Section 124 Relief on transfer.F4C2C1
United Kingdom
If an individual who has attained the age of 60 years—
disposes by way of sale or gift of the whole or part of a business, or
disposes by way of sale or gift of shares or securities of a company,
and throughout a period of at least one year ending with the disposal the relevant conditions have been fulfilled, relief shall be given under this section in respect of gains accruing to him on the disposal.
For the purposes of subsection (1) above the relevant conditions are fulfilled at any time if at that time,—
in the case of a disposal falling within paragraph (a) of that subsection, the business in question is owned either by the individual or by a company with respect to which the following conditions are at that time fulfilled, namely,—
it is a trading company,
it is the individual’s family company, and
he is a full-time working director of it;
and
in the case of a disposal falling within paragraph (b) of that subsection, either the conditions in sub-paragraphs (i) to (iii) of paragraph (a) above are fulfilled with respect to the company in question or the individual owns the business which, at the time of the disposal, is owned by the company;
and in relation to a particular disposal the period, up to a maximum of 10 years, which ends with the disposal and throughout which the relevant conditions are fulfilled is in this section referred to as “the qualifying period”.
The amount available for relief under this section shall be—
in the case of an individual who has attained the age of 65 years, the relevant percentage of F1£100,000, and
in the case of an individual who has not attained that age, the relevant percentage of the aggregate of F2£20,000 for every year by which his age exceeds 60 and a corresponding part of £20,000 for any odd part of a year;
and for the purpose of this subsection “the relevant percentage” means a percentage determined according to the length of the qualifying period on a scale rising arithmetically from 10 per cent. where that period is precisely one year to 100 per cent. where it is ten years.
Where subsection (1)(a) above applies the gains accruing to the individual on the disposal of chargeable business assets comprised in the disposal by way of sale or gift shall be aggregated, and only so much of that aggregate as exceeds the amount available for relief under this section shall be chargeable gains (but not so as to affect liability in respect of gains accruing on the disposal of assets other than chargeable business assets).
Where subsection (1)(b) above applies—
the gains which accrue to the individual on the disposal of the shares or securities shall be aggregated, and
of a proportion of that aggregate sum which is equal to the proportion which the part of the value of the company’s chargeable assets at the time of the disposal which is attributable to the value of the company’s chargeable business assets bears to the whole of that value, only so much as exceeds the amount available for relief under this section shall constitute chargeable gains (but not so as to affect liability in respect of gains representing the balance of the said aggregate sum),
and for the purposes of paragraph (b) above every asset is a chargeable asset except one, on the disposal of which by the company at the time of the disposal of the shares or securities, no chargeable gain would accrue.
So far as the amount available for relief under this section is applied in giving relief to an individual as respects a disposal it shall not be applied in giving relief to that individual as respects any other disposal (and the relief shall be applied in the order in which any disposals take place).
In arriving at the aggregate under subsection (4) or sub-section (5) above—
the respective amounts of the gains shall be computed in accordance with the provisions of this Act (other than this section) fixing the amount of chargeable gains, and
any allowable loss which accrues on the disposal shall be deducted,
and the provisions of this section shall not affect the computation of the amount of any allowable loss.
In this section—
“chargeable business asset” means an asset (including goodwill but not including shares or securities or other assets held as investments) which is, or is an interest in, an asset used for the purposes of a trade, profession, vocation, office or employment carried on by the individual, or as the case may be by the individual’s family company, other than an asset on the disposal of which no chargeable gain accrues or (where the disposal is of shares or securities in the family company) on the disposal of which no chargeable gain would accrue if the family company disposed of the asset at the time of the disposal of the shares or securities,
“family company” means, in relation to an individual, a company the voting rights in which are—
as to not less than 25 per cent., exercisable by the individual, or
as to not less than 51 per cent., exercisable by the individual or a member of his family, and, as to not less than 5 per cent., exercisable by the individual himself,
“family” means, in relation to an individual, the husband or wife of the individual, and a relative of the individual or the individual’s husband or wife, and “relative” means brother, sister, ancestor or lineal descendant,
“full time working director” means a director who is required to devote substantially the whole of his time to the service of the company in a managerial or technical capacity,
“trade”, “profession”, “vocation”, “office” and “employment” have the same meanings as in the Income Tax Acts,
“trading company” has the meaning given by paragraph F37 of Schedule 19 to the Taxes Act 1988;
and in this section references to the disposal of the whole or part of a business include references to the disposal of the whole or part of the assets provided or held for the purposes of an office or employment by the person exercising that office or employment.
Annotations
Textual amendments
- F1
“£100,000” substituted by Finance Act 1984 (c. 43, SIF 63:2), s. 63(4) in relation to disposals on or after 6 April 1983
- F2
“£20,000” substituted by Finance Act 1984 (c. 43, SIF 63:2), s. 63(4) in relation to disposals on or after 6 April 1983
- F3
Words substituted by Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), Sch. 29 para. 32
- F4
Ss. 124, 125 repealed by Finance Act 1985 (c. 54), ss. 69(1), 98(6) and Sch. 27 Part VII in relation to any disposal made on or after 6 April 1985 unless the qualifying period relating to the disposal ends before 6 April 1985
Modifications
- C1
See Finance Act 1985 (c. 54), ss. 69, 70 and Sch. 20
- C2
See— Development Land Tax Act 1976 (c. 24), s. 34 and Sch. 6 para. 1(5) (which Act was repealed by Finance Act 1985 (c. 54, SIF 63:2), ss. 93, 98(6) and Sch. 27 Pt. X); Finance Act 1984 (c. 43, SIF 63:1), s. 50(1) and Sch. 11 para. 1
Notes on the whole Act
Textual amendments
- F1
Act repealed (6.3.1992 with effect as mentioned in s. 289(1)(2) of the repealing Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch.12 (with s. 201(3), Sch. 11 paras. 20, 22, 26(2), 27 and with saving in Sch. 11 para. 24(2)) and subject to an amendment (prosp.) by Museum and Galleries Act 1992 (c. 44), s. 11(2), Sch. 8 Pt. I para. 1(1)(2)(7), and amendments by: Disability Living Allowance and Disability Working Allowance Act 1991 (c. 21), s. 4(2), Sch. 2 para. 9(1)(2) (in force 6.4.1992 by S.I. 1991/2617, art. 2(f)); S.I. 1991/2874, art. 2 (in force 6.4.1992 by S.R. 1992/94, art. 2); Social Security (Consequential Provisions) Act 1992 (c. 6), s. 4, Sch. 2 para. 52(a)(b) (in force 1.7.1992 by s. 7(2) of the amending Act); Social Security (Consequential Provisions) (Northern Ireland) Act 1992 (c. 9), s. 4, Sch. 2 para. 20(a)(b) (in force 1.7.1992 by s. 7(2) of the amending Act); Finance (No. 2) Act 1992 (c. 48), ss. 35(2), 47, 48, 56, 77, Sch. 9 para. 20(1)(inserting ss. 143A and 143B), Sch. 17 paras. 3, 6(2)(5), 7, (the amendments coming into force 16.7.1992 except for the amendment by s. 56, Sch. 9 para. 20(1) which comes into force on 19.2.1993 by S.I. 1993/236, art. 2); and amendments (retrospective to 1.1.1992) by ss. 35(2), 47, 48 of the same 1992 Act, and amendments (27.7.1993 with effect as mentioned in ss. 84(3), 86(4), 88(4), 105(4) of the amending Act) by 1993 c. 34, ss. 84(3), 86(4), 88(4)(a)(b), 105(3)(4)