Section 154: New assets which are depreciating assets., Taxation of Chargeable Gains Act 1992

Sections 152, 153 and 229 shall have effect subject to the provisions of this section in which—

the "held-over gain" means the amount by which, under those sections, and apart from the provisions of this section, any chargeable gain on one asset ("asset No.1") is reduced, with a corresponding reduction of the expenditure allowable in respect of another asset ("asset No.2"), and

any reference to a gain of any amount being carried forward to any asset is a reference to a reduction of that amount in a chargeable gain coupled with a reduction of the same amount in expenditure allowable in respect of that asset.

If asset No.2 is a depreciating asset, the held-over gain shall not be carried forward, but the claimant shall be treated as if so much of the chargeable gain on asset No.1 as is equal to the held-over gain did not accrue until—

the claimant disposes of asset No.2, or

he ceases to use asset No.2 for the purposes of a trade carried on by him, or

the expiration of a period of 10 years beginning with the acquisition of asset No.2,

whichever event comes first.

If asset No 2 or shares in a company which holds asset No 2 are transferred as part of the process of a merger to which section 140E applies, the transfer shall be disregarded for the purpose of subsection (2), and for that purpose—

if the transferee holds asset No 2, it shall be treated for the purpose of subsection (2), in relation to asset No 2, as if it were the claimant, or

if the transferee holds shares in the company which holds asset No 2, section 175 shall apply in relation to the group of which the transferee is a member as if it were the same group as any group of which the claimant was a member before the merger.

If, as part of the process of a merger to which section 140E applies, the transferee becomes a member (whether or not as the principal company) of a group of which the claimant is also a member, for the purposes of subsection (2) section 175 shall apply in relation to the trade carried on by the claimant as if the group of which the transferee is a member were the same group as the group of which the claimant was a member before the merger.

In subsections (2A) and (2B), "transferor" and "transferee" have the meaning given by section 140E(9).

Subsections (2A) and (2B) shall apply in relation to the transfer of an asset in circumstances where section 140A applies as they apply in relation to the transfer of an asset on a merger to which section 140E applies, and for that purpose—

references to the merger shall be treated as references to the transfer,

references to section 140E shall be treated as references to section 140A, and

references to the transferor and the transferee shall be treated as references to the transferor and the transferee in relation to the asset.

Where section 229 has effect subject to the provisions of this section, subsection (2)(b) above shall have effect as if it read—

If, in the circumstances specified in subsection (5) below, the claimant acquires an asset ("asset No.3") which is not a depreciating asset, and claims under section 152 or 153—

the gain held-over from asset No.1 shall be carried forward to asset No.3, and

the claim which applies to asset No.2 shall be treated as withdrawn (so that subsection (2) above does not apply).

The circumstances are that asset No.3 is acquired not later than the time when the chargeable gain postponed under subsection (2) above would accrue and, assuming—

that the consideration for asset No.1 was applied in acquiring asset No.3, and

that the time between the disposal of asset No.1 and the acquisition of asset No.3 was within the time limited by section 152(3),

the whole amount of the postponed gain could be carried forward from asset No.1 to asset No.3; and the claim under subsection (4) above shall be accepted as if those assumptions were true.

If part only of the postponed gain could be carried forward from asset No.1 to asset No.3, and the claimant so requires, that and the other part of the postponed gain shall be treated as derived from 2 separate assets, so that, on that claim—

subsection (4) above applies to the first-mentioned part, and

the other part remains subject to subsection (2) above.

For the purposes of this section, an asset is a depreciating asset at any time if—

at that time it is a wasting asset, as defined in section 44, or

within the period of 10 years beginning at that time it will become a wasting asset (so defined).

Section 154: New assets which are depreciating assets.

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