Income Tax (Trading and Other Income) Act 2005 section 564

Deemed disposal where futures run to delivery or options are exercised

Section 564 provided rules for treating futures contracts that run to delivery, or options that are exercised, as if a disposal had taken place for the purposes of calculating income tax on financial derivatives — but this section has been repealed.

• Section 564 was part of Chapter 12 (sections 555–569) of ITTOIA 2005, which dealt with the income tax treatment of certain financial derivatives held by individuals outside of a trade.
• The section established a deemed disposal mechanism so that when a futures contract reached its delivery date, or when an option was exercised, the transaction was treated as a disposal for tax purposes, allowing any profit or loss to be recognised.
• The entire Chapter 12, including section 564, was removed from the legislation by Finance Act 2013, Schedule 12, paragraph 13(2), as part of a broader reform of how derivatives are taxed.
• The repeal took effect from the 2013–14 tax year onwards, meaning section 564 has no application for that year or any subsequent tax year.

---