Taxes Consolidation Act 1997 Schedule 26 paragraph 3

Capital gains

Schedule 26 paragraph 3 provides for a tax-neutral capital gains tax treatment when assets are transferred to a relevant port company in the course of a relevant transfer, ensuring that no gain or loss arises on the transfer and that deferred gains are preserved.

• An asset disposed of in the course of a relevant transfer is deemed to be made for a consideration that produces neither a gain nor a loss for the transferor.
• On any subsequent disposal of the asset by the port company, the company is treated as having acquired the asset at the same time and cost as the original transferor, so that no capital gains tax is lost through the transfer.
• For rollover relief purposes under section 597, the port company and the person from whom the asset was acquired are treated as the same person, preventing deferred gains from crystallising on the transfer.
• The combined effect is full tax neutrality on the transfer, with any ultimate capital gains tax charge calculated by reference to the harbour authority's original acquisition cost and indexed from that date.