Legislation – Finance Act 2025
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Schedule 2Sections 7 to 10 : transitional provision
Part 1Transitional provision in consequence of section 7 and Schedule 1
Introductory
1
This Part of this Schedule applies for the purpose of determining how the provisions of TCGA 1992 mentioned below are to apply for the tax year 2024-25 for the purposes of the amendments made by section 7 and Schedule 1.
Allocation of amounts to times before or after 30 October 2024
2
Gains or losses treated as accruing to an individual under section 1M of TCGA 1992 (temporary non-residents) in the tax year 2024-25 are to be treated as accruing before 30 October 2024.
3
Foreign chargeable gains under section 809J of ITA 2007 (section 809I: order of remittances) in the tax year 2024-25 are to be treated for the purposes of paragraph 1(2) of Schedule 1 to TCGA 1992 (UK resident individuals not domiciled in UK) as remitted before 30 October 2024.
4
Chargeable gains treated as accruing to a settlor under section 86(4)(a) of TCGA 1992 (attribution of gains to settlors with interest in non-resident or dual resident settlements) in the tax year 2024-25 are to be treated as accruing before 30 October 2024.
5
(1)
This paragraph makes provision in relation to—
(a)
chargeable gains treated as accruing to a beneficiary of a settlement under section 87(2) of TCGA 1992 (non-UK resident settlements: attribution of gains to beneficiaries) in the tax year 2024-25,
(b)
chargeable gains treated as accruing to a beneficiary of a settlement under section 89(2) of that Act (migrant settlements etc) in that tax year, and
(c)
chargeable gains treated as accruing to a beneficiary of a relevant settlement under paragraph 8(1) of Schedule 4C to that Act (attribution of Schedule 4C gains to beneficiaries) in that tax year.
(2)
Such of the chargeable gains within sub-paragraph (1)(a), (b) or (c) as result from the matching of capital payments received before 30 October 2024 are to be treated as accruing before that date.
(3)
Such of the chargeable gains within sub-paragraph (1)(a), (b) or (c) as result from the matching of capital payments received on or after that date are to be treated as accruing on or after that date.
(4)
The reference in sub-paragraph (1)(b) to section 89(2) of TCGA 1992 is to be read as including a reference to that section as applied by section 90(6)(a) of that Act (transfers between settlements).
Part 2Anti-forestalling provisions: sections 7(3) and 10(2)
Introductory
6
Assets transferred under unconditional contract made before 30 October 2024
7
(1)
If an asset is transferred on or after 30 October 2024 under an unconditional contract made before that date, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
(2)
A contract is an excluded contract if—
(a)
obtaining an advantage by reason of the application of section 28(1) of TCGA 1992 was no purpose of entering into the contract, and
(b)
where the parties to the contract are connected persons, the contract was entered into wholly for commercial reasons.
(3)
A contract is not to be regarded as an excluded contract unless the person making the transfer makes a claim which includes a statement that the contract meets the conditions to be an excluded contract.
(4)
But no claim is required if the total amount of—
(a)
the chargeable gain accruing on the disposal, and
(b)
does not exceed £100,000.
(5)
For this purpose the amount of any gain accruing on a qualifying business disposal is to be taken to be the amount of the gain under section 169N(2) of TCGA 1992.
(6)
If the person making the transfer makes—
(a)
a claim under section 169M of TCGA 1992 in relation to a qualifying business disposal (business asset disposal relief), or
(b)
a claim under section 169VM of that Act (investors’ relief) in relation to a disposal,
section 169M(2) and (3) of that Act, or (as the case may be) section 169VM(1) and (2) of that Act, apply to a claim under sub-paragraph (3) in relation to the disposal as they apply to a claim under the section concerned.
(7)
In this paragraph “qualifying business disposal” has the meaning given by Chapter 3 of Part 5 of TCGA 1992.
(8)
In this paragraph any reference to the transfer of an asset includes its conveyance.
Investors’ relief: reorganisations of share capital before 30 October 2024
8
(1)
This paragraph applies for the purposes of an election under section 169VT of TCGA 1992 in relation to a reorganisation of a company where—
(a)
the reorganisation takes place on or after 6 April 2023 but before 30 October 2024, and
(b)
the election is made on or after 30 October 2024.
(2)
If, as at 30 October 2024, a relevant individual holds qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
(3)
For this purpose “a relevant individual” means—
(a)
where a claim under section 169VM of TCGA 1992 is made jointly by the trustees of a settlement and an eligible beneficiary, an eligible beneficiary, and
(b)
where a claim under that section is made by an individual, the individual.
(4)
References in this paragraph to a reorganisation are to a reorganisation within the meaning of section 126 of TCGA 1992 or an exchange of shares or securities which is treated as such a reorganisation by virtue of section 135 or 136 of that Act, applying for the purposes of this paragraph the provision made by sections 169VN to 169VS of that Act.
(5)
In this paragraph “qualifying shares” and “potentially qualifying shares” have the meaning given by section 169VB of that Act.
Interpretation
9
This Part of this Schedule is to be read as if it were contained in TCGA 1992.
Part 3Anti-forestalling provisions: sections 8(3) and (6) and 9(4) and (8)
Introductory
10
This Part of this Schedule applies—
Assets transferred on or after 6 April 2025 under unconditional contract made before 30 October 2024
11
If an asset is transferred on or after 6 April 2025 under an unconditional contract made before 30 October 2024, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
Assets transferred on or after 6 April 2025 under unconditional contract made on or after 30 October 2024 but before 6 April 2025
12
If an asset is transferred on or after 6 April 2025 under an unconditional contract made on or after 30 October 2024 but before 6 April 2025, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
Assets transferred on or after 6 April 2026 under unconditional contract made in tax year 2025-26
13
If an asset is transferred on or after 6 April 2026 under an unconditional contract made at any time in the tax year 2025-26, the disposal is, despite section 28(1) of TCGA 1992, to be treated as taking place at the time the asset is transferred (rather than at the time the contract is made) unless the contract is an excluded contract.
Paragraphs 11 to 13: supplementary provision
14
(1)
(a)
obtaining an advantage by reason of the application of section 28(1) of TCGA 1992 was no purpose of entering into the contract, and
(b)
where the parties to the contract are connected persons, the contract was entered into wholly for commercial reasons.
(2)
(3)
But no claim is required if the total amount of—
(a)
the chargeable gain accruing on the disposal, and
(b)
the chargeable gains accruing on all other disposals made under excluded contracts (including contracts which are excluded contracts for the purposes of paragraph 7),
does not exceed £100,000.
(4)
For this purpose the amount of any gain accruing on a qualifying business disposal is to be taken to be the amount of the gain under section 169N(2) of TCGA 1992.
(5)
(a)
a claim under section 169M of TCGA 1992 in relation to a qualifying business disposal (business asset disposal relief), or
(b)
a claim under section 169VM of that Act (investors’ relief) in relation to a disposal,
section 169M(2) and (3) of that Act, or (as the case may be) section 169VM(1) and (2) of that Act, apply to a claim under sub-paragraph (2) in relation to the disposal as they apply to a claim under the section concerned.
(6)
(7)
Business asset disposal relief: reorganisations of share capital before 30 October 2024
15
(1)
This paragraph applies for the purposes of an election under 169Q of TCGA 1992 in relation to a reorganisation of a company where—
(a)
the reorganisation takes place on or after 6 April 2023 but before 30 October 2024, and
(b)
the election is made on or after 30 October 2024.
(2)
If, as at 30 October 2024—
(a)
the company is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
(b)
the relevant individual is an officer or employee of the company or (if the company is a member of a trading group) of one or more companies which are members of the trading group,
the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
(3)
For this purpose “the relevant individual” means—
(a)
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
(b)
where a claim under that section is made by an individual, the individual.
(4)
In this paragraph—
“holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A),
“the ” has the meaning given by section 126 of TCGA 1992,
“reorganisation” has the meaning given by that section, and
“trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
(5)
References in this paragraph to a reorganisation do not include an exchange of shares or securities which is treated as a reorganisation by virtue of section 135 or 136 of TCGA 1992 (but see instead paragraph 17).
Business asset disposal relief: reorganisations of share capital on or after 30 October 2024 but before 6 April 2026
16
(1)
This paragraph applies for the purposes of an election under 169Q of TCGA 1992 in relation to a reorganisation of a company where—
(a)
the reorganisation takes place on or after 30 October 2024 but before 6 April 2026, and
(b)
the election is made on or after 30 October 2024.
(2)
If, when the election is made—
(a)
the company is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
(b)
the relevant individual is an officer or employee of the company or (if the company is a member of a trading group) of one or more companies which are members of the trading group,
the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
(3)
If, at any time (“the relevant time”) before the making of the election, anything mentioned in sub-paragraph (2)(a) or (b) ceases to be as mentioned there, the disposal of the original shares is to be treated as taking place immediately before the relevant time and not at the time of the reorganisation.
(4)
For the purposes of this paragraph “the relevant individual” means—
(a)
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
(b)
where a claim under that section is made by an individual, the individual.
(5)
In this paragraph—
“holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A),
“the ” has the meaning given by section 126 of TCGA 1992,
“reorganisation” has the meaning given by that section, and
“trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
(6)
References in this paragraph to a reorganisation do not include an exchange of shares or securities which is treated as a reorganisation by virtue of section 135 or 136 of TCGA 1992 (but see instead paragraph 18).
(7)
This paragraph does not apply if both the reorganisation and the election occur in the same tax year.
Business asset disposal relief: exchanges of securities etc before 30 October 2024
17
(1)
This paragraph applies for the purposes of an election under section 169Q of TCGA 1992 in relation to an exchange of shares or securities within section 135(1) of TCGA 1992 where—
(a)
the exchange takes place on or after 6 April 2023 but before 30 October 2024, and
(b)
the election is made on or after 30 October 2024.
(2)
If condition A or B is met, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the exchange.
(3)
Condition A is that—
(a)
the persons who hold shares or securities in company B immediately after the exchange are substantially the same as those who held shares or securities in company A immediately before the exchange, or
(b)
the persons who have control of company B immediately after the exchange are substantially the same as those who had control of company A immediately before the exchange,
and, for the purposes of paragraph (a), connected persons are to be treated as the same person.
(4)
Condition B is that—
(a)
the shareholders who, immediately before and after the exchange, hold shares or securities in company A and company B respectively hold a greater percentage of the ordinary share capital in company B immediately after the exchange than they held in company A immediately before the exchange, and
(b)
as at 30 October 2024—
(i)
company B is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
(ii)
the relevant individual is an officer or employee of company B or (if company B is a member of a trading group) of one or more companies which are members of the trading group.
(5)
For this purpose “the relevant individual” means—
(a)
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
(b)
where a claim under that section is made by an individual, the individual.
(6)
If, before the exchange, the Commissioners for His Majesty’s Revenue and Customs have issued a notification in respect of it under section 138(1) of TCGA 1992 (advance clearance procedure)—
(a)
sections 127 to 131 of that Act apply with the necessary adaptations as if—
(i)
company A and company B were the same company, and
(ii)
the exchange were a reorganisation, and
(b)
section 169Q of that Act applies as if the exchange were treated as a reorganisation by virtue of section 135 of that Act.
(7)
In this paragraph—
“company A” and “company B” have the same meanings as in section 135 of TCGA 1992,
“holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A),
“the ” has the meaning given by section 126 of TCGA 1992, and
“trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
Business asset disposal relief: exchanges of securities etc on or after 30 October 2024 but before 6 April 2026
18
(1)
This paragraph applies for the purposes of an election under section 169Q of TCGA 1992 in relation to an exchange of shares or securities within section 135(1) of TCGA 1992 where—
(a)
the exchange takes place on or after 30 October 2024 but before 6 April 2026, and
(b)
the election is made on or after 30 October 2024.
(2)
If the following condition is met, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the exchange.
(3)
The condition is that—
(a)
the persons who hold shares or securities in company B immediately after the exchange are substantially the same as those who held shares or securities in company A immediately before the exchange, or
(b)
the persons who have control of company B immediately after the exchange are substantially the same as those who had control of company A immediately before the exchange,
and, for the purposes of paragraph (a), connected persons are to be treated as the same person.
(4)
If—
(a)
the shareholders who, immediately before and after the exchange, hold shares or securities in company A and company B respectively hold a greater percentage of the ordinary share capital in company B immediately after the exchange than they held in company A immediately before the exchange, and
(b)
the relief conditions are met when the election is made,
the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the exchange.
(5)
If—
(a)
the shareholders who, immediately before and after the exchange, hold shares or securities in company A and company B respectively hold a greater percentage of the ordinary share capital in company B immediately after the exchange than they held in company A immediately before the exchange, and
(b)
at any time (“the relevant time”) before the making of the election, the relief conditions cease to be met,
the disposal of the original shares is to be treated as taking place immediately before the relevant time and not at the time of the exchange.
(6)
For the purposes of this paragraph “the relief conditions” are met if—
(a)
company B is the relevant individual’s personal company and is either a trading company or the holding company of a trading group, and
(b)
the relevant individual is an officer or employee of company B or (if company B is a member of a trading group) of one or more companies which are members of the trading group.
(7)
For the purposes of this paragraph “the relevant individual” means—
(a)
where a claim under section 169M of TCGA 1992 is made jointly by the trustees of a settlement and a qualifying beneficiary, the qualifying beneficiary, and
(b)
where a claim under that section is made by an individual, the individual.
(8)
If, before the exchange, the Commissioners for His Majesty’s Revenue and Customs have issued a notification in respect of it under section 138(1) of TCGA 1992 (advance clearance procedure)—
(a)
sections 127 to 131 of that Act apply with the necessary adaptations as if—
(i)
company A and company B were the same company, and
(ii)
the exchange were a reorganisation, and
(b)
section 169Q of that Act applies as if the exchange were treated as a reorganisation by virtue of section 135 of that Act.
(9)
In this paragraph—
“company A” and “company B” have the same meanings as in section 135 of TCGA 1992,
“holding company” has the same meaning as in section 165 of TCGA 1992 (see section 165A),
“the ” has the meaning given by section 126 of TCGA 1992, and
“trading company” and “trading group” have the meaning given by paragraph 1 of Schedule 7ZA to TCGA 1992.
(10)
This paragraph does not apply if both the exchange and the election occur in the same tax year.
Investors’ relief: reorganisations of share capital before 30 October 2024
19
(1)
This paragraph applies for the purposes of an election under section 169VT of TCGA 1992 in relation to a reorganisation of a company where—
(a)
the reorganisation takes place on or after 6 April 2023 but before 30 October 2024, and
(b)
the election is made on or after 30 October 2024.
(2)
If, as at 30 October 2024, a relevant individual holds qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
(3)
For this purpose “a relevant individual” means—
(a)
where a claim under section 169VM of TCGA 1992 is made jointly by the trustees of a settlement and an eligible beneficiary, an eligible beneficiary, and
(b)
where a claim under that section is made by an individual, the individual.
(4)
References in this paragraph to a reorganisation are to a reorganisation within the meaning of section 126 of TCGA 1992 or an exchange of shares or securities which is treated as such a reorganisation by virtue of section 135 or 136 of that Act, applying for the purposes of this paragraph the provision made by sections 169VN to 169VS of that Act.
(5)
In this paragraph “qualifying shares” and “potentially qualifying shares” have the meaning given by section 169VB of that Act.
(6)
This paragraph does not apply if both the reorganisation and the election occur in the same tax year.
Investors’ relief: reorganisations of share capital on or after 30 October 2024 but before 6 April 2026
20
(1)
This paragraph applies for the purposes of an election under section 169VT of TCGA 1992 in relation to a reorganisation of a company where—
(a)
the reorganisation takes place on or after 30 October 2024 but before 6 April 2026, and
(b)
the election is made on or after 30 October 2024.
(2)
If, when the election is made, a relevant individual holds qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place at the time of the election and not at the time of the reorganisation.
(3)
If, at any time (“the relevant time”) before the making of the election, a relevant individual ceases to hold qualifying shares or potentially qualifying shares, the disposal of the original shares is to be treated as taking place immediately before the relevant time and not at the time of the reorganisation.
(4)
For the purposes of this paragraph “a relevant individual” means—
(a)
where a claim under section 169VM of TCGA 1992 is made jointly by the trustees of a settlement and an eligible beneficiary, an eligible beneficiary, and
(b)
where a claim under that section is made by an individual, the individual.
(5)
References in this paragraph to a reorganisation are to a reorganisation within the meaning of section 126 of TCGA 1992 or an exchange of shares or securities which is treated as such a reorganisation by virtue of section 135 or 136 of that Act, applying for the purposes of this paragraph the provision made by sections 169VN to 169VS of that Act.
(6)
In this paragraph “qualifying shares” and “potentially qualifying shares” have the meaning given by section 169VB of that Act.
(7)
This paragraph does not apply if both the reorganisation and the election occur in the same tax year.
Interpretation
21
This Part of this Schedule is to be read as if it were contained in TCGA 1992.