Taxation of Chargeable Gains Act 1992 section 143

Commodity and financial futures and qualifying options

Section 143 sets out how gains and losses from dealing in commodity or financial futures and qualifying options are treated for capital gains tax purposes, ensuring they fall within the chargeable gains regime rather than being taxed as miscellaneous income.

• Gains from dealing in commodity or financial futures on a recognised exchange, or in qualifying options, are brought within the capital gains tax regime — outstanding obligations under futures contracts and qualifying options are treated as chargeable assets, preventing them from being taxed as miscellaneous income
• Over-the-counter futures contracts (those not dealt on a recognised exchange) are also brought within the capital gains regime where one of the parties is an authorised person under the Financial Services and Markets Act 2000, provided the gain or loss does not arise in the course of a trade
• Closing out a futures contract by entering into a reciprocal contract is treated as a disposal — money received is the disposal consideration, and money paid is treated as incidental costs of the disposal; similarly, any payment received or made in full or partial settlement of an unclosed contract is also treated as a disposal
• The straight-line restriction on allowable expenditure in section 46 does not apply to obligations under futures contracts dealt on a recognised exchange or to futures contracts where an authorised person or listed institution is a party