Corporation Tax Act 2009 section 644

Income to be left out of account in determining whether section 643 applies

Section 644 provides that certain income elements within a derivative contract's underlying subject matter can be ignored when deciding whether the chargeable gains rules in section 643 apply to that contract.

• Where the underlying subject matter of a derivative contract includes income from land or tangible movable property (as described in section 643), that income may be disregarded if it qualifies as "subordinate income".
• Income is "subordinate income" if it is subordinate relative to the land or tangible movable property element of the underlying subject matter, or if it is of small value compared with the overall value of the underlying subject matter.
• Whether the income element is subordinate or of small value is assessed at the point in time when the company first enters into or acquires the derivative contract.
• This provision mirrors a similar rule in section 590, which performs the same function for the "excluded property" definition used elsewhere in the derivative contracts regime.