What does section 156ZA of the Taxation of Chargeable Gains Act 1992 do?

Section 156ZA provides rules for how roll-over relief under the intangible fixed assets regime in CTA 2009 interacts with chargeable gains rules. When a company disposes of a pre-April 2002 intangible asset and qualifies for roll-over relief, the disposal consideration is treated as reduced by the relief amount, deferring the chargeable gain.

When does section 156ZA apply to intangible fixed assets?

Section 156ZA applies in two situations: first, where a company disposes of a pre-FA 2002 intangible asset on or after 1 April 2002 and qualifies for CTA 2009 roll-over relief; second, where a degrouping charge arises on a pre-FA 2002 intangible asset on or after 1 April 2002 and the company is entitled to roll-over relief.

How does section 156ZA affect the chargeable gains calculation on disposal?

The company is treated for chargeable gains purposes as though the disposal proceeds are reduced by the amount of roll-over relief. This reduces or eliminates any chargeable gain that would otherwise arise, effectively mirroring the deferral achieved through the intangible fixed assets regime under CTA 2009.

Does section 156ZA affect the buyer of the intangible asset?

No. The adjustment under section 156ZA is one-sided and only affects the disposing company's chargeable gains position. The buyer's acquisition cost and tax treatment remain unchanged. Similarly, the treatment of expenditure on replacement assets into which the proceeds are reinvested is not altered by this provision.

Taxation of Chargeable Gains Act 1992 section 156ZA

Intangible fixed assets: roll-over relief

Section 156ZA provides rules for how roll-over relief available under the intangible fixed assets regime interacts with the chargeable gains rules, specifically where older intangible assets (those held before April 2002) are disposed of or trigger degrouping charges.

The section applies when a company qualifies for intangible asset roll-over relief under CTA 2009 in respect of pre-April 2002 intangible assets that are disposed of or that give rise to degrouping charges on or after 1 April 2002.
For chargeable gains purposes, the disposal consideration for the old asset is treated as reduced by the amount of roll-over relief available, thereby deferring any chargeable gain.
This deemed reduction in consideration only affects the disposing company's own chargeable gains position — it does not alter the tax treatment of the other party to the transaction or the treatment of expenditure on replacement assets.
The "old asset" takes its meaning from the intangible fixed assets roll-over relief provisions in CTA 2009, and "the Taxes Acts" covers all legislation relating to income tax, corporation tax, and chargeable gains.

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