Taxation of Chargeable Gains Act 1992 section 151Y

Diminishing shared ownership arrangements: further provision

Section 151Y provides supplementary capital gains tax rules for diminishing shared ownership arrangements, ensuring that these Sharia-compliant financing structures are not treated as partnerships and that certain transactions within them do not give rise to chargeable gains consequences.

• Diminishing shared ownership arrangements are not treated as a partnership for capital gains tax purposes, even though they involve shared ownership of an asset between a financier and a customer.
• Where the financier grants a lease of the asset to the customer as part of the arrangements, neither the grant nor the termination of that lease counts as a disposal or acquisition of part of the asset for capital gains tax.
• If the customer defaults on their obligations and the financier becomes entitled to the asset, any dealings by the financier or an appointed person to enforce that entitlement are treated as if carried out by the customer through a nominee — so the capital gains tax consequences fall on the customer, not the financier.
• Key definitions align with those used elsewhere in the alternative finance arrangements legislation: "the asset" is the asset whose beneficial interest is progressively acquired and disposed of, and "customer" and "financier" take their meanings from sections 151K and 151KA.