Part 7

Derivative contracts
Chapter 2

Contracts to which this Part applies

Exclusions from derivative contracts

Contracts excluded because of underlying subject matter: general
589
1
A relevant contract is not a derivative contract for the purposes of this Part if its underlying subject matter—
a
consists wholly of excluded property (see subsections (2) to (5)), or
b
is treated as consisting wholly of such property.
2
“Excluded property” means—
a
intangible fixed assets,
b
shares in a company other than shares within subsection (3), or
c
rights of a unit holder under a unit trust scheme other than a scheme in relation to which section 490 (holdings in OEICs, unit trusts and offshore funds treated as creditor relationship rights) has effect.
3
The shares within this subsection are—
a
shares to which section 524 or 526 (shares subject to outstanding third party obligations and shares which are non-qualifying shares) applies, and
b
shares in an open-ended investment company in relation to which section 490 has effect.
4
Subsection (2)(a) applies only in relation to a relevant contract which is an option or future.
5
Subsection (2)(b) and (c) apply only in relation to a relevant contract which—
a
meets any of conditions A to E in section 591, and
b
is not designed to produce a return which equates in substance to the return on an investment of money at a commercial rate of interest.
6
Section 590 applies for determining whether the underlying subject matter of a relevant contract is to be treated as consisting wholly of excluded property.
Pt. 7 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
Pt. 7 modified by 2007 c. 3, s. 809FZZ(8) (as inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2))
Pt. 7 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)