Finance Act 1990

54 Indexation: collective investment schemes. U.K.

(1) The provisions specified in subsection (2) below (which provide for an indexation allowance on the disposal of assets) shall not apply in the case of a disposal if each of the three conditions set out below is fulfilled.

(2) The provisions are—

(a) in the M1 Finance Act 1982, sections 86(4) and 87 and, in Schedule 13, paragraphs 1 to 7, 8(2)(c) and 10(3), and

(b) in the M2 Finance Act 1985, section 68(4) to (8) and, in Schedule 19, paragraphs 1(3), 2, 5, 7(3), 8(1)(b) and (c), 11 to 15, 18, 22 and 23.

(3) The first condition is that the disposal is of rights in property to which collective investment arrangements relate; and—

(a) collective investment arrangements are arrangements which constitute a collective investment scheme;

(b) “collective investment scheme” has the same meaning as in the M3 Financial Services Act 1986.

(4) Subject to subsection (5) below, the second condition is that, at some time in the relevant ownership period, not less than 90 per cent. of the market value (at that time) of the investment property then falling within the arrangements was represented by—

(a) non-chargeable assets,

(b) shares in a building society, or

(c) such assets and such shares.

(5) In a case where—

(a) the arrangements are ones under which the contributions of the participants, and the profits or income out of which payments are to be made to them, are pooled in relation to separate parts of the property in question, and

(b) the disposal is of rights in property falling within a separate part,

subsection (4) above shall have effect as if the reference to the arrangements were to the separate part.

(6) For the purposes of subsection (4) above the relevant ownership period is the period which begins with the later of—

(a) the earliest date on which any relevant consideration was given for the acquisition of the rights, and

(b) 1st April 1982,

and ends with the day on which the disposal is made.

(7) For the purposes of subsection (4) above investment property is all property other than cash awaiting investment.

(8) For the purposes of subsection (4) above an asset is a non-chargeable asset if, were it to be disposed of—

(a) at the time the rights are disposed of, and

(b) by a person resident in the United Kingdom,

any gain accruing on the disposal would not be a chargeable gain.

(9) In subsection (4)(b) above “shares” and “building society” have the same meanings as in the M4 Building Societies Act 1986.

(10) For the purposes of subsection (6) above relevant consideration is consideration which, assuming the application of Chapter II of Part II of the M5 Capital Gains Tax Act 1979 to the disposal of the rights, would fall to be taken into account in determining the amount of the gain or loss accruing on the disposal, whether that consideration was given by or on behalf of the person making the disposal or by or on behalf of a predecessor in title of his whose acquisition cost represents (directly or indirectly) the whole or any part of the acquisition cost of the person making the disposal.

(11) The third condition is that the disposal is made on or after 20th March 1990.

Marginal Citations

M1 1982 c. 39.

M2 1985 c. 54.

M3 1986 c. 60.

M4 1986 c. 53.

M5 1979 c. 14.