IFM09320 | Taxation of investors: Chargeable Gains: introduction

For Capital Gains Tax purposes, RIFs are treated similarly to authorised contractual schemes (ACS) (IFM08600) that are co-ownership schemes so that, in broad terms, they are opaque for capital gains purposes.

This is given effect by Regulation 52(3), which extends the rules in section 103D TCGA 1992 (applicable to interests in tax transparent funds for capital gains purposes), so that they now also apply to interests in RIFs.

A unit in a RIF is therefore treated as an asset for the purposes of TCGA 1992, and a participant’s interest in the fund property is disregarded for those purposes. This means that transactions in the underlying assets of the RIF do not, merely by reason of being made by the RIF, create chargeable disposals for each participant. Instead, participants are generally taxed on chargeable gains by reference to disposals, actual or deemed, of their units in the RIF. The Regulation provide that participants are deemed to have disposed of and reacquired their units in a RIF in certain circumstances (IFM09340).