Corporation Tax Act 2009 section 504A

Diminishing shared ownership arrangements: refinancing

Section 504A extends the alternative finance rules for diminishing shared ownership arrangements to cover refinancing scenarios, where a new financier replaces the original one partway through the arrangement.

• A diminishing shared ownership arrangement can qualify as alternative finance even where the customer already owns a beneficial interest in the asset before disposing of part of it to a financier, rather than the financier acquiring the asset first
• Where an existing diminishing shared ownership arrangement is refinanced — meaning a new financier takes over the remaining share from the original financier — the new arrangement also qualifies as alternative finance
• The financier must be a financial institution, a regulated home purchase plan provider, or the arrangement must be facilitated through a regulated electronic system
• The arrangements are excluded from this treatment if the terms are not at arm's length

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