Taxation of Chargeable Gains Act 1992 Schedule 5AAA paragraph 23

Gains accruing on disposals under paragraph 21 or 22

Paragraph 23 sets out the rules for when and how gains arising from deemed disposals of assets held in UK property rich collective investment vehicles are treated as accruing to the investor, where those deemed disposals arise because the fund has made payments derived from UK land that are not otherwise taxable, or because the fund or company has ceased to meet the conditions for exemption.

• When a deemed disposal triggers a gain, that gain does not all accrue at once — instead, portions of it are recognised as the investor actually disposes of fund units or receives relevant payments, with each portion calculated as the ratio of the disposal proceeds or receipt to the total deemed gain.
• Cumulative portions recognised across all occasions cannot exceed 100% of the deemed gain, and any part of a disposal consideration or receipt that exceeds the deemed gain is ignored when calculating the proportion.
• Any remaining unrecognised portion of the deemed gain is treated as accruing either when the fund is wound up (for paragraph 21 disposals) or at the earlier of three years after the deemed disposal or the fund's winding up (for paragraph 22 disposals).
• Where a market value reduction has been applied to the deemed disposal under paragraph 21, a corresponding just and reasonable reduction must also be made to the receipt amount used in calculating the appropriate portion of the gain.