739A Reorganisation of undertakings for collective investment

Summary

This section allows a reorganisation of domestic collective funds without the triggering of a tax charge.

What the section does is that it allows one fund to transfer all its assets to another fund in exchange for the issue by that other fund of units. There is no capital gains tax charge on the transfer of those assets, but when the units acquired in return for the transfer are themselves disposed of, the cost of the units for capital gains tax purposes will be —

• the cost of the assets transferred, or
• where any of those assets have been subject to a deemed disposal and reacquisition under section 738(4), the value thereof of such assets at the time of the latest such disposal.

Details

(1)(a) The term “undertaking for collective investment” has the same meaning as it has in section 738(1).

(1)(b) Where one fund transfers all its assets to another fund in exchange for the issue by that other fund of units, a capital gains tax charge does not arise on the transfer of those assets.

(2) Where the units acquired in return for the transfer are themselves disposed of, the cost of the units for capital gains tax purposes will be —

• (a) the cost of the assets transferred, or
• (b) where any of those assets have been subject to a deemed disposal and reacquisition under the Tax Acts, the value of such assets at the time of the latest such disposal.

Relevant Date: Finance Act 2021