Corporation Tax Act 2009 section 590

Disregard of subordinate or small value underlying subject matter

Section 590 allows minor or subordinate elements of a derivative contract's underlying subject matter to be ignored when determining whether the contract qualifies for exclusion from the derivative contracts rules.

• Where a derivative contract's underlying subject matter consists of excluded property (such as shares or land) plus other elements that are subordinate or of small value, the entire contract is treated as though it consists wholly of excluded property
• This means the contract falls outside the derivative contracts tax regime, even though it contains minor non-excluded elements
• Whether elements are subordinate or of small value is assessed at the time the company enters into or acquires the contract, not at any later date
• Where the non-excluded elements are neither subordinate nor of small value, separate rules under section 593 apply to options and futures that contain a mixture of excluded and non-excluded underlying subject matter