146 Options: application of rules as to wasting assets.
(1) Section 46 shall not apply—
(a) to a quoted option to subscribe for shares in a company, or
(b) to a traded option, or financial option, or
(c) to an option to acquire assets exercisable by a person intending to use them, if acquired, for the purpose of a trade carried on by him.
(2) In relation to the disposal by way of transfer of an option (other than an option falling within subsection (1)(a) or (b) above) binding the grantor to sell or buy quoted shares or securities, the option shall be regarded as a wasting asset the life of which ends when the right to exercise the option ends, or when the option becomes valueless, whichever is the earlier.
Subsections (5) and (6) of section 144 shall apply in relation to this subsection as they apply in relation to that section.
(3) The preceding provisions of this section are without prejudice to the application of sections 44 to 47 to options not within those provisions.
(4) In this section—
(a) “financial option”, “quoted option” and “traded option” have the meanings given by section 144(8), and
(b) “quoted shares or securities” means shares or securities which are listed on a recognised stock exchange ... .
147 Quoted options treated as part of new holdings.
(1) If a quoted option to subscribe for shares in a company is dealt in (on the stock exchange where it is quoted) within 3 months after the taking effect, with respect to the company granting the option, of any reorganisation, reduction, conversion, exchange or scheme of reconstruction to which Chapter II of this Part applies, or within such longer period as the Board may by notice allow—
(a) the option shall, for the purposes of that Chapter be regarded as the shares which could be acquired by exercising the option, and
(b) section 272(3) shall apply for determining its market value.
(2) In this section “quoted option” has the meaning given by section 144(8) and “scheme of reconstruction" has the same meaning as in section 136.
(1) This section applies where a person (“the grantor”) who has granted a traded option (“the original option”) closes it out by acquiring a traded option of the same description (“the second option”).
(2) Any disposal by the grantor involved in closing out the original option shall be disregarded for the purposes of capital gains tax or, as the case may be, corporation tax on chargeable gains.
(3) The incidental costs to the grantor of making the disposal constituted by the grant of the original option shall be treated for the purposes of the computation of the gain as increased by an amount equal to the aggregate of—
(a) the amount or value of the consideration, in money or money’s worth, given by him or on his behalf wholly and exclusively for the acquisition of the second option, and
(b) the incidental costs to him of that acquisition.
(4) In this section “traded option” has the meaning given by section 144(8).
(1) This section applies where on or after 25th July 1991 (the day on which the Finance Act 1991 was passed) a building society confers—
(a) on its members, or
(b) on any particular class or description of its members,
any rights to acquire, in priority to other persons, shares in the society which are qualifying shares.
(2) Any such right so conferred shall be regarded for the purposes of capital gains tax as an option granted to, and acquired by, the member concerned for no consideration and having no value at the time of that grant and acquisition.
(3) In this section—
“member” includes a former member, and
“qualifying share” has the same meaning as in section 117(4).
(1) This section applies where—
(a) an option is granted on or after 16th March 1993,
(b) the option is a securities option within the meaning of Chapter 5 of Part 7 of ITEPA 2003 (see section 420(8) of that Act) to which that Chapter applies ... (see section 471 of that Act), and
(c) section 17(1) of this Act would (apart from this section) apply for the purposes of calculating the consideration for the grant of the option.
(2) Both the grantor of the option and the person to whom the option is granted shall be treated for the purposes of this Act as if section 17(1) did not apply for the purposes of calculating the consideration and, accordingly, as if the amount or value of the consideration was its actual amount or value.
(3) Where the option is granted wholly or partly in recognition of services or past services in any office or employment, the value of those services shall not be taken into account in calculating the actual amount or value of the consideration.
(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
149AA Restricted and convertible employment-related securities and employee shareholder shares
(1) Subject to subsection (1A), where an individual has acquired an asset consisting of employment-related securities which are—
(a) restricted securities or a restricted interest in securities, or
(b) convertible securities or an interest in convertible securities,
the consideration for the acquisition shall (subject to section 119A) be taken to be equal to the aggregate of the actual amount or value given for the employment-related securities and any amount that constituted earnings under Chapter 1 of Part 3 of ITEPA 2003 (earnings) in respect of the acquisition.
(1A) Where an individual has acquired an asset consisting of shares which, on acquisition, became employee shareholder shares—
(a) the consideration for the acquisition is (subject to section 119A) to be taken to be equal to any amount that constituted earnings under Chapter 1 of Part 3 of ITEPA 2003 (earnings) or section 226A of that Act (employee shareholder shares), and
(b) no other consideration is to be treated as having been given for the acquisition of the shares.
(2) Subsections (1) and (1A) apply only to the individual making the acquisition and, accordingly, are to be disregarded in calculating the consideration received by the person from whom the employment-related securities are acquired.
(3) This section has effect in relation to acquisitions on or after the day appointed under paragraph 3(2) of Schedule 22 to the Finance Act 2003.
(4) In this section “employment-related securities” has the same meaning as in Chapters 1 to 4 of Part 7 of ITEPA 2003 (as substituted by Schedule 22 to the Finance Act 2003).
(5) In this section—
“restricted interest in securities”, and
“restricted securities”,
have the same meaning as in Chapter 2 of that Part of ITEPA 2003 (as so substituted).
(6) In this section “convertible securities” has the same meaning as in Chapter 3 of that Part of ITEPA 2003 (as so substituted).
(6A) For the purposes of this section—
shares are “acquired” by an employee if the employee becomes beneficially entitled to them (and they are acquired at the time when the employee becomes so entitled);
“employee shareholder share” means a share acquired in consideration of an employee shareholder agreement and held by the employee;
“employee shareholder agreement” means an agreement by virtue of which an employee is an employee shareholder (see section 205A(1)(a) to (d) of the Employment Rights Act 1996);
“employee” and “employer company”, in relation to an employee shareholder agreement, mean the individual and the company which enter into the agreement.
(7) In subsections (1) and (1A) a reference to any amount that constituted earnings under Chapter 1 of Part 3 of ITEPA 2003 or was treated as earnings under section 226A of that Act does not include—
(a) any amount of exempt income (within the meaning of section 8 of that Act), or
(b) in a case in which the amount that constituted, or was treated as, earnings was not an amount of general earnings to which any of the charging provisions of Chapters 4 and 5 of Part 2 of ITEPA 2003 applied, any amount that would have been an amount of such exempt income if any of those charging provisions had applied.
149AB Shares in research institution spin-out companies
(1) Where an individual has acquired shares (or an interest in shares) in circumstances where section 452(1) and (2)(a) of ITEPA 2003 (shares in research institution spin-out companies: market value on acquisition) apply (and section 149AA does not apply in relation to those shares (or interest in shares)) the consideration for the acquisition shall (subject to section 119A) be taken to be equal to the aggregate of—
(a) the actual amount or value given for the shares (or interest in shares), and
(b) any amount that constituted earnings under Chapter 1 of Part 3 of ITEPA 2003 (earnings) in respect of the acquisition.
(2) Subsection (1) above applies only to the individual making the acquisition and, accordingly, is to be disregarded in calculating the consideration received by the person from whom the shares (or interest in shares) are (or is) acquired.
149B Employee incentive schemes: conditional interests in shares.
(1) Where—
(a) an individual has acquired an interest in any shares or securities which is only conditional,
(b) that interest is one which for the purposes of Chapter 2 of Part 7 of ITEPA 2003 (conditional interests in shares) is taken to have been acquired by him as a director or employee of a company, and
(c) by virtue of section 17(1)(b) the acquisition of that interest would, apart from this section, be an acquisition for a consideration equal to the market value of the interest,
section 17 shall not apply for calculating the consideration.
(2) Instead, the consideration for the acquisition shall be taken (subject to section 120) to be equal to the actual amount or value of the consideration given for that interest as computed in accordance with section 429 of ITEPA 2003.
(3) This section shall apply in relation only to the individual making the acquisition and, accordingly, shall be disregarded in calculating the consideration received by the person from whom the interest is acquired.
(4) Expressions used in this section and in Chapter 2 of Part 7 of ITEPA 2003 have the same meanings in this section as in that Chapter.
(5) This section does not apply to acquisitions on or after the day appointed under paragraph 3(2) of Schedule 22 to the Finance Act 2003.
(6) References in this section to ITEPA 2003 are to that Act as originally enacted.
(1) In this section “relief” means relief under Chapter III of Part VII of the Taxes Act, Schedule 5 to the Finance Act 1983 (“the 1983 Act”) or Chapter II of Part IV of the Finance Act 1981 (“the 1981 Act”) and “eligible shares” has the meaning given by section 289(4) of the Taxes Act and references in this section to Chapter III of Part VII of the Taxes Act or any provision of that Chapter are to that Chapter or provision as it applies in relation to shares issued before 1st January 1994.
(2) A gain or loss which accrues to an individual on the disposal of any shares issued after 18th March 1986 in respect of which relief has been given to him and not withdrawn shall not be a chargeable gain or allowable loss for the purposes of capital gains tax.
(3) The sums allowable as deductions from the consideration in the computation for the purposes of capital gains tax of the gain or loss accruing to an individual on the disposal of shares issued before 19th March 1986 in respect of which relief has been given and not withdrawn shall be determined without regard to that relief, except that where those sums exceed the consideration they shall be reduced by an amount equal to—
(a) the amount of that relief; or
(b) the excess,
whichever is the less, but the foregoing provisions of this subsection shall not apply to a disposal falling within section 58(1).
(4) Any question—
(a) as to which of any shares acquired by an individual at different times, being shares in respect of which relief has been given and not withdrawn, a disposal relates to, or
(b) whether a disposal relates to shares in respect of which relief has been given and not withdrawn or to other shares,
shall for the purposes of capital gains tax be determined as for the purposes of section 299 of the Taxes Act, or section 57 of the Finance Act 1981 if the relief has only been given under that Act; and Chapter I of this Part shall have effect subject to the foregoing provisions of this subsection.
(5) Sections 104, 105 and 106A do not apply to shares in respect of which relief has been given and not withdrawn.
(6) Where an individual holds shares which form part of the ordinary share capital of a company and the relief has been given (and not withdrawn) in respect of some but not others, then, if there is within the meaning of section 126 a reorganisation affecting those shares, section 127 shall apply separately to the shares in respect of which the relief has been given (and not withdrawn) and to the other shares (so that shares of each kind are treated as a separate holding of original shares and identified with a separate new holding).
(7) Where section 58 has applied to any shares in respect of which relief has been given and not withdrawn disposed of by an individual to his or her spouse or civil partner (“the transferee”), subsection (2) above shall apply in relation to the subsequent disposal of the shares by the transferee to a third party.
(8) Where section 135 or 136 would, but for this subsection, apply in relation to ... shares issued after 18th March 1986 in respect of which an individual has been given relief, that section shall apply only if the relief is withdrawn.
(8A) Subsection (8) above shall not have effect to disapply section 135 or 136 where—
(a) the new holding consists of new ordinary shares carrying no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future ... right to be redeemed,
(b) the new shares are issued on or after 29th November 1994 and after the end of the relevant period, and
(c) the condition in subsection (8B) below is fulfilled.
(8B) The condition is that at some time before the issue of the new shares—
(a) the company issuing them issued eligible shares, and
(b) a certificate in relation to those eligible shares was issued by the company for the purposes of subsection (2) of section 306 of the Taxes Act and in accordance with that section.
(8C) In subsection (8A) above—
(a) “new holding” shall be construed in accordance with sections 126, 127, 135 and 136;
(b) “relevant period” means the period found by applying section 289(12)(a) of the Taxes Act by reference to the company issuing the shares referred to in subsection (8) above and by reference to those shares.
(8D) Where shares in respect of which relief has been given and not withdrawn are exchanged for other shares in circumstances such that section 304A of the Taxes Act (acquisition of share capital by new company) applies—
(a) subsection (8) above shall not have effect to disapply section 135; and
(b) subsections (2)(b), (3) and (4) of section 304A of the Taxes Act, and subsection (5) of that section so far as relating to section 306(2) of that Act, shall apply for the purposes of this section as they apply for the purposes of Chapter III of Part VII of that Act.
(9) Sections 127 to 130 shall not apply in relation to any shares in respect of which relief (other than relief under the 1981 Act) has been given and which form part of a company’s ordinary share capital if—
(a) there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation occurring after 18th March 1986 affecting those shares; and
(b) immediately following the reorganisation, the relief has not been withdrawn in respect of those shares or relief has been given in respect of the allotted shares and not withdrawn.
(10) Where relief is reduced by virtue of subsection (2) of section 305 of the Taxes Act—
(a) the sums allowable as deductions from the consideration in the computation, for the purposes of capital gains tax, of the gain or loss accruing to an individual on the disposal, after 18th March 1986, of any of the allotted shares or debentures shall be taken to include the amount of the reduction apportioned between the allotted shares or (as the case may be) debentures in a way which is just and reasonable; and
(b) the sums so allowable on the disposal (in circumstances in which subsections (2) to (8) above do not apply) of any of the shares referred to in section 305(2)(a) shall be taken to be reduced by the amount mentioned in paragraph (a) above, similarly apportioned between those shares.
(11) There shall be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the relief being given or withdrawn.
(12) In this section—
“ordinary share capital” has the same meaning as in the Taxes Act;
“ordinary shares”, in relation to a company, means shares forming part of its ordinary share capital.
(1) For the purpose of determining the gain or loss on any disposal of ... shares by an individual where—
(a) an amount of EIS relief is attributable to the shares, and
(b) apart from this subsection there would be a loss,
the consideration given by him for the shares shall be treated as reduced by the amount of the EIS relief.
(2) Subject to subsection (3) below, if on any disposal of ... shares by an individual after the end of the period referred to in section 312(1A)(a) of the Taxes Act or section 159(2) of ITA 2007 where an amount of EIS relief is attributable to the shares, there would (apart from this subsection) be a gain, the gain shall not be a chargeable gain.
(2A) Notwithstanding anything in section 16(2), subsection (2) above shall not apply to a disposal on which a loss accrues.
(3) Where—
(a) an individual's liability to income tax has been reduced (or treated by virtue of section 304 of the Taxes Act or section 245 of ITA 2007 (spouses and civil partners) as reduced) for any year of assessment under section 289A of the Taxes Act or section 158 of ITA 2007 in respect of any issue of shares,
(b) the amount of the reduction (“A”) is less than the amount (“B”) which is equal to tax at the EIS original rate for that year on the amount subscribed for the issue, and
(c) A is not found under section 289A(2)(b) of the Taxes Act or (as the case may require) is not within paragraph (b) solely by virtue of section 29(2) and (3) of ITA 2007,
then, if there is a disposal of the shares on which there is a gain, subsection (2) above shall apply only to so much of the gain as is found by multiplying it by the fraction—
AB
(3A) In subsection (3) “EIS original rate” has the meaning given by section 256A of ITA 2007, except that where the year mentioned in subsection (3)(b) is the tax year 2007-08 or an earlier year, it means 20%.
(4) Any question as to—
(a) which of any shares acquired by an individual at different times a disposal relates to, being shares to which EIS relief is attributable, or
(b) whether a disposal relates to shares to which EIS relief is attributable or to other shares,
shall for the purposes of capital gains tax be determined as for the purposes of section 299 of the Taxes Act or as provided by section 246 of ITA 2007; and Chapter I of this Part shall have effect subject to the foregoing provisions of this subsection.
(5) Sections 104, 105 and 106A shall not apply to shares to which EIS relief is attributable.
(6) Where an individual holds shares which form part of the ordinary share capital of a company and include shares of more than one of the following kinds, namely—
(a) shares to which EIS relief is attributable and to which subsection (6A) below applies,
(b) shares to which EIS relief is attributable and to which that subsection does not apply, ...
(ba) shares to which SEIS relief is attributable; and
(c) shares to which neither EIS nor SEIS relief is attributable,
then, if there is within the meaning of section 126 a reorganisation affecting those shares, section 127 shall apply (subject to the following provisions of this section) separately to shares falling within paragraph (a), (b), (ba) or (c) above (so that shares of each kind are treated as a separate holding of original shares and identified with a separate new holding).
(6A) This subsection applies to any shares if—
(a) expenditure on the shares has been set under Schedule 5B to this Act against the whole or part of any gain; and
(b) in relation to the shares there has been no chargeable event for the purposes of that Schedule.
(7) Where—
(a) an individual holds shares (“the existing holding”) which form part of the ordinary share capital of a company,
(b) there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the existing holding, and
(c) immediately following the reorganisation, EIS relief is attributable to the existing holding or the allotted shares,
sections 127 to 130 shall not apply in relation to the existing holding.
(8) Sections 135 and 136 shall not apply in respect of shares to which EIS relief is attributable.
(8A) Subsection (8) above shall not have effect to disapply section 135 or 136 where—
(a) the new holding consists of new ordinary shares carrying no present or future preferential right to dividends or to a company’s assets on its winding up and no present or future ... right to be redeemed,
(b) the new shares are issued on or after 29th November 1994 and after the end of the relevant period, and
(c) the condition in subsection (8B) below is satisfied.
(8B) The condition is that at some time before the issue of the new shares—
(a) the company issuing them issued eligible shares, and
(b) a certificate in relation to those eligible shares was issued by the company for the purposes of section 306(2) of the Taxes Act or section 203(1) of ITA 2007 and in accordance with section 306 of the Taxes Act or sections 204 and 205 of ITA 2007.
(8C) In subsection (8A) above—
(a) “new holding” shall be construed in accordance with sections 126, 127, 135 and 136;
(b) “relevant period” means the period found by applying section 312(1A)(a) of the Taxes Act or section 159(2) of ITA 2007 by reference to the company issuing the shares referred to in subsection (8) above and by reference to those shares.
(8D) Where shares to which EIS relief is attributable are exchanged for other shares in circumstances such that section 304A of the Taxes Act or section 247 of ITA 2007 (acquisition of share capital by new company) applies—
(a) subsection (8) above shall not have effect to disapply section 135; and
(b) the following—
(i) subsections (2)(b), (3) and (4) of section 304A of the Taxes Act and subsection (5) of that section so far as relating to section 306(2) of that Act, or
(ii) sections 247(3)(b), 248(2)(a) and 249 of ITA 2007,
shall apply for the purposes of this section as they apply for the purposes of Chapter 3 of Part 7 of the Taxes Act or Part 5 of ITA 2007.
(9) Where the EIS relief attributable to any shares is reduced by virtue of section 305(2) of the Taxes Act—
(a) the sums allowable as deductions from the consideration in the computation, for the purposes of capital gains tax, of the gain or loss accruing to an individual on the disposal of any of the allotted shares or debentures shall be taken to include the amount of the reduction apportioned between the allotted shares or (as the case may be) debentures in a way which is just and reasonable, and
(b) the sums so allowable on the disposal (in circumstances in which the preceding provisions of this section do not apply) of any of the shares referred to in section 305(1)(a) shall be taken to be reduced by the amount mentioned in paragraph (a) above, similarly apportioned between those shares.
(10) There shall be made all such adjustments of capital gains tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of EIS relief being given or withdrawn.
(10A) In this section—
“EIS relief” means relief under Chapter 3 of Part 7 of the Taxes Act or Part 5 of ITA 2007;
“ordinary share capital” has the meaning given in section 989 of ITA 2007;
“ordinary shares”, in relation to a company, means shares forming part of its ordinary share capital;
“SEIS relief” means relief under Part 5A of ITA 2007.
(11) Chapter III of Part VII of the Taxes Act or Part 5 of ITA 2007 (enterprise investment scheme) applies for the purposes of this section to determine whether EIS relief is attributable to any shares and, if so, the amount of EIS relief so attributable; and “eligible shares” has the same meaning as in that Chapter or means shares that meet the requirements of section 173(2) of ITA 2007.
(12) References in this section to Chapter III of Part VII of the Taxes Act or any provision of that Chapter are to that Chapter or provision as it applies in relation to shares issued on or after 1st January 1994.
(13) References in this section to Part 5 of ITA 2007 or any provision of that Part are to a Part or provision that applies only in relation to shares issued after 5 April 2007.
150B Enterprise investment scheme: reduction of EIS relief.
(1) This section has effect where section 150A(2) applies on a disposal of ... shares, and before the disposal but on or after 29th November 1994—
(a) value is received in circumstances where EIS relief attributable to the shares is reduced by an amount under section 300(1A)(a) of the Taxes Act or section 213(2)(a) of ITA 2007,
(b) there is a repayment, redemption, repurchase or payment in circumstances where EIS relief attributable to the shares is reduced by an amount under section 303(1A)(a) of the Taxes Act or section 224(2)(a) of ITA 2007, or
(c) paragraphs (a) and (b) above apply.
(2) If section 150A(2) applies on the disposal but section 150A(3) does not, section 150A(2) shall apply only to so much of the gain as remains after deducting so much of it as is found by multiplying it by the fraction—
(a) whose numerator is equal to the amount by which the EIS relief attributable to the shares is reduced as mentioned in subsection (1) above, and
(b) whose denominator is equal to the amount of the EIS relief attributable to the shares.
(3) If section 150A(2) and (3) apply on the disposal, section 150A(2) shall apply only to so much of the gain as is found by—
(a) taking the part of the gain found under section 150A(3), and
(b) deducting from that part so much of it as is found by multiplying it by the fraction mentioned in subsection (2) above.
(4) Where the EIS relief attributable to the shares is reduced as mentioned in subsection (1) above by more than one amount, the numerator mentioned in subsection (2) above shall be taken to be equal to the aggregate of the amounts.
(5) The denominator mentioned in subsection (2) above shall be found without regard to any reduction mentioned in subsection (1) above.
(5A) In this section “EIS relief” means relief under Chapter 3 of Part 7 of the Taxes Act or Part 5 of ITA 2007.
(6) Subsections (11) to (13) of section 150A apply for the purposes of this section as they apply for the purposes of that section.
(1) For the purpose of determining the gain or loss on any disposal of shares by an individual where—
(a) an amount of SEIS relief is attributable to the shares, and
(b) apart from this subsection there would be a loss,
the consideration given by the individual for the shares is to be treated as reduced by the amount of the relief.
(2) Where—
(a) shares are disposed of by an individual after the end of the period referred to in section 257AC(2) of ITA 2007,
(b) an amount of SEIS relief is attributable to the shares, and
(c) (apart from this subsection) there would be a gain,
the gain is not a chargeable gain.
(3) Despite section 16(2), subsection (2) does not apply to a disposal on which a loss accrues.
(4) Subsection (5) applies where—
(a) an individual's liability to income tax has been reduced (or treated by virtue of section 257H of ITA 2007 (spouses and civil partners) as reduced) for any tax year under section 257AB of that Act in respect of an issue of shares,
(b) the amount of the reduction (“R”) is less than the amount (“T”) which is equal to tax at the SEIS rate on the amount subscribed for the issue, and
(c) R is not within paragraph (b) solely by virtue of section 29(2) and (3) of ITA 2007.
(5) If there is a disposal of the shares on which there is a gain, subsection (2) applies only to so much of the gain as is found by multiplying it by the fraction—
R T
(6) Any question as to—
(a) which of any shares that—
(i) are acquired by an individual at different times, and
(ii) are shares to which SEIS relief is attributable,
a disposal relates to, or
(b) whether a disposal relates to shares to which SEIS relief is attributable,
is to be determined for the purposes of capital gains tax as for the purposes of section 257HA of ITA 2007.
Chapter 1 of this Part has effect subject to this subsection.
(7) Sections 104, 105 and 106A do not apply to shares to which SEIS relief is attributable.
(8) Where—
(a) an individual holds shares (“the existing holding”) which form part of the ordinary share capital of a company,
(b) there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the existing holding, and
(c) immediately following the reorganisation, SEIS relief is attributable to the existing holding or the allotted shares,
sections 127 to 130 do not apply in relation to the existing holding.
(9) Sections 135 and 136 do not apply in respect of shares to which SEIS relief is attributable.
(10) Subsection (9) does not have effect to disapply section 135 or 136 where—
(a) the new holding consists of new ordinary shares carrying no present or future preferential right to dividends or to a company's assets on its winding up and no present or future right to be redeemed,
(b) the new shares are issued after the end of the relevant period, and
(c) the condition in subsection (11) is satisfied.
(11) The condition is that at some time before the issue of the new shares—
(a) the company issuing them issued eligible shares, and
(b) a certificate in relation to those eligible shares was issued by the company for the purposes of section 257EB(1) of ITA 2007 and in accordance with sections 257EC and 257ED of that Act.
(12) All such adjustments of capital gains tax are to be made, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the SEIS relief being given or withdrawn.
(13) Where shares to which SEIS relief is attributable are exchanged for other shares in circumstances such that section 257HB of ITA 2007 (acquisition of share capital by new company) applies—
(a) subsection (9) above does not have effect to disapply section 135, and
(b) sections 257HB(3)(b), 257HC(2)(a) and 257HD of ITA 2007 apply for the purposes of this section as they apply for the purposes of Part 5A of that Act.
(14) For the purposes of this section—
“eligible shares” means shares that meet the requirements of section 257CA(2);
“new holding” is to be construed in accordance with sections 126, 127, 135 and 136;
“ordinary share capital” has the meaning given in section 989 of ITA 2007;
“ordinary shares”, in relation to a company, means shares forming part of its ordinary share capital;
“relevant period” means the period found by applying section 257AC(2) of ITA 2007 by reference to the company issuing the shares referred to in subsection (9) and by reference to those shares;
“the SEIS rate” has the meaning given by section 257AB(3) of ITA 2007;
“SEIS relief” means relief under Part 5A of ITA 2007 (seed enterprise investment scheme);
and that Part applies to determine whether SEIS relief is attributable to any shares and, if so, the amount of SEIS relief so attributable.
150F Seed enterprise investment scheme: reduction of relief
(1) This section has effect where—
(a) section 150E(2) applies on a disposal of shares, and
(b) before the disposal, value is received in circumstances where SEIS relief attributable to the shares is reduced by an amount under section 257FE(2)(a) of ITA 2007.
(2) If section 150E(2) applies on the disposal but section 150E(5) does not, section 150E(2) applies only to so much of the gain as remains after deducting so much of it as is found by multiplying it by the fraction—
A B
where—
A is the amount by which the SEIS relief attributable to the shares is reduced as mentioned in subsection (1), and
B is the amount of the relief attributable to the shares.
(3) If section 150E(2) and (5) apply on the disposal, section 150E(2) applies only to so much of the gain as is found by—
(a) taking the part of the gain found under section 150E(5), and
(b) deducting from that part so much of it as is found by multiplying it by the fraction mentioned in subsection (2) above.
(4) Where the SEIS relief attributable to the shares is reduced as mentioned in subsection (1) by more than one amount, “A” in subsection (2) is to be taken to be equal to the aggregate of the amounts.
(5) The amount which is “B” in subsection (2) is to be found without regard to any reduction mentioned in subsection (1).
(6) For the purposes of this section, Part 5A of ITA 2007 (seed enterprise investment scheme) applies to determine whether SEIS relief is attributable to any shares and, if so, the amount of SEIS relief so attributable.
(1) The Treasury may make regulations providing that an individual who invests under a plan shall be entitled to relief from capital gains tax in respect of the investments.
(2) The provisions of Chapter 3 of Part 6 of ITTOIA 2005 (income from individual investment plans), except sections 694(1) to (2) and 694A(1), shall apply in relation to regulations made under subsection (1) as they apply to regulations made under section 694(1), but with the following modifications—
(a) any reference to income tax is to be read as a reference to capital gains tax,
(aa) section 694A(2) applies also for the purposes of subsection (1) of this section,
(ab) the reference in section 694A(3) to section 694A(1) is to be read as a reference to paragraph (aa) of this subsection,
(ac) the reference in section 694A(4)(b)(iii) to the individual's income from investments under the plan being exempt from income tax is to be read as a reference to the individual being entitled to relief from capital gains tax in respect of the investments,
(b) the reference in section 695A(1) to the case where regulations provide that income of a child from investments under a plan is exempt from income tax is to be read as a reference to the case where regulations provide that a child who invests under a plan is entitled to relief from capital gains tax in respect of the investments,
(c) the reference in section 695A(4) to that Chapter is to be read as a reference to this section, and
(d) that Chapter has effect as if sections 699(9) and 701(6) were omitted.
(3) Regulations under this section may include provision securing that losses are disregarded for the purposes of capital gains tax where they accrue on the disposal of investments on or after 18th January 1988.
(4) Regulations under this section may include provision which, for cases where a person subscribes to a plan by transferring or renouncing shares or rights to shares—
(a) modifies the effect of this Act in relation to their acquisition and their transfer or renunciation; and
(b) makes consequential modifications of the effect of this Act in relation to anything which (apart from the regulations) would have been regarded on or after their acquisition as an indistinguishable part of the same asset.
(1) A gain or loss accruing to an individual on a qualifying disposal of any ordinary shares in a company which—
(a) was a venture capital trust at the time when he acquired the shares, and
(b) is still such a trust at the time of the disposal,
shall not be a chargeable gain or, as the case may be, an allowable loss.
(2) For the purposes of this section a disposal of shares is a qualifying disposal in so far as—
(a) it is made by an individual who has attained the age of eighteen years;
(b) the shares disposed of were not acquired in excess of the permitted maximum for any year of assessment; and
(c) that individual acquired those shares for bona fide commercial purposes and not as part of a scheme or arrangement the main purpose of which, or one of the main purposes of which, is the avoidance of tax.
(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4) In determining for the purposes of this section whether a disposal by any person of shares in a venture capital trust relates to shares acquired in excess of the permitted maximum for any year of assessment, it shall be assumed (subject to subsection (5) below)—
(a) as between shares acquired by the same person on different days, that those acquired on an earlier day are disposed of by that person before those acquired on a later day; and
(b) as between shares acquired by the same person on the same day, that those acquired in excess of the permitted maximum are disposed of by that person before he disposes of any other shares acquired on that day.
(5) It shall be assumed for the purposes of subsection (1) above that a person who disposes of shares in a venture capital trust disposes of shares acquired at a time when it was not such a trust before he disposes of any other shares in that trust.
(6) References in this section to shares in a venture capital trust acquired in excess of the permitted maximum for any year of assessment shall be construed as references to shares not acquired within the limit in section 709(4) of ITTOIA 2005; and the question whether shares are acquired within that limit shall be determined as it is for the purposes of Chapter 5 of Part 6 of that Act.
(7) In this section and section 151B “ordinary shares”, in relation to a company, means any shares forming part of the company’s ordinary share capital (within the meaning given in section 989 of ITA 2007).
(1) Sections 104, 105 and 106A shall not apply to any shares in a venture capital trust which are eligible for relief under section 151A(1).
(2) Subject to the following provisions of this section, where—
(a) an individual holds any ordinary shares in a venture capital trust,
(b) some of those shares fall within one of the paragraphs of subsection (3) below, and
(c) others of those shares fall within at least one other of those paragraphs,
then, if there is within the meaning of section 126 a reorganisation affecting those shares, section 127 shall apply separately in relation to the shares (if any) falling within each of the paragraphs of that subsection (so that shares of each kind are treated as a separate holding of original shares and identified with a separate new holding).
(3) The kinds of shares referred to in subsection (2) above are—
(a) any shares in a venture capital trust which are eligible for relief under section 151A(1) and by reference to which any person has obtained or is entitled to claim relief under Chapter 2 of Part 6 of ITA 2007;
(b) any shares in a venture capital trust which are eligible for relief under section 151A(1) but by reference to which no person has obtained, or is entitled to claim, any relief under that Chapter of that Part;
(c) any shares in a venture capital trust by reference to which any person has obtained, or is entitled to claim, any relief under that Chapter of that Part but which are not shares that are eligible for relief under section 151A(1); and
(d) any shares in a venture capital trust that do not fall within any of paragraphs (a) to (c) above.
(4) Where—
(a) an individual holds ordinary shares in a company (“the existing holding”),
(b) there is, by virtue of any such allotment for payment as is mentioned in section 126(2)(a), a reorganisation affecting the existing holding, and
(c) immediately following the reorganisation, the shares or the allotted holding are shares falling within any of paragraphs (a) to (c) of subsection (3) above,
sections 127 to 130 shall not apply in relation to the existing holding.
(5) Sections 135 and 136 shall not apply where—
(a) the exchanged holding consists of shares falling within paragraph (a) or (b) of subsection (3) above; and
(b) that for which the exchanged holding is or is treated as exchanged does not consist of ordinary shares in a venture capital trust.
(6) Where—
(a) the approval of any company as a venture capital trust is withdrawn, and
(b) the withdrawal of the approval is not one to which section 281(3) of ITA 2007 applies,
any person who at the time when the withdrawal takes effect is holding shares in that company which (apart from the withdrawal) would be eligible for relief under section 151A(1) shall be deemed for the purposes of this Act, at that time, to have disposed of and immediately re-acquired those shares for a consideration equal to their market value at that time.
(7) The disposal that is deemed to take place by virtue of subsection (6) above shall be deemed for the purposes of section 151A to take place while the company is still a venture capital trust; but, for the purpose of applying sections 104, 105 and 106A to the shares that are deemed to be re-acquired, it shall be assumed that the re-acquisition for which that subsection provides takes place immediately after the company ceases to be such a trust.
(8) For the purposes of this section—
(a) shares are eligible for relief under section 151A(1) at any time when they are held by an individual whose disposal of the shares at that time would (on the assumption, where it is not the case, that the individual attained the age of eighteen years before that time) be a disposal to which section 151A(1) would apply; and
(b) shares shall not, in relation to any time, be treated as shares by reference to which relief has been obtained under Chapter 2 of Part 6 of ITA 2007 if that time falls after—
(i) any relief given by reference to those shares has been reduced or withdrawn,
(ii) any chargeable event (within the meaning of Schedule 5C) has occurred in relation to those shares, or
(iii) the death of a person who held those shares immediately before his death;
and
(c) a reference to the exchanged holding is, in relation to section 135 or 136, to the shares in the company referred to in that section as company A.
151BA CITR: identification of securities or shares on a disposal
(1) This section applies for the purpose of identifying the securities or shares disposed of in any case where—
(a) an individual or company (“the investor”) disposes of part of a holding of securities or shares (“the holding”), and
(b) the holding includes securities or shares to which CITR is attributable in respect of one or more years of assessment or accounting periods that have been held by the investor continuously from the time they were issued until the disposal.
(2) Any disposal by the investor of securities or shares included in the holding which have been acquired by the investor on different days is treated as relating to those acquired on an earlier day rather than to those acquired on a later day.
(3) If there is a disposal by the investor of securities or shares included in the holding which have been acquired by the investor on the same day, any of those securities or shares—
(a) to which CITR is attributable, and
(b) which have been held by the investor continuously from the time they were issued until the time of disposal,
are treated as disposed of after any other securities or shares included in the holding which were acquired by the investor on that day.
(4) For the purposes of this section a holding of securities is any number of securities of a company which—
(a) carry the same rights,
(b) were issued under the same terms, and
(c) are held by the investor in the same capacity.
It does not matter for this purpose that the number of the securities grows or diminishes as securities carrying those rights and issued under those terms are acquired or disposed of.
(5) For the purposes of this section a holding of shares is any number of shares in a company which—
(a) are of the same class, and
(b) are held by the investor in the same capacity.
It does not matter for this purpose that the number of the shares grows or diminishes as shares of that class are acquired or disposed of.
(6) Chapter 1 of Part 4 (share pooling, etc) has effect subject to this section.
(7) Sections 104 to 107 (which make provision for the identification of securities and shares on a disposal) do not apply to securities or shares to which CITR is attributable.
(8) In a case to which section 127 (equation of original shares and new holding) applies, shares included in the new holding are treated for the purposes of subsections (2) and (3) as acquired when the original shares were acquired.
(9) In subsection (8)—
(a) the reference to section 127 includes a reference to that section as it is applied by virtue of any enactment relating to chargeable gains, and
(b) “original shares” and “new holding” have the same meaning as in section 127, or (as the case may be) that section as applied by virtue of the enactment in question.
(10) In this section and sections 151BB and 151BC—
(a) if the investor is an individual—
(i) “CITR” has the meaning given by section 333 of ITA 2007,
(ii) references to CITR being attributable to securities, shares or debentures are to be read in accordance with section 357 of that Act, and
(iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with section 380 of that Act,
(b) if the investor is a company—
(i) “CITR” means relief under Part 7 of CTA 2010,
(ii) references to CITR being attributable to securities, shares or debentures are to be read in accordance with section 240 of that Act, and
(iii) references to securities, shares or debentures having been held by the investor continuously are to be read in accordance with section 267 of that Act.
(1) If—
(a) an individual or company (“the investor”) holds shares in the CDFI which are of the same class and held in the same capacity (“the existing holding”),
(b) there is a reorganisation affecting the existing holding as a result of an allotment which—
(i) falls within section 126(2)(a) (an allotment of shares or debentures in respect of and in proportion to an original holding), and
(ii) is not an allotment of corresponding bonus shares,
(c) immediately after the reorganisation, CITR is attributable to the shares included in the existing holding or the shares or debentures allotted in respect of those shares, in respect of one or more years of assessment or accounting periods, and
(d) if CITR is attributable to the shares included in the existing holding at that time, those shares have been held by the investor continuously from the time they were issued until the reorganisation,
sections 127 to 130 (treatment of share capital following a reorganisation) do not apply in relation to the existing holding.
(2) Section 116(10) (reorganisations, conversions and reconstructions) does not apply in any case where the old asset consists of shares held (in the same capacity) by the investor—
(a) that have been held by the investor continuously from the time they were issued until the relevant transaction, and
(b) to which CITR is attributable immediately before that transaction.
In this subsection “old asset” and “the relevant transaction” have the meaning given by section 116.
(3) For the purposes of subsection (1)—
“corresponding bonus shares” means bonus shares that—
are issued in respect of shares included in the existing holding, and
are in the same company, are of the same class, and carry the same rights as, those shares,
“reorganisation” has the meaning given in section 126.
(4) The following provisions of this Act have effect subject to this section—
section 116 (reorganisations, conversions and reconstructions);
Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc).
(5) In this section “the CDFI” is to be read—
(a) if the investor is an individual, in accordance with section 334(2) of ITA 2007,
(b) if the investor is a company, in accordance with section 219(2) of CTA 2010.
(1) If—
(a) an individual or company (“the investor”) holds shares in or debentures of a company (“company A”),
(b) there is a reconstruction or amalgamation affecting that holding (“the existing holding”),
(c) immediately before the reconstruction or amalgamation, CITR is attributable to the shares or debentures included in the existing holding in respect of one or more years of assessment or accounting periods, and
(d) the shares or debentures included in the existing holding have been held by the investor continuously from the time they were issued until the reconstruction or amalgamation,
sections 135 and 136 (share exchanges and company reconstructions) do not apply in respect of the existing holding.
(2) Subsection (1)(a) applies only if the shares or debentures are held by the investor in the same capacity.
(3) For the purposes of subsection (1) a “reconstruction or amalgamation” means an issue by a company of shares in or debentures of that company in exchange for or in respect of shares in or debentures of company A.
(4) The following provisions of this Act have effect subject to this section—
section 116 (reorganisations, conversions and reconstructions),
Chapter 2 of Part 4 (reorganisation of share capital, conversion of securities etc).
(5) The investor is treated as disposing of any securities or shares which but for subsection (1) the investor—
(a) would be treated as exchanging for other securities or shares by virtue of section 136, or
(b) would be so treated but for section 137(1) (which restricts section 136 to genuine reconstructions).
151C Strips: manipulation of price: associated payment giving rise to loss
(1) This section applies if—
(a) as a result of any scheme or arrangement which has an unallowable purpose, the circumstances are, or might have been, as mentioned in paragraph (a), (b) or (c) of section 449(2) of ITTOIA 2005,
(b) under the scheme or arrangement, a payment falls to be made otherwise than in respect of the acquisition or disposal of a strip, and
(c) as a result of that payment or the circumstances in which it is made, a loss accrues to any person.
(2) The loss shall not be an allowable loss.
(3) For the purposes of this section a scheme or arrangement has an unallowable purpose if the main benefit, or one of the main benefits that might have been expected to result from, or from any provision of, the scheme or arrangement (apart from section 449 of ITTOIA 2005 and this section) is—
(a) the obtaining of a tax advantage by any person, or
(b) the accrual to any person of an allowable loss.
(4) The reference in subsection (1)(b) to the acquisition or disposal of a strip shall be construed as if it were in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see, in particular, sections 437 and 445 of that Act for the meaning of “disposal” and “acquisition” and section 444 of that Act for the meaning of “strip”).
(5) In subsection (3)(a) “tax advantage” has the meaning given by section 1139 of CTA 2010.
(6) This section applies to losses accruing on or after 17th March 2004.
151D Corporate strips: manipulation of price: associated payment giving rise to loss
(1) This section applies if—
(a) as a result of any scheme or arrangement which has an unallowable purpose, the circumstances are, or might have been, as mentioned in paragraph (a), (b) or (c) of section 452G(2) of ITTOIA 2005,
(b) under the scheme or arrangement, a payment falls to be made otherwise than in respect of the acquisition or disposal of a corporate strip, and
(c) as a result of that payment or the circumstances in which it is made, a loss accrues to any person.
(2) The loss shall not be an allowable loss.
(3) For the purposes of this section a scheme or arrangement has an unallowable purpose if the main benefit, or one of the main benefits, that might have been expected to result from, or from any provision of, the scheme or arrangement (apart from section 452G of ITTOIA 2005 and this section) is—
(a) the obtaining of a tax advantage by any person, or
(b) the accrual to any person of an allowable loss.
(4) The reference in subsection (1)(b) above to the acquisition or disposal of a corporate strip shall be construed as if it were in Chapter 8 of Part 4 of ITTOIA 2005 (profits from deeply discounted securities) (see, in particular, sections 437 and 452F of that Act for the meaning of “disposal” and section 452E of that Act for the meaning of “corporate strip”).
(5) In subsection (3)(a) above “tax advantage” has the meaning given by section 1139 of CTA 2010.
(6) This section applies to losses accruing on or after 6th April 2005.
151E Exchange gains and losses from loan relationships: regulations
(1) The Treasury may by regulations make provision for or in connection with bringing into account in prescribed circumstances for the purposes of this Act exchange gains or losses (as defined by section 475 of CTA 2009) to which section 328(1) of CTA 2009 does not apply because of section 328(3) of that Act or because of regulations under section 328(4) of that Act.
(1A) The regulations may make provision as to the way in which, including the currency by reference to which, the amounts to be brought into account are to be calculated.
(2) The regulations may—
(a) make different provision for different cases, and
(b) make provision subject to an election or to other prescribed conditions.
151G Regulations where non-qualifying shares conditions altered
(1) If the Treasury make regulations under section 533 of CTA 2009 (power to change conditions for non-qualifying shares) adding, varying or removing such a condition as is mentioned in subsection (1) of that section, they may also by regulations amend this Act so as to make provision for or in connection with taxation in the case of any asset or transaction that is or was mentioned in the condition.
(2) Regulations under this section may—
(a) make different provision for different cases, and
(b) make incidental, supplemental, consequential and transitional provisions and savings.
(3) Regulations made under subsection (2)(b) may, in particular, include provision amending any enactment or any instrument made under an enactment.
(1) This Chapter makes provision about the treatment of alternative finance arrangements ... and alternative finance return under such arrangements for the purposes of this Act (see sections 151T to 151Y).
(2) In this Chapter “alternative finance arrangements” means—
(a) purchase and resale arrangements,
(b) diminishing shared ownership arrangements,
(c) deposit arrangements,
(d) profit share agency arrangements, and
(e) investment bond arrangements.
(3) In this Chapter—
(a) “purchase and resale arrangements” means arrangements to which section 151J applies,
(b) “diminishing shared ownership arrangements” means arrangements to which section 151K or 151KA applies,
(c) “deposit arrangements” means arrangements to which section 151L applies,
(d) “profit share agency arrangements” means arrangements to which section 151M applies, and
(e) “investment bond arrangements” means arrangements to which section 151N applies.
(4) For the meaning of “alternative finance return”, see sections 151P to 151S.
(5) For the meaning of “financial institution”, see section 151I.
(6) Also, see—
(a) section 366 of TIOPA 2010 (power to extend this Chapter and other provisions to other arrangements by order), and
(b) Schedule 61 to FA 2009 (alternative finance investment bonds) which makes further provision about the treatment of investment bond arrangements for the purposes of this Act.
(1) In this Chapter “financial institution” means—
(a) a bank, as defined by section 1120 of CTA 2010,
(b) a building society,
(c) a wholly-owned subsidiary—
(i) of a bank within paragraph (a), or
(ii) of a building society,
(d) a person with permission under Part 4A of the Financial Services and Markets Act 2000 to enter into, or to exercise or have the right to exercise rights and duties under, a contract of the kind mentioned in paragraph 23 or paragraph 23B of Schedule 2 to that Act (credit agreements and contracts for hire of goods);
(e) a bond-issuer, within the meaning of section 151N, but only in relation to any bond assets which are rights under purchase and resale arrangements, diminishing shared ownership arrangements or profit share agency arrangements,
(f) a person authorised in a jurisdiction outside the United Kingdom—
(i) to receive deposits or other repayable funds from the public, and
(ii) to grant credits for its own account,
(g) an insurance company as defined in section 65 of the Finance Act 2012, or
(h) a person who is authorised in a jurisdiction outside the United Kingdom to carry on a business which consists of effecting or carrying out contracts of insurance or substantially similar business but not an insurance special purpose vehicle as defined in section 139(1) of the Finance Act 2012.
(2) For the purposes of subsection (1)(c) a company is a wholly-owned subsidiary of a bank or building society (“the parent”) if it has no members except—
(a) the parent or persons acting on behalf of the parent, and
(b) the parent's wholly-owned subsidiaries or persons acting on behalf of the parent's wholly-owned subsidiaries.
(1) This section applies to arrangements if—
(a) they are entered into between two persons (“the first purchaser” and “the second purchaser”), and—
(i) at least one of those persons is a financial institution, or
(ii) the arrangements are regulated electronic system facilitated arrangements, and
(b) under the arrangements—
(i) the first purchaser purchases an asset and sells it to the second purchaser,
(ii) the sale occurs immediately after the purchase or in the circumstances mentioned in subsection (2),
(iii) all or part of the second purchase price is not required to be paid until a date later than that of the sale,
(iv) the second purchase price exceeds the first purchase price, and
(v) the excess equates, in substance, to the return on an investment of money at interest.
(2) The circumstances are that—
(a) the first purchaser is a financial institution, and
(b) the asset referred to in subsection (1)(b)(i) was purchased by the first purchaser for the purpose of entering into arrangements within this section.
(2A) Arrangements are regulated electronic system facilitated arrangements if—
(a) the arrangements substantially consist of an article 36H agreement in relation to the deferral of the payment of all or part of the second purchase price,
(b) the first purchaser would be regarded, for the purposes of that agreement, as the lender under it,
(c) the second purchaser would be regarded, for the purposes of that agreement, as the borrower under it, and
(d) those purchasers becoming parties to the agreement was facilitated by an electronic system operated by a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to carry on, in relation to that system, the regulated activity specified in article 36H(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (operating an electronic system in relation to lending).
(3) In this section—
“the first purchase price” means the amount paid by the first purchaser in respect of the purchase, ...
“the second purchase price” means the amount payable by the second purchaser in respect of the sale,
“article 36H agreement” has the meaning given by article 36H(4) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, and
“borrower” and “lender” are to be construed in accordance with article 36H(9) of that Order.
(4) This section is subject to section 151O (provision not at arm's length: exclusion of arrangements from this section and sections 151K to 151N).
(1) This section applies to arrangements if under them—
(a) a person (“the financier”) acquires a beneficial interest in an asset,
(aa) either—
(i) the financier is a financial institution or a regulated home purchase plan provider, or
(ii) the arrangements are regulated electronic system facilitated arrangements,
(b) another person (“the customer”) also acquires a beneficial interest in it,
(c) the customer is to make payments to the financier amounting in aggregate to the consideration paid for the acquisition of the financier’s beneficial interest (but subject to any adjustment required for such a reduction as is mentioned in subsection (5)),
(d) the customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,
(e) the customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),
(f) the customer has the exclusive right to occupy or otherwise to use the asset, and
(g) the customer is exclusively entitled to any income, profit or gain arising from or attributable to the asset (including, in particular, an increase in its value).
(1A) Arrangements are regulated electronic system facilitated arrangements if—
(a) the arrangements substantially consist of an article 36H agreement in relation to the enjoyment by the customer of the rights referred to in subsection (1)(f) and (g) before the customer’s acquisition of the first owner’s beneficial interest,
(b) the customer would be regarded, for the purposes of that agreement, as the borrower under it,
(c) the financier would be regarded, for the purposes of that agreement, as the lender under it,
(d) the customer and the financier becoming parties to the agreement was facilitated by an electronic system operated by a person who has permission under Part 4A of the Financial Services and Markets Act 2000 to carry on, in relation to that system, the regulated activity specified in article 36H(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (operating an electronic system in relation to lending).
(2) For the purposes of subsection (1)(a) it does not matter if—
(a) the financier acquires its beneficial interest from the customer,
(b) the customer, or another person who is not the financier, also has a beneficial interest in the asset, or
(c) the financier also has a legal interest in it.
(3) Subsection (1)(f) does not prevent the customer from granting an interest or right in relation to the asset if the conditions in subsection (4) are met.
(4) The conditions are that—
(a) the grant is not to—
(i) the financier,
(ii) a person controlled by the financier, or
(iii) a person controlled by a person who also controls the financier, and
(b) the grant is not required by the financier or arrangements to which the financier is a party.
(5) Subsection (1)(g) does not prevent the financier from—
(a) having responsibility for any reduction in the asset's value, or
(b) having a share in a loss arising out of any such reduction.
(6) Section 1124 of CTA 2010 (meaning of “control”) applies for the purposes of this section.
(7) In this section—
“article 36H agreement” has the meaning given by article 36H(4) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;
“borrower” and “lender” are to be construed in accordance with article 36H(9) of that Order;
“regulated home purchase plan provider” means a person who—
is carrying on the regulated activity specified in article 63F(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (entering into regulated home purchase plans as home purchase provider), and
has permission under Part 4A of the Financial Services and Markets Act 2000 to do so.
(7) This section is subject to section 151O (provision not at arm's length: exclusion of arrangements from section 151J, this section and sections 151KA to 151N).
(1) This section applies to arrangements if under them—
(a) a person (“the customer”) has a beneficial interest in an asset,
(b) the customer disposes of some or all of their beneficial interest in the asset to another person (“the financier”),
(c) either—
(i) the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 151K(7)), or
(ii) the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 151K(1A)),
(d) the customer is to make payments to the financier amounting in aggregate to the consideration paid for the financier acquiring a beneficial interest as mentioned in paragraph (b) (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),
(e) the customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,
(f) the customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),
(g) the customer has the exclusive right to occupy or otherwise to use the asset, and
(h) the customer is exclusively entitled to any income, profit or gain arising from or attributable to the asset (including, in particular, an increase in its value).
(2) This section also applies to arrangements which supersede arrangements to which section 151K or subsection (1) of this section applies if under them—
(a) a person (“the financier”) acquires so much of the beneficial interest in an asset mentioned in section 151K(1)(a) or subsection (1)(b) of this section as has not yet been acquired as mentioned in section 151K(1)(d) or subsection (1)(e) of this section,
(b) either—
(i) the financier is a financial institution or a regulated home purchase plan provider (within the meaning of section 151K(7)), or
(ii) the arrangements are regulated electronic system facilitated arrangements (within the meaning of section 151K(1A)),
(c) the customer mentioned in section 151K(1) or subsection (1) of this section is to make payments to the financier amounting in aggregate to so much of the payments mentioned in section 151K(1)(c) or subsection (1)(d) of this section as are yet to be paid (but subject to any adjustment required for such a reduction as is mentioned in subsection (6)),
(d) that customer is to acquire the financier’s beneficial interest (whether or not in stages) as a result of those payments,
(e) that customer is to make other payments to the financier (whether under a lease forming part of the arrangements or otherwise),
(f) the customer has the exclusive right to occupy or otherwise to use the asset, and
(g) the customer is exclusively entitled to any income, profit or gain arising from or attributable to that asset (including, in particular, an increase in its value).
(3) For the purposes of subsections (1)(a) and (b) and (2)(a) it does not matter if—
(a) another person who is not the customer or the financier also has a beneficial interest in the asset, or
(b) the financier also has a legal interest in it.
(4) Subsection (1)(g) or (2)(f) does not prevent the customer from granting an interest or right in relation to the asset if the conditions in subsection (5) are met.
(5) The conditions are that—
(a) the grant is not to—
(i) the financier,
(ii) a person controlled by the financier, or
(iii) a person controlled by a person who also controls the financier, and
(b) the grant is not required by the financier or arrangements to which the financier is a party.
(6) Subsection (1)(h) or (2)(g) does not prevent the financier from—
(a) having responsibility for any reduction in the asset’s value, or
(b) having a share in a loss arising out of any such reduction.
(7) Section 1124 of CTA 2010 (meaning of “control”) applies for the purposes of this section.
(8) This section is subject to section 151O (provision not at arm’s length: exclusion of arrangements from sections 151J and 151K, this section and sections 151L to 151N).
(1) This section applies to arrangements if under them—
(a) a person (“the depositor”) deposits money with a financial institution,
(b) the money, together with money deposited with the institution by other persons, is used by it with a view to producing a profit,
(c) from time to time the institution makes or credits a payment to the depositor out of profit resulting from the use of the money,
(d) the payment is in proportion to the amount deposited by the depositor, and
(e) the payments so made or credited by the institution equate, in substance, to the return on an investment of money at interest.
(2) This section is subject to section 151O (provision not at arm's length: exclusion of arrangements from sections 151J, 151K, this section and sections 151M and 151N).
(1) This section applies to arrangements if under them—
(a) a person (“the principal”) appoints an agent,
(b) one or both of the principal and agent is a financial institution,
(c) the agent uses money provided by the principal with a view to producing a profit,
(d) the principal is entitled, to a specified extent, to profits resulting from the use of the money,
(e) the agent is entitled to any additional profits resulting from its use (and may also be entitled to a fee paid by the principal), and
(f) payments made because of the principal's entitlement to profits equate, in substance, to the return on an investment of money at interest.
(2) This section is subject to section 151O (provision not at arm's length: exclusion of arrangements from sections 151J to 151L, this section and section 151N).
(1) This section applies to arrangements if—
(a) they provide for one person (“the bond-holder”) to pay a sum of money (“the capital”) to another (“the bond-issuer”),
(b) they identify assets, or a class of assets, which the bond-issuer will acquire for the purpose of generating income or gains directly or indirectly (“the bond assets”),
(c) they specify a period at the end of which they cease to have effect (“the bond term”),
(d) the bond-issuer undertakes under the arrangements—
(i) to dispose at the end of the bond term of any bond assets which are still in the bond-issuer's possession,
(ii) to make a repayment of the capital (“the redemption payment”) to the bond-holder during or at the end of the bond-term (whether or not in instalments), and
(iii) to pay to the bond-holder other payments on one or more occasions during or at the end of the bond term (“additional payments”),
(e) the amount of the additional payments does not exceed an amount which would be a reasonable commercial return on a loan of the capital,
(f) under the arrangements the bond-issuer undertakes to arrange for the management of the bond assets with a view to generating income sufficient to pay the redemption payment and additional payments,
(g) the bond-holder is able to transfer the rights under the arrangements to another person (who becomes the bond-holder because of the transfer),
(h) the arrangements are a listed security on a recognised stock exchange or admitted to trading on a multilateral trading facility operated by a regulated recognised stock exchange, and
(i) the arrangements are wholly or partly treated in accordance with international accounting standards as a financial liability of the bond-issuer, or would be if the bond-issuer applied those standards.
(2) For the purposes of subsection (1)—
(a) the bond-issuer may acquire bond assets before or after the arrangements take effect,
(b) the bond assets may be property of any kind, including rights in relation to property owned by someone other than the bond-issuer,
(c) the identification of the bond assets mentioned in subsection (1)(b) and the undertakings mentioned in subsection (1)(d) and (f) may (but need not) be described as, or accompanied by a document described as, a declaration of trust,
(d) a reference to the management of assets includes a reference to disposal,
(e) the bond-holder may (but need not) be entitled under the arrangements to terminate them, or participate in terminating them, before the end of the bond term,
(f) the amount of the additional payments may be—
(i) fixed at the beginning of the bond term,
(ii) determined wholly or partly by reference to the value of or income generated by the bond assets, or
(iii) determined in some other way,
(g) if the amount of the additional payments is not fixed at the beginning of the bond term, the reference in subsection (1)(e) to the amount of the additional payments is a reference to the maximum amount of the additional payments,
(h) the amount of the redemption payment may (but need not) be subject to reduction in the event of a fall in the value of the bond assets or in the rate of income generated by them, ... and
(i) entitlement to the redemption payment may (but need not) be capable of being satisfied (whether or not at the option of the bond-issuer or the bond-holder) by the issue or transfer of shares or other securities,
(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2A) In subsection (1)—
“regulated recognised stock exchange” means a recognised stock exchange that is regulated in the United Kingdom, the European Economic Area or Gibraltar;
“multilateral trading facility” means—
a UK multilateral trading facility within the meaning given by Article 2.1(14A) of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments,
an EU multilateral trading facility within the meaning given by Article 2.1(14B) of that Regulation, and
a Gibraltar multilateral trading facility within the meaning given by Article 26(11)(b)(ii) of that Regulation.
...
(3) This section is subject to section 151O (provision not at arm's length: exclusion of arrangements from sections 151J to 151M and this section).
151O Provision not at arm's length: exclusion of arrangements from sections 151J to 151N
(1) Arrangements to which this section applies are not—
(a) purchase and resale arrangements,
(b) diminishing shared ownership arrangements,
(c) deposit arrangements,
(d) profit share agency arrangements, or
(e) investment bond arrangements.
(2) This section applies to arrangements if—
(a) apart from this section they would be alternative finance arrangements,
(b) subsection (3) or (5) of section 147 of TIOPA 2010 (tax calculations to be based on arm's length, not actual, provision) requires the profits and losses of a person who is a party to the arrangements to be calculated for tax purposes as if the arm's length provision (within the meaning of that section) had been made or imposed rather than in accordance with the arrangements,
(c) any person who is an affected person for the purposes of Part 4 of that Act (“the affected person”) is entitled to—
(i) relevant return in relation to the arrangements, or
(ii) an amount representing relevant return in relation to them, and
(d) the affected person is not subject—
(i) to income tax or corporation tax, or
(ii) to any corresponding tax under the law of a territory outside the United Kingdom,
on the relevant return or the amount representing it.
(3) In this section “relevant return”, in relation to arrangements, means any amount which would be alternative finance return if the arrangements were alternative finance arrangements.