Taxation of Chargeable Gains Act 1992 section 103F

Exchange of units for units in the same scheme

Section 103F sets out the circumstances in which an exchange of units for new units within the same collective investment scheme will be treated as a tax-neutral reorganisation rather than as a disposal giving rise to a chargeable gain or allowable loss.

• Case 1 applies where a participant swaps units for new units of substantially the same value and the underlying scheme property and participants' rights remain unchanged (ignoring any variation in management charges).
• Case 2 applies where there is a full reorganisation in which all unitholders — or all holders of a particular class of units — exchange all their units for new units in the same scheme.
• Where either case applies, the exchange is treated as though the scheme were a company undergoing a share reorganisation, so the standard share reorganisation rules in sections 127 to 131 apply and no disposal is treated as occurring at that point.
• Management charges are defined as costs charged to the scheme property for remunerating those who operate, administer, invest or safeguard the scheme's assets.