Chapter 4

Taxation of stallion profits and gains

669G Interpretation (Chapter 4).

In this Chapter—

“excess relief” has the same meaning as in section 485C;

“initial value” in relation to a stallion means its market value on—

(a) 1 August 2008, or

(b) the day it is either acquired for, or appropriated to, stud activities, as the case may be,

whichever is later, and any reference to a stallion includes a reference to an interest in a stallion;

“market value”, at any time in relation to a stallion, means the price which the stallion might reasonably be expected to fetch on a sale in the open market and in a case where a person (the “purchaser”) acquires the stallion from another person (the “vendor”)—

(a) at arm’s length, and

(b) the purchaser and the vendor are not connected persons (within the meaning of section 10),

then the market value is the price paid;

“relevant amount”, in relation to a year of assessment and an individual, means an amount determined by the formula—

A − B

where—

A is the amount of income tax payable by the individual for the year of assessment, and

B is the amount of income tax which would be payable by the individual for the year of assessment if—

(a) the entry at Reference Number 6 of Schedule 25B had not been enacted, and

(b) for the purposes of the entry at Reference Number 1 of Schedule 25B the definition of “exempt profits” in section 140(1) did not include profits or gains which by virtue of section 231 were not charged to tax;

“relevant excess relief”, in relation to a year of assessment and an individual, means an amount determined by the formula—

C − D

where—

C is the amount of excess relief which is carried forward to the next year of assessment and which the individual is entitled to deduct from his or her total income for that year, and

D is the amount of excess relief which would be carried forward to the next year of assessment and which the individual would be entitled to deduct from his or her total income for that year if—

(a) the entry at Reference Number 6 of Schedule 25B had not been enacted, and

(b) for the purposes of the entry at Reference Number 1 of Schedule 25B the definition of “exempt profits” in section 140(1) did not include profits or gains which by virtue of section 231 were not charged to tax;

“residual value”, in relation to a stallion, at any time, means—

(a) an amount equal to the initial value of the stallion, or

(b) if less, the amount by which the initial value of the stallion exceeds—

(i) the amount which has been allowed as a deduction under section 669I for a chargeable period ending before that time, or

(ii) where there is more than one such amount, the aggregate of such amounts.