CFM55010 | Derivative contracts: chargeable gains on derivatives: summary

Summary of CTA09/Chapters 7 and 8

This section of the guidance covers interactions between derivative contracts and the chargeable gains code. Chapter 7 of CTA09 deals with the cases where profits or losses on derivatives are brought into account as chargeable gains, rather than as income. Chapter 8 contains a number of miscellaneous provisions concerning chargeable gains.

The provisions in Chapters 7 and 8 relate, broadly, to:

• ‘annual chargeable gains’ on certain derivatives, and the carry back of capital losses arising from such derivatives

• the tax treatment of certain property derivatives

• the tax treatment of convertible or share-linked securities, from the holder’s perspective

• the tax treatment of such securities for the issuing company, and

• the interaction with TCGA 1992 where an equity derivative results in physical delivery of shares.

This part of the guidance deals with the first, second and fifth bullet points above. The third and fourth bullet points are covered at CFM55200+ and CFM55400+ respectively.

You may find the table below of help in locating the statutory provisions or guidance you are looking for.