What are exit charge assets and liabilities under Taxes Management Act 1970 Schedule 3ZB paragraph 3?

Exit charge assets and liabilities are those on which income, profits or gains arise during the migration accounting period as a result of exit charge provisions. They arise when a company migrates its tax residence away from the United Kingdom, triggering deemed disposal charges on its assets and liabilities under corporation tax rules.

What are the three categories of exit charge assets and liabilities?

The three categories are: TCGA or trading stock exit charge assets, covering capital gains and trading stock charges; financial exit charge assets or liabilities, arising under loan relationships or derivative contracts rules; and intangible exit charge assets, covering both post-FA 2002 intangible assets and pre-FA 2002 intangible fixed assets taxed under TCGA rules.

What is a pre-FA 2002 intangible fixed asset for exit charge purposes?

A pre-FA 2002 intangible fixed asset is one that qualifies as a pre-FA 2002 asset as defined in section 881 of the Corporation Tax Act 2009. These are intangible assets acquired before the 2002 intangible fixed assets regime commenced. Despite being taxed under TCGA rules, they are classified as intangible exit charge assets rather than TCGA exit charge assets.

Why does the categorisation of exit charge assets matter?

The categorisation determines how the exit charge is calculated and how instalment payment arrangements may apply. Each category links to specific exit charge provisions elsewhere in the schedule, ensuring the correct tax treatment applies depending on whether assets fall under capital gains, financial instruments, or intangible fixed assets rules.

Taxes Management Act 1970 section Schedule 3ZB paragraph 3

Interpretation: exit charge assets and liabilities

Section Schedule 3ZB paragraph 3 defines the key terms "exit charge assets" and "exit charge liabilities" and categorises them into three distinct types for the purposes of the corporation tax exit charge payment regime.

Exit charge assets and liabilities are those on which income, profits or gains arise during the migration accounting period as a result of the exit charge provisions
There are three categories: TCGA or trading stock exit charge assets, financial exit charge assets or liabilities, and intangible exit charge assets
Intangible exit charge assets include both post-FA 2002 intangible assets and older pre-FA 2002 intangible fixed assets that give rise to chargeable gains under the TCGA rules
A pre-FA 2002 intangible fixed asset is one that qualifies as a pre-FA 2002 asset as defined in section 881 of the Corporation Tax Act 2009

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