SCHEDULES

C1C9C3C2C5C4C6C7C8SCHEDULE 26Derivative contracts

Annotations:
Modifications etc. (not altering text)
C1

Sch. 26 modified by 1996 c. 8, s. 86(3C) (as inserted (24.7.2002 with effect as mentioned in s. 82(2) of the amending Act) by 2002 c. 23, s. 82, Sch. 25 Pt. 1 para. 6(3))

C9

Sch. 26 extended (retrospective to 30.9.2002) by Finance Act 2003 (c. 14), s. 177(4)(8)(11)

C3

Sch. 26 applied by 1988 c. 1, s. 440(2B) (as amended (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 70)

C2

Sch. 26 modified by 1996 c. 8, s. 94A (as inserted (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 13)

C5

Sch. 26 applied (with modifications) (5.10.2004) by Energy Act 2004 (c. 20), s. 198(2), Sch. 9 para. 24 (with s. 38(2)); S.I. 2004/2575, art. 2(1), Sch. 1

C4

Sch. 26 applied (with modifications) (5.10.2004) by Energy Act 2004 (c. 20), s. 198(2), Sch. 9 para. 12 (with s. 38(2)); S.I. 2004/2575, art. 2(1), Sch. 1

C8

Sch. 26 modified (19.7.2006) by Finance Act 2006 (c. 25), s. 136(2)(e)

Part 9Miscellaneous

F445HAF1F2F4Treatment of credits and debits on terminal exercise of non-embedded option or running to delivery of future

1

This paragraph applies where—

a

a company is party to a derivative contract in an accounting period,

b

the derivative contract is a plain vanilla contract which is an option,

c

rights comprised in the plain vanilla contract are exercised to any extent in that accounting period, and

d

those rights are rights to acquire shares.

1A

This paragraph also applies where—

a

a company is party to a derivative contract in an accounting period,

b

the derivative contract is a plain vanilla contract which is a future,

c

delivery is taken of an asset in accordance with the terms of the future, and

d

that asset is shares.

2

F6Where this paragraph applies, for the purpose of computing any chargeable gain accruing to the company on a disposal by it of all the shares F7acquired or delivered, the sums allowable as a deduction under section 38(1)(a) of F8TCGA 1992 (acquisition costs) shall—

a

if G exceeds L, be increased by the amount of that excess,

b

if L exceeds G, be reduced by the amount of that excess,

and, in the case of a part disposal of those shares, section 42(2) of that Act shall have effect accordingly.

3

If the amount of the excess in sub-paragraph (2)(b) is greater than the amount of expenditure allowable under section 38(1)(a) of F9TCGA 1992, the amount of the excess that cannot be deducted from the expenditure so allowable shall, for the purpose mentioned in sub-paragraph (2), be added to the amount of the consideration for the disposal of the shares.

4

In this paragraph—

  • G is the sum of the credits brought into account under F3paragraph 14(3) in respect of the derivative contract in each relevant accounting period so far as referable, on a just and reasonable apportionment, to the shares acquired as a result of the exercise of the rights mentioned in F5sub-paragraph (1)(c) or the delivery mentioned in sub-paragraph (1A)(c);

  • L is the sum of the debits brought into account under F3paragraph 14(3) in respect of the derivative contract in each relevant accounting period, so far as so referable.

5

For the purposes of sub-paragraph (4), a “relevant accounting period” is—

a

the accounting period in which the disposal in question is made, or

b

any previous accounting period.