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GB 51B: Increases or decreases in value
or “Ignoring value changes made to avoid interest and thin capitalisation rules”
You could also call this:

“Rules for companies selling shares when they own residential land”

This section applies to companies that own residential land. It comes into effect when three things happen:

  1. The company owns residential land that could be sold within two years of when some company shares are sold.

  2. The residential land makes up at least half of what the company owns.

  3. Half or more of the company’s shares are sold within a year, and this is done to avoid following the rules about selling residential land.

If all these things happen, the law treats the situation differently. It acts as if the person buying the shares has bought part of the land instead. The amount of land they’re treated as buying matches the percentage of shares they bought.

The law then pretends that the shareholder sold this land back to the company for its current value. This means the company is seen as buying back the land at its current price.

In this section, ‘shareholder portion’ means the percentage of the company that the shareholder bought, based on how much their shares are worth compared to all the shares in the company.

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Next up: GB 53: Arrangements involving residential land: trusts

or “Special rules for trusts that own residential land and make certain changes”
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Part G Avoidance and non-market transactions
Avoidance: specific: Arrangements involving residential land

GB 52Arrangements involving residential land: companies’ shares

  1. This section applies when—

  2. a company owns residential land directly or indirectly for which the bright-line end date in section CB 6A(1) (Disposal within 2 years: bright-line test for residential land) is within 2 years of a disposal of shares that paragraph (c) of this section applies to (company residential land); and
    1. residential land owned directly or indirectly by the company makes up 50% or more, by market value, of the assets of the company; and
      1. 50% or more of the shares in the company, by market value, are disposed of within a 12-month period, with a purpose or effect of defeating the intent and application of section CB 6A.

        1. The company is treated as disposing of the relevant shareholder portion of company residential land to the relevant shareholder for an amount of consideration equal to the total cost to the company of the portion, and the shareholder is treated as acquiring the portion for that total cost and then disposing of it, back to the company, for an amount of consideration equal to the market value of the portion. The company is treated as reacquiring the portion for the market value.

        2. In this section, shareholder portion means the proportion that the market value of the shares disposed of by a shareholder bears to the total market value of the shares in the company.

        Notes
        • Section GB 52: inserted (with effect on 1 October 2015), on , by section 18 of the Taxation (Bright-line Test for Residential Land) Act 2015 (2015 No 111).
        • Section GB 52(1)(a): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
        • Section GB 52(1)(c): amended, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
        • Section GB 52(1)(c): amended (with effect on 27 March 2021), on , by section 78(2) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
        • Section GB 52 list of defined terms bright-line end date: inserted, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).
        • Section GB 52 list of defined terms year: inserted, on , by section 127 of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Act 2024 (2024 No 11).