Taxation of Chargeable Gains Act 1992 Schedule 2 paragraph 20

Capital allowances

Schedule 2 paragraph 20 deals with how capital allowances interact with the deemed sale and reacquisition of assets at 6 April 1965 when computing chargeable gains or allowable losses.

• Where an asset is deemed to have been sold and reacquired on 6 April 1965, capital allowances and renewals allowances from 1965–66 onwards are treated as if they related to the deemed reacquisition cost rather than the original actual expenditure.
• This ensures that the rules restricting allowable losses by reference to capital allowances (section 41) and the rules on wasting assets qualifying for capital allowances (section 47) operate correctly against the rebased 1965 value.
• When computing a loss on disposal, the deemed 6 April 1965 cost is reduced by the amount of capital allowances granted from 1965–66 onwards, and any balancing charges on disposal are deducted from the total of those capital allowances.
• The provision applies only to capital allowances and renewals allowances made for the tax year 1965–66 and subsequent years of assessment, not to allowances granted for earlier years.