Taxation of Chargeable Gains Act 1992 section 261F

Deemed manufactured payments: effect on repurchase price

Section 261F ensures that when a deemed manufactured payment causes the repurchase price in a repo transaction to be increased for income tax purposes, that same increase is also recognised for capital gains tax purposes.

• Where a repo involves UK shares, UK securities or overseas securities and the repurchase price is deemed to be increased under the manufactured payments rules, that increase also applies for capital gains tax
• The section only applies where either Condition A is met (the deemed increase eliminates any difference between the sale price and the repurchase price) or Condition B is met (an exception disapplies the normal repo price-difference rules)
• The section does not apply where the general repo capital gains rules in section 263A already govern the transaction
• All terminology used in this section carries the same meaning as in the corresponding income tax provisions dealing with deemed increases in repurchase prices