Taxation of Chargeable Gains Act 1992 section 79A

Restriction on set-off of trust losses

Section 79A prevents trustees from using allowable losses to offset a chargeable gain where gifts hold-over relief was previously claimed on a transfer into the trust, and the transferor or a connected person has acquired an interest in the settlement for consideration.

• This section applies where a chargeable gain arises to trustees and the allowable expenditure has been reduced because of an earlier claim for gifts hold-over relief (under section 165 or section 260) on a transfer into the trust.
• A further condition is that the original transferor, or someone connected with the transferor, has acquired or arranged to acquire an interest in the settled property.
• There must also be consideration received or receivable by any person in connection with that acquisition or arrangement.
• Where all conditions are met, no allowable losses — whether arising in the current year or any earlier year — may be set against the chargeable gain, and this restriction applies to the whole gain, not just the element that was deferred by the gifts relief claim.