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HMRC internal manual

Savings and Investment Manual

Artificial transactions in futures and options: meaning of future or option (this guidance applies to disposals of futures and options before 6 April 2013)


The definition of futures and options is in ITTOIA05/S558. The legislation applies to a wider range of transactions than the ‘commodity or financial futures or qualifying options’ which are charged to capital gains tax under TCGA92/S143.


‘Future’ means the outstanding rights and obligations under a commodity or financial futures contract. The term commodity or financial future is not defined, so it must be given its ordinary meaning. It covers both exchange traded and over the counter contracts (see also CG56003). Paragraph 4 of Statement of Practice 3/02 tells you more about how ‘financial futures’ should be interpreted. A swap, however, is not a future and therefore cannot be a financial future.


‘Option’ means

  • an option relating to currency, shares, stock, securities or an interest rate, or rights under a commodity or financial futures contract,
  • or any other option listed on a recognised stock exchange or recognised futures exchange. This is same as the definition of a ‘traded option’ as defined by TCGA92/S144 (8), (see CG55510 onwards SAIM20000).

The definition covers exchange traded and over the counter options (see also CG55571).

The distinction between a traded option and any other option is relevant only to the question of when disposals occur - see section 562 (SAIM7080).

Unlike TCGA92/S143, over-the-counter contracts covered by the legislation are not restricted to transactions where one of the parties is an authorised person. (An authorised person is, broadly, a financial institution or other person permitted under the Financial Services and Markets Act 2000 to carry on investment business and other regulated activities. The term is defined at TCGA92/S143 (8)).