Corporation Tax Act 2009 section 640

Credits and debits not to be brought into account under Part 5

Section 640 prevents certain derivative contract credits and debits from being taxed as non-trading loan relationship amounts, redirecting them instead to the chargeable gains regime.

• Where a derivative contract falls within one of four specified categories, its relevant credits and debits are excluded from the non-trading loan relationships rules in Part 5 of the Act.
• The four categories are: contracts relating to land or certain tangible movable property, embedded derivatives that are options within creditor relationships, embedded derivatives that are exactly tracking contracts for differences, and property-based total return swaps.
• The meaning of "relevant credits" and "relevant debits" for these purposes is defined separately in section 659.
• Instead of being taxed under the loan relationships rules, the relevant credits and debits for these contracts are taxed on a chargeable gains basis under section 641.