Corporation Tax Act 2009

504 Diminishing shared ownership arrangements [F1 : initial acquisition] U.K.

(1) This section applies to arrangements if under them—

(a) a [F2 person] (“[F3 the financier]”) acquires a beneficial interest in an asset,

[F4 (aa) either—

(i) [F3 the financier] is a financial institution or a regulated home purchase plan provider, or

(ii) the arrangements are regulated electronic system facilitated arrangements,]

(b) another person (“[F5 the customer]”) also acquires a beneficial interest in it,

(c) [F5 the customer] is to make payments to [F3 the financier] amounting in aggregate to the consideration paid for the acquisition of [F6 the financier’s] beneficial interest (but subject to any adjustment required for such a reduction as is mentioned in subsection (5)),

(d) [F5 the customer] is to acquire [F6 the financier’s] beneficial interest (whether or not in stages) as a result of those payments,

(e) [F5 the customer] is to make other payments to [F3 the financier] (whether under a lease forming part of the arrangements, or otherwise),

(f) [F5 the customer] has the exclusive right to occupy or otherwise to use the asset, and

(g) [F5 the customer] is exclusively entitled to any income, profit or gain arising from or attributable to the asset (including, in particular, an increase in its value).

[F7 (1A) Arrangements are regulated electronic system facilitated arrangements if—

(a) the arrangements substantially consist of an article 36H agreement in relation to the enjoyment by [F5 the customer] of the rights referred to in subsection (1)(f) and (g) before [F8 the customer’s] acquisition of [F6 the financier’s] beneficial interest,

(b) [F5 the customer] would be regarded, for the purposes of that agreement, as the borrower under it,

(c) [F3 the financier] would be regarded, for the purposes of that agreement, as the lender under it, and

(d) [F9 the customer and the financier] becoming parties to the agreement was facilitated by an electronic system operated by a person who has permission under Part 4A of FISMA 2000 to carry on, in relation to that system, the regulated activity specified in article 36H(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (operating an electronic system in relation to lending).]

(2) For the purposes of subsection (1)(a) it does not matter if—

(a) [F3 the financier] acquires its beneficial interest from [F5 the customer],

(b) [F5 the customer], or another person who is not [F3 the financier], also has a beneficial interest in the asset, or

(c) [F3 the financier] also has a legal interest in it.

(3) Subsection (1)(f) does not prevent [F5 the customer] from granting an interest or right in relation to the asset if the conditions in subsection (4) are met.

(4) The conditions are that—

(a) the grant is not to—

(i) [F3 the financier],

(ii) a person controlled by [F3 the financier], or

(iii) a person controlled by a person who also controls [F3 the financier], and

(b) the grant is not required by [F3 the financier] or arrangements to which [F3 the financier] is a party.

(5) Subsection (1)(g) does not prevent [F3 the financier] from—

(a) having responsibility for any reduction in the asset's value, or

(b) having a share in a loss arising out of any such reduction.

(6) This section is subject to section 508 (provision not at arm's length: exclusion of arrangements from section 503, this section and sections [F10 504A] to 507).

[F11 (7) In this section—

• “article 36H agreement” has the meaning given by article 36H(4) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

• “borrower” and “lender” are to be construed in accordance with article 36H(9) of that Order;

• “regulated home purchase plan provider” means a person who—

  (a)

  is carrying on the regulated activity specified in article 63F(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (entering into regulated home purchase plans as home purchase provider), and

  (b)

  has permission under Part 4A of FISMA 2000 to do so.]

Textual Amendments

F1 Words in s. 504 heading inserted (with effect in accordance with Sch. 7 para. 4 of the amending Act) by Finance Act 2025 (c. 8), Sch. 7 paras. 2(3)(a), 4

F2 Word in s. 504(1)(a) substituted (24.5.2022) by The Alternative Finance (Income Tax, Capital Gains Tax and Corporation Tax) Order 2022 (S.I. 2022/572), arts. 1(2), 4(2)(a) (with art. 1(3))

F3 Words in s. 504 substituted (with effect in accordance with Sch. 7 para. 4 of the amending Act) by Finance Act 2025 (c. 8), Sch. 7 paras. 2(3)(b), 4

F4 S. 504(1)(aa) inserted (24.5.2022) by The Alternative Finance (Income Tax, Capital Gains Tax and Corporation Tax) Order 2022 (S.I. 2022/572), arts. 1(2), 4(2)(b) (with art. 1(3))

F5 Words in s. 504 substituted (with effect in accordance with Sch. 7 para. 4 of the amending Act) by Finance Act 2025 (c. 8), Sch. 7 paras. 2(3)(c), 4

F6 Words in s. 504 substituted (with effect in accordance with Sch. 7 para. 4 of the amending Act) by Finance Act 2025 (c. 8), Sch. 7 paras. 2(3)(d), 4

F7 S. 504(1A) inserted (24.5.2022) by The Alternative Finance (Income Tax, Capital Gains Tax and Corporation Tax) Order 2022 (S.I. 2022/572), arts. 1(2), 4(3) (with art. 1(3))

F8 Words in s. 504 substituted (with effect in accordance with Sch. 7 para. 4 of the amending Act) by Finance Act 2025 (c. 8), Sch. 7 paras. 2(3)(e), 4

F9 Words in s. 504(1A)(d) substituted (with effect in accordance with Sch. 7 para. 4 of the amending Act) by Finance Act 2025 (c. 8), Sch. 7 paras. 2(3)(f), 4

F10 Word in s. 504(6) substituted (with effect in accordance with Sch. 7 para. 4 of the amending Act) by Finance Act 2025 (c. 8), Sch. 7 paras. 2(3)(g), 4

F11 S. 504(7) inserted (24.5.2022) by The Alternative Finance (Income Tax, Capital Gains Tax and Corporation Tax) Order 2022 (S.I. 2022/572), arts. 1(2), 4(4) (with art. 1(3))