IFM08610 - Co-ownership Authorised Contractual Schemes (CoACS): Chargeable Gains: Introduction

General

Investors in a CoACS benefit from a simplification for the purposes of chargeable gains: the investors’ units in the CoACS are treated as assets for capital gains purposes, and the underlying assets held in the CoACS are disregarded. This avoids creating a chargeable event every time the CoACS buys or sells assets, or when an investor joins or leaves the CoACS.

A holding of units in a CoACS is treated as a single asset for chargeable gains purposes. It is also a “security” for the purposes of the chargeable gains pooling rules – a holding of multiple units of the same type in a CoACS will normally be treated as a single asset or “pool”. See CG51500C for more on pooling.

{#}New rules from 1 January 2018 and transition

The government has legislated to clarify and improve the rules applying to CoACS with effect from 1 January 2018. The Collective Investment Schemes and Offshore Funds (Amendment of the Taxation of Chargeable Gains Act 1992) Regulations 2017 (SI 2017/1204) replace the existing section 103D of the Taxation of Chargeable Gains Act 1992 (TCGA) with new sections 103D and 103DA, as well as making some other minor and consequential amendments.

Where an investor disposes of units in a CoACS on or after 1 January 2018, the chargeable gains computation should take account of:

• Expenditure and other relevant adjustments which arose under the rules in force up to 31 December 2017; and

• Expenditure and other relevant adjustments which arose under the new rules in force from 1 January 2018.

{#}Application of new rules to transparent offshore funds

The new chargeable gains rules apply to transparent offshore funds as well as to CoACS.

{#}Mergers, reorganisations and reconstructions

The special rules in chapter 2 of Part 4 of TCGA for collective investment schemes concerning reorganisations, reconstructions, mergers and or demergers apply to authorised contractual schemes.