Taxation of Chargeable Gains Act 1992 section 59B

Alternative investment fund managers

Section 59B establishes the capital gains tax treatment when a partner in an alternative investment fund management partnership receives deferred variable remuneration in the form of financial instruments that are partnership assets.

• Where a partner allocates profit to the partnership representing variable remuneration that will vest as financial instruments, and those instruments are then disposed of to the partner from partnership assets, specific capital gains rules apply.
• Both the partnership members making the disposal and the receiving partner are treated as if the instruments were acquired for a consideration equal to the allocated profit, reduced by the income tax already charged on it.
• This ensures the base cost of the instruments for future capital gains purposes reflects the net-of-tax amount of the deferred remuneration, preventing double taxation.
• The section applies from 6 April 2014, introduced by Finance Act 2014, and uses the same defined terms as the related income tax provisions in ITTOIA 2005.