Taxation of Chargeable Gains Act 1992 Schedule A1 paragraph 14

Further rules for assets derived from other assets

Paragraph 14 of Schedule A1 sets out additional rules that apply when a chargeable gain arises on the disposal of an asset that has been derived from another asset, ensuring that the taper relief calculation properly reflects the history of the original asset.

• When a new asset is derived from an original asset (for example, through a reorganisation of share capital or similar transaction), the holding period for taper relief purposes is traced back to the original asset rather than starting afresh from the date the new asset came into existence.
• The qualifying holding period of the derived asset includes any period during which the original asset was held, so that the taxpayer does not lose the benefit of time already accumulated on the original asset.
• Whether the asset qualifies as a business asset or a non-business asset for taper relief purposes is determined by looking at the nature and use of both the original asset and the derived asset across the combined holding period.
• These provisions were introduced by the Finance Act 2008 Schedule 2 paragraph 45, and they work alongside the general taper relief rules in Schedule A1 to ensure consistent treatment where assets undergo transformation or reorganisation without a real change in economic ownership.

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