Taxation of Chargeable Gains Act 1992 Schedule 1A paragraph 3

The basic rule

Schedule 1A paragraph 3 sets out the basic rule for determining whether an asset derives at least 75% of its value from UK land, by reference to a company's qualifying assets at the time of disposal.

• An asset meets the 75% test if it is a right or interest in a company and at least 75% of the total market value of the company's qualifying assets derives, directly or indirectly, from interests in UK land at the time of disposal.
• Market value can be traced through any number of companies, partnerships, trusts and other entities, regardless of whether they are established under UK or overseas law, but cannot be traced through a normal commercial loan.
• Assets held by intermediate entities must be attributed to shareholders, partners, beneficiaries or other participants at each stage in whatever way is appropriate in the circumstances.
• Two exceptions apply: one for interests in UK land used for trading purposes and another for certain disposals of rights or interests in connected companies.