Taxation of Chargeable Gains Act 1992 section 151Z

Diminishing shared ownership arrangements: further provision in respect of refinancing

Section 151Z ensures that when a customer refinances a Sharia-compliant diminishing shared ownership arrangement, the various disposals and acquisitions involved in the refinancing process do not trigger capital gains tax charges.

• Any gain accruing to the customer when they dispose of an asset to the new financier as part of the refinancing is treated as not having accrued for capital gains tax purposes.
• When the customer later makes a genuine disposal of the asset to a third party, the intermediate disposal and reacquisition involved in the refinancing are ignored, so the gain is computed as if the refinancing steps never happened.
• Where one set of diminishing shared ownership arrangements is superseded by successor arrangements, the transfer of the original financier's lease interest to the new financier is not treated as a disposal or acquisition for capital gains tax purposes.
• These provisions apply only for capital gains tax purposes and only to arrangements that qualify under the diminishing shared ownership refinancing rules in section 151KA.

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