Taxation of Chargeable Gains Act 1992 section 140A

Transfer or division of UK business

Section 140A provides capital gains tax relief on a no gain/no loss basis when a UK business (or part of one) is transferred between companies resident in different relevant states, subject to certain conditions being met.

• A qualifying company resident in one relevant state may transfer all or part of a UK business to a company in another relevant state on a no gain/no loss basis, provided the transfer is wholly in exchange for shares or debentures and both parties make a joint claim.
• The section also covers partial divisions of a business to one or more transferee companies, provided the transferor continues to carry on a business after the transfer and shares or debentures are issued to the transferor's shareholders (or are only withheld because a transferee is legally prevented from issuing shares to itself).
• If the transferee is not UK-resident, any gains on the transferred assets must fall within the UK corporation tax charge; if the transferee is UK-resident, double taxation treaty arrangements must not exempt it from UK tax on gains from those assets.
• Where all conditions are met, the transferred assets are treated as acquired by the transferee at a value that produces neither a gain nor a loss for the transferor, and the deemed disposal rules for non-residents ceasing to hold assets do not apply.