Income Tax Act 2007

[F1 Average holding period: disposals U.K.

Textual Amendments

F1 Pt. 13 Ch. 5F inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2)

809FZD Disposals U.K.

(1) An investment or part of an investment is disposed of where—

(a) there is a disposal of the investment or the part of the investment for the purposes of the investment scheme,

(b) there is a disposal for the purposes of the investment scheme of an intermediate holding or intermediate holding structure (including an intermediate investment scheme) by or through which the investment is held, or

(c) in any other case, there is a deemed disposal under subsection (2).

(2) There is a deemed disposal of an investment or part of an investment under this subsection where—

(a) under any arrangements—

(i) the scheme in substance closes its position on the investment or the part of the investment, or

(ii) the scheme ceases to be exposed to risks and rewards in the respect of the investment or the part of the investment, and

(b) it is reasonable to suppose that the arrangements were designed to secure that result.

(3) In the case of a disposal of part of a holding of securities in a company which are of the same class, suppose for the purposes of determining which investments have been disposed of that the disposal affects the securities in the order in which they were acquired (that is, on a first in first out basis).

(4) The references in subsection (1)(a) and (b) to a disposal are to something which is a disposal for the purposes of TCGA 1992; but for the purposes of subsection (1)(a) disregard section 116 of TCGA 1992 (which disapplies sections 127 to 130 of that Act in relation to qualifying corporate bonds).

809FZE Part disposals U.K.

(1) Where there is a disposal of part of an investment, the part disposed of and the part not disposed of are to be treated as two separate investments which were made at the same time.

(2) The value of each of those two separate investments is the appropriate proportion of the value first invested in the whole investment.

(3) The appropriate proportion is the proportion of the value of the part in question to the value of the whole investment at the time of the disposal.

(4) The disposal of part of an asset includes the disposal of an interest in or right over the asset (and “part disposed of” is to be construed accordingly).

809FZF Unwanted short-term investments U.K.

(1) The making and disposal of an investment for the purposes of an investment scheme are to be disregarded if—

(a) the investment is an unwanted short-term investment, and

(b) the unwanted short-term investment is excludable.

(2) An investment is an unwanted short-term investment where—

(a) the investment is made as part of a transaction under which one or more other investments are made for the purposes of the scheme,

(b) the value of the investment does not exceed that of the other investments taken together,

(c) it is reasonable to suppose that the investment had to be made in order for the other investments to be made,

(d) at the time the investment is made, managers of the scheme have a firm, settled and evidenced intention to dispose of the investment for the purposes of the scheme within the relevant period,

(e) the investment is disposed of for the purposes of the scheme within the relevant period, and

(f) any profit resulting from the disposal has no bearing on whether a sum of carried interest arises or on the amount of any sum of carried interest which does arise.

(3) An unwanted short-term investment is excludable if it constitutes—

(a) an investment in land,

(b) an investment in securities in an unlisted company,

(c) the making of a direct loan where the other investments specified in subsection (2)(b) are shares or other securities in an unlisted company, or

(d) the making of a direct loan which is a qualifying loan within the meaning given by section 809FZR(2).

(4) In subsection (2)(e) “relevant period” means—

(a) for an investment within subsection (3)(a), 12 months;

(b) for an investment within subsection (3)(b) or (c), 6 months;

(c) for an investment within subsection (3)(d), 120 days.

(5) But if at any time it becomes reasonable to suppose that, when the scheme ceases to invest, 25% or more of the capital of the investment scheme will have been invested in unwanted short-term investments which are excludable, subsection (1) does not apply to any investment made subsequently for the purposes of the scheme.]