Taxation of Chargeable Gains Act 1992 section 99A

Treatment of umbrella schemes

Section 99A defines what an umbrella scheme is and establishes how each of its sub-funds should be treated as a separate collective investment scheme for capital gains tax purposes.

• An umbrella scheme is a collective investment scheme (such as a unit trust, authorised co-ownership scheme, or offshore fund) that pools assets into separate sub-funds, with participants able to switch between them.
• For CGT purposes, each sub-fund is treated as a standalone collective investment scheme in its own right, while the umbrella scheme as a whole is disregarded as a scheme — meaning unit holders are treated as holding shares in the company corresponding to their particular sub-fund, not the overall umbrella.
• When a unit holder switches from one continuing sub-fund to another, this counts as a disposal for CGT purposes because the holder is effectively disposing of an interest in one deemed company and acquiring an interest in another.
• Certain overriding provisions are preserved: gains accruing to an umbrella scheme can still qualify for the authorised unit trust exemption, and a transfer of business to an umbrella scheme can still be treated as a transfer to a unit trust scheme for reconstruction relief purposes.