Section 149 | Taxation of amounts taken to reserves

(1)This section applies for the purpose of calculating the profits of a person's trade if a profit on the sale of securities would be brought into account in calculating the profits of the trade.

(2)Profits and losses from the securities that in accordance with generally accepted accounting practice are—

(a)calculated by reference to the fair value of the securities, and

(b)recognised in the person's statement of recognised gains and losses or statement of changes in equity,

are brought into account in calculating the profits of the trade.

(3)But subsection (2) does not apply—

(a)to an amount so far as deriving from or otherwise relating to an amount brought into account under that subsection in an earlier period of account, or

(b)to an amount recognised for accounting purposes by way of correction of a fundamental error.

(4)In this section “securities” includes—

(a)shares,

(b)rights of unit holders in unit trust schemes to which TCGA 1992 applies as a result of section 99 of TCGA 1992,

(ba)rights of participants in schemes or funds to which TCGA 1992 applies as a result of section 103D of TCGA 1992, and

(c)in the case of a company with no share capital, interests in the company possessed by members of the company,

but does not include a loan relationship (within the meaning of Chapter 2 of Part 4 of FA 1996).