Finance Act 1997

80 Futures and options: transactions with guaranteed returns

(1) After section 127 of the Taxes Act 1988 there shall be inserted the following section—

“127A Futures and options: transactions with guaranteed returns

Schedule 5AA (which makes provision for the taxation of the profits and gains arising from transactions in futures and options that are designed to produce guaranteed returns) shall have effect.”

(2) After Schedule 5 to that Act there shall be inserted, as Schedule 5AA to that Act, the Schedule set out in Schedule 11 to this Act.

(3) In section 128 of that Act (profits arising from commodity and financial futures etc. to be taxed only under the provisions relating to chargeable gains)—

(a) after the word “which”, where it first occurs, there shall be inserted “is not chargeable to tax in accordance with Schedule 5AA and”; and

(b) for “that Schedule” there shall be substituted “Schedule D”.

(4) In section 399 of that Act (withdrawal of loss relief for losses from dealing in futures etc.), after subsection (1) there shall be inserted the following subsection—

“(1A) Subsection (1) above does not apply to a loss arising from a transaction to which Schedule 5AA applies.”

(5) In section 469(9) of that Act (sections 686 and 687 disapplied in relation to unauthorised unit trusts), at the end there shall inserted “except as respects income to which section 686 is treated as applying by virtue of paragraph 7 of Schedule 5AA.”

(6) Subject to subsection (7) below, this section and Schedule 11 to this Act shall have effect, and be deemed to have had effect, for chargeable periods ending on or after 5th March 1997 in relation to profits and gains realised, and losses sustained, on or after that date.

(7) In relation to profits and gains realised, and losses sustained, on or after 5th March 1997, paragraph 1(6) and (7) of the Schedule 5AA to the Taxes Act 1988 (rule against double counting) inserted by this section shall be deemed to have had effect for chargeable periods beginning before that date (as well as for those beginning on or after that date).