Taxation of Chargeable Gains Act 1992 section 103KFD

Deemed accrual of loss where carried interest never arises

Section 103KFD provides relief where an individual who elected to be taxed on carried interest as scheme profits arise ends up receiving less carried interest than the gains already taxed, by deeming a loss to accrue.

• Where an individual has elected under section 103KFA and has been taxed on deemed chargeable gains, but the scheme's investments have been substantially disposed of and actual carried interest received is less than the gains already taxed, a loss is deemed to accrue.
• The loss arises immediately before the end of the tax year in which the conditions are first satisfied, and equals the excess of the total chargeable gains previously reported over the carried interest actually received.
• No further carried interest can reasonably be expected to arise to the individual from the scheme before the loss can be recognised.
• Once the loss is recognised, no further deemed gains arise under section 103KFA for future tax years in relation to that scheme, and if carried interest does subsequently arise, the individual cannot claim adjustments under section 103KFC(3) for tax already charged on it.