Groups - Reallocation of chargeable gains
The measure
This change affects groups of companies who wish to move capital gains or losses from one group company to another.
Legislation will be introduced in Finance Bill 2009 to make it easier for groups to move capital gains and losses within the group without the need to actually transfer the assets within the group.
Existing legislation enables groups to elect to move certain capital gains and losses between group companies. However an election cannot normally be made unless the asset on which the gain or loss arose was sold to a third party. Consequently, the election cannot currently be made for some types of gains and losses, for example for the loss which results if an asset has become of negligible value and the company makes a claim to that effect.
The change announced as part of the Budget will mean that the group companies can jointly deem to transfer the resulting capital gain or loss from the company which owned the asset to one or more other specified companies within the group. The former restrictions on the type of asset, and the circumstances under which the gain or loss arises, no longer apply.
Who will be affected?
Groups of companies with capital gains or losses.
When?
The new legislation will apply to gains or losses arising on or after the date that Finance Bill 2009 receives Royal Assent.
We welcome this proposal which has been sought by tax payers and advisers for some time. It will make it a great deal easier for groups to move capital gains or losses from one group member to another.
