the asset remains within the UK tax net. If the recipient company B disposes of the asset outside the group, or to a group company which is not resident in the UK and does not hold or use the asset for the purposes of a UK branch or agency, the chargeable gain assessable on B takes account of the original cost to A. The gain accordingly reflects the asset's increase in value during the period of ownership by both A and B.

If the recipient B disposes of the asset to another company C in the same group, and the asset remains within the UK tax net (see CG45301), the no gain/no loss rule operates again on the transfer from B to C. If company C disposes of the asset outside the group, or out of the scope of UK tax, the gain brought into charge at that stage takes account of the original cost to company A, which is the first company in the sequence of no gain/no loss disposals. The gain assessed on company C will therefore reflect the asset's increase in value throughout the period of ownership by A, B and C.