Taxation of Chargeable Gains Act 1992 section 151J

Purchase and resale arrangements

Section 151J defines what qualifies as a "purchase and resale arrangement" for the purposes of alternative finance, and sets out the conditions that must be met for the special tax treatment to apply.

• The arrangements must be between two parties, where at least one is a financial institution or the deal is facilitated through a regulated peer-to-peer lending platform
• One party (the first purchaser) buys an asset and immediately resells it to the other party (the second purchaser) at a higher price, with all or part of that higher price payable at a later date
• The difference between the purchase price and the resale price must, in substance, equate to the return on an investment of money at interest — effectively treating the markup as an alternative to conventional interest
• Arrangements that are not made on arm's length terms may be excluded from this treatment under section 151O