Taxation of Chargeable Gains Act 1992 section 151KA

Diminishing shared ownership arrangements: refinancing

Section 151KA provides capital gains tax relief when a customer refinances an existing Sharia-compliant diminishing shared ownership arrangement by switching to a new financier, ensuring the refinancing does not trigger a chargeable gain.

• Where a customer already has a diminishing shared ownership arrangement (under section 151K or this section), they can refinance by transferring the financier's remaining share to a new financier without adverse CGT consequences.
• The new financier must be a financial institution, a regulated home purchase plan provider, or the arrangement must be a regulated electronic system facilitated arrangement.
• The customer must retain exclusive occupation, use, and entitlement to income and gains from the asset throughout, and must continue making payments to buy back the financier's share over time.
• The relief does not apply if the arrangements are not on arm's length terms, as section 151O can exclude non-arm's length arrangements from this treatment.

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