Corporation Tax Act 2009 section 515A

Diminishing shared ownership arrangements: further provision in respect of refinancing

Section 515A provides tax neutrality rules for corporation tax purposes when a diminishing shared ownership arrangement is refinanced — ensuring that the various asset transfers involved in switching from one financial institution to another do not trigger taxable gains or treated disposals.

• When a customer sells an asset back to a financial institution as part of refinancing a diminishing shared ownership arrangement, any gain arising on that sale is disregarded for corporation tax purposes.
• If the customer later sells the asset to a third party, the gain is calculated as though the intermediate refinancing transactions (the sale to the old financier, the reacquisition from the new financier, and any steps in between) had never happened.
• When the original financier transfers its interest in a lease to the new financier as part of successor arrangements, that transfer is not treated as a disposal or acquisition for corporation tax purposes.
• These provisions ensure that the purely mechanical steps involved in moving a Sharia-compliant diminishing shared ownership arrangement from one provider to another carry no corporation tax consequences.