Taxation of Chargeable Gains Act 1992 section 116A

Holding beginning or ceasing to fall within section 490 of CTA 2009

Section 116A deals with the chargeable gains consequences when a company's holding in an OEIC, unit trust, or offshore fund moves into or out of the loan relationships regime between two successive accounting periods.

• Where a company holds units or shares in an OEIC, unit trust, or offshore fund that are treated as loan relationship rights in one accounting period but not in the next (or vice versa), a deemed reorganisation is assumed to have taken place at the boundary between the two periods.
• If the holding ceases to be within the loan relationships regime in the second period, the holding just before the start of that period is treated as the "old asset" and the holding just after is the "new asset" for the purposes of the section 116 reorganisation rules.
• If the holding enters the loan relationships regime in the second period, a similar deemed reorganisation is assumed to have occurred at the end of the first period, again treating the holding before and after the boundary as old and new assets respectively.
• The deemed reorganisation into the loan relationships regime does not apply where the first period is one in which an annual deemed disposal of the holding has already been treated as occurring under the insurance company rules for unit trust holdings.