Taxation of Chargeable Gains Act 1992 Schedule 5AAA paragraph 22

Deemed disposal if election ceases to have effect

Section 22 deals with the capital gains tax consequences for participants in a qualifying fund or qualifying company when a transparency election previously made under paragraph 12 ceases to have effect, triggering a deemed disposal and immediate reacquisition at market value.

• When a paragraph 12 transparency election for a qualifying fund or qualifying company ceases to have effect, a deemed disposal is triggered for all participants.
• For a qualifying fund, each participant is treated as having sold and immediately reacquired their units in the fund at market value immediately before the election ceased.
• For a qualifying company, each participant is treated as having sold and immediately reacquired their rights and interests in the relevant entity at market value immediately before the election ceased.
• The deemed disposal and reacquisition resets the base cost of each participant's holding to market value at the point the election ends, crystallising any accrued gains or losses up to that date.