Finance Act 2003

Chargeable gains

15(1)In the Taxation of Chargeable Gains Act 1992 (c. 12), after section 210A (inserted by paragraph 14(1)) insert—

“210BDisposal and acquisition of section 440A securities

(1)Subsections (2) to (4) below apply in a case where, within a period of 10 days, an insurance company disposes of a number of section 440A securities and (whether subsequently or previously) acquires a number of section 440A securities if—

(a)the securities disposed of decrease the size of a chargeable section 440A holding,

(b)the securities acquired increase the size of the same chargeable section 440A holding, and

(c)(apart from this section) an allowable loss would accrue on the disposal.

(2)The securities disposed of shall be identified with the securities acquired.

(3)The securities disposed of shall be identified with securities acquired before the disposal rather than securities acquired after the disposal and—

(a)in the case of securities acquired before the disposal, with those acquired later rather than those acquired earlier, and

(b)in the case of securities acquired after the disposal, with those acquired earlier rather than those acquired later.

(4)Where securities acquired could be identified with securities disposed of either at an earlier or at a later date, they shall be identified with the former rather than the latter; and the identification of securities acquired with securities disposed of on any occasion shall preclude their identification with securities comprised in a later disposal.

(5)Subsections (2) to (4) above have effect subject to section 105(1).

(6)Subsections (2) to (4) above do not apply to—

(a)securities which are section 212 assets within the meaning of section 214(1) (rights under authorised unit trusts and interests in offshore funds), or

(b)securities deemed by section 440 of the Taxes Act to be disposed of and immediately re-acquired by virtue of paragraph 3 of Schedule 19AA to the Taxes Act (assets becoming or ceasing to be assets of overseas life assurance fund).

(7)Subsections (2) to (4) above do not apply if—

(a)the securities disposed of are linked assets appropriated to a BLAGAB internal linked fund,

(b)the securities acquired are, on acquisition, appropriated to that or another internal linked fund, and

(c)the disposal and acquisition are made with a view to adjusting the value of the assets of that fund, or of those funds, in order to match its or their liabilities.

(8)In this section—

• “BLAGAB internal linked fund” means an internal linked fund all the assets appropriated to which are linked solely to basic life assurance and general annuity business,

• “chargeable section 440A holding” means a holding which is a separate holding by virtue of subsection (2)(a)(iii) or (d) of section 440A of the Taxes Act (and subsections (3) and (4) of that section),

• “internal linked fund” has the same meaning as in section 432ZA of the Taxes Act, and

• “section 440A securities” means securities within the meaning of section 440A of the Taxes Act.”.

(2)Sub-paragraph (1) has effect in relation to disposals on or after 23rd December 2002.

(3)But sub-paragraph (1) has effect in relation to disposals made by an insurance company during the period—

(a)beginning with 23rd December 2002, and

(b)ending with 31st December 2002,

only if the amount of the allowable losses referable to the company’s life assurance business which would have accrued to the company on the disposals (but for that sub-paragraph) would have been at least £10 million.