What does Schedule 4 paragraph 6 of TCGA 1992 do?

Paragraph 6 extends the pre-31 March 1982 deferred charges on gains rules to assets whose value is derived from other assets acquired before that date. It ensures that where section 43 TCGA 1992 applies, the derived asset is treated as if it too were acquired before 31 March 1982, bringing it within the deferred charges framework.

How does section 43 TCGA 1992 interact with the deferred charges provisions in Schedule 4?

Under section 43, where an asset is derived from another asset, the cost and relevant details of the original asset must be taken into account when computing the chargeable gain. Paragraph 6 of Schedule 4 ensures that if the original asset was acquired before 31 March 1982, the deferred charges provisions apply to the derived asset's disposal.

Can a taxpayer avoid the pre-1982 deferred charges rules by disposing of a derived asset rather than the original?

No. Paragraph 6 prevents taxpayers from circumventing the pre-31 March 1982 rules simply because the asset disposed of is technically different from the one originally acquired. If the value traces back to a pre-1982 asset and section 43 applies, the deferred charge provisions in paragraphs 2 and 4 of Schedule 4 still apply.

What is an example of a derived asset falling within the deferred charges rules?

If Mr Brown acquired Asset A in 1978 and it was converted into Asset B in 1985, with section 43 requiring Asset A's base cost to be used in computing gains on Asset B, then paragraph 6 treats the disposal of Asset B as a disposal of a pre-31 March 1982 asset, applying the deferred charges provisions.

Taxation of Chargeable Gains Act 1992 Schedule 4 paragraph 6

Assets derived from other assets

Section 8 of Schedule 4 extends the pre-31 March 1982 acquisition rules to assets whose value is derived from other assets that were held before that date.

An asset does not need to have been directly acquired before 31 March 1982 to fall within the deferred charges provisions.
If the asset's value is derived from another asset that was acquired before 31 March 1982, it is treated as if it too were acquired before that date.
This applies where section 43 TCGA 1992 requires the original asset to be taken into account when computing the gain on disposal of the derived asset.
The effect is that the rolled-over or held-over gain provisions in paragraphs 2 and 4 of Schedule 4 apply equally to disposals of such derived assets.

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