The Co-ownership Contractual Schemes (Tax) Regulations 2025

Chapter 2 Taxation of Chargeable Gains Act 1992

Collective investment schemes

52.—(1) TCGA 1992(1) is amended as set out in this regulation and in regulations 53 and 54.

(2) In section 99A(6) (treatment of umbrella schemes), after paragraph (a) insert—

“(aa) a Reserved Investor Fund (Contractual Scheme),”.

(3) In section 103D (application of Act to tax transparent funds)—

(a) in subsection (1), in the definition of “tax transparent fund”—

(i) at the end of paragraph (a) omit “or”,

(ii) at the end of that paragraph insert—

“(aa) a Reserved Investor Fund (Contractual Scheme), or”;

(b) in subsection (2)—

(i) at the end of the definition of “authorised contractual scheme” omit “and”, and

(ii) after the definition of “co-ownership scheme” insert “, and

““Reserved Investor Fund (Contractual Scheme)” has the meaning given by section 20 of the Finance (No.2) Act 2024.”.

(4) After section 103DB insert—

““103DC.    Co-ownership schemes which are to be treated as partnerships

(1) The assets of a co-ownership scheme, which is not a tax transparent fund or an offshore collective investment vehicle, are treated for the purposes of tax in respect of chargeable gains as held by the participants in the scheme as partners.

(2) Any dealings by the operator of a such a scheme are treated for those purposes as dealings by the participants in the scheme in partnership.

(3) If a participant is entitled to an allowance under Part 2A of CAA 2001 (structures and buildings allowances) by reference to expenditure in relation to their interest in such a scheme, that allowance is not to be disregarded for the purposes of the application of section 37B (exclusion of certain expenditure: structures and buildings allowances) in relation to a disposal of their interest.

(4) Where—

(a) expenditure has been made in respect of the assets of such a scheme, and

(b) a capital allowance or renewals allowance (within the meaning of section 41(4) or (5)) has been given to a participant in the scheme in relation to that expenditure,

the capital allowance or renewals allowance that was given to the investor is to be excluded from the sums allowable as a deduction in computing the amount of a loss accruing to the participant in relation to a disposal of their interest in the assets of the scheme.

(5) Subsections (6) and (7) apply for the purposes of this Act at any time that a co-ownership scheme, which is not a tax transparent fund or an offshore collective investment vehicle, becomes an authorised contractual scheme or a Reserved Investor Fund (Contractual Scheme) (a “relevant scheme”).

(6) Each participant in the co-ownership scheme is deemed to, immediately before the time that the scheme becomes a relevant scheme, have sold their interest in the assets held by the participants in the scheme as partners at its market value at that time.

(7) Each participant is treated as having acquired their units in the relevant scheme—

(a) at the time the co-ownership scheme becomes a relevant scheme, and

(b) at their market value at that time.

(8) For the purposes of this section, a participant’s interest in the assets held by the participants of a co-ownership scheme as partners is a just and reasonable proportion of the assets having regard to the participant’s units in the scheme.

(9) In this section—

“offshore collective investment vehicle” has the meaning it has in Schedule 5AAA (see paragraph 2 of that Schedule);

“tax transparent fund” has the meaning it has in section 103D.

(10) In subsection (1), the reference to the assets of a co-ownership scheme is a reference to assets which are subject to the scheme.”.

(5) In section 103E(1) (application of Chapter), after paragraph (a) insert—

“(aa) a Reserved Investor Fund (Contractual Scheme),”.

(6) In section 211B(1) (transfers of assets to certain collective investment schemes)—

(a) at the end of paragraph (a)(i) omit “or”,

(b) after that paragraph insert—

“(ia) a Reserved Investor Fund (Contractual Scheme), or”.

(7) In section 212 (annual deemed disposal of holdings of unit trusts etc.)—

(a) in subsection (1), after paragraph (ba) insert—

“(bb) units in a Reserved Investor Fund (Contractual Scheme), or”, and

(b) after subsection (1) insert—

“(1A) For the purposes of computing the gain accruing on a deemed disposal under subsection (1) of units in an authorised contractual scheme which is a co-ownership scheme or of units in a Reserved Investor Fund (Contractual Scheme), subsections (3A) and (9) of section 103D (application of Act to tax transparent funds) do not apply.

(1B) But subsection (1A) does not affect the application of those subsections in the event of any other disposal of units in such a scheme by an insurance company, and in such a case—

(a) section 103D(3A) applies in respect of all allowances under Part 2A of CAA 2001 to which the company has been entitled during the period it has held units in the scheme, and

(b) section 103D(9) applies in respect of all capital allowances and renewal allowances that have been, or may be, made to expenditure incurred during that period.”.

(8) In section 288(8) (interpretation), in the table, at the appropriate place insert—

““Reserved Investor Fund (Contractual Scheme)”

s 103D(2)”.

Property rich collective investment vehicles

53.—(1) Schedule 5AAA to TCGA 1992(2) is amended as follows.

(2) In the italic heading before paragraph 5 for “a CoACS” substitute “certain co-ownership schemes”.

(3) In paragraph 5(1) after “co-ownership scheme” insert “, or a Reserved Investor Fund (Contractual Scheme),”.

(4) In paragraph 12—

(a) in sub-paragraph (3)(a) after “CoACS” insert “or a RIF”,

(b) in sub-paragraph (4)(b) after “CoACS”, in both places it occurs, insert “or RIF”, and

(c) in sub-paragraph (8) after the definition of “CoACS” insert—

““RIF” means a Reserved Investor Fund (Contractual Scheme).”.

(5) In paragraph 21(5)(a) after “CoACS”, in both places it occurs, insert “or RIF”.

(6) In paragraph 33(1)—

(a) after paragraph (a) insert “,

“(aa) a RIF (within the meaning of paragraph 12) that meets the UK property rich condition in regulation 12 of the Co-ownership Contractual Schemes (Tax) Regulations 2025.”, and

(b) in the words after paragraph (d), after “transparent fund,” insert “the RIF,”.

Exemptions for disposals by companies with substantial shareholding

54.—(1) Schedule 7AC to TCGA 1992(3) is amended as follows.

(2) In paragraph 3B (subsidiary exemption: qualifying institutional investors)—

(a) in sub-paragraph (4)(b)—

(i) the words from the first “as” to the end become sub-paragraph (i), and

(ii) after that sub-paragraph insert—

“(ii) as including an exempt Reserved Investor Fund (Contractual Scheme) (and references to ordinary share capital, in the case of such a scheme, as references to units in the scheme).”;

(b) after sub-paragraph (6) insert—

“(6A) Sub-paragraph (6) does not apply in relation to a co-ownership scheme which is treated as a partnership under section 103DC (co-ownership schemes which are to be treated as partnerships).”;

(c) for sub-paragraph (7), substitute—

“(7) In this Schedule—

“exempt Reserved Investor Fund (Contractual Scheme)” means a Reserved Investor Fund (Contractual Scheme) which meets the exempt investor condition in regulation 14 of the Co-ownership Contractual Schemes (Tax) Regulations 2025;

“exempt unauthorised unit trust” has the same meaning as in regulation 3 of the Unauthorised Unit Trusts (Tax) Regulations 2013 (4).”.

(3) In paragraph 30A(1) (meaning of qualifying institutional investor), at the end insert—

“(H) Exempt Reserved Investor Fund (Contractual Scheme)

Exempt Reserved Investor Fund (Contractual Scheme) (within the meaning given by paragraph 3B(7)).”.

(1)

1992 c. 12. Section 99A was added by section 118(3) of the Finance Act 2004 (c. 12) and amended by S.I. 2013/1400. Section 103B was inserted by paragraph 1 of Schedule 1 to the Finance Act 2019 (c. 1). Section 103D was substituted by S.I. 2017/1204 and amended by S.I. 2019/1087. Section 103E was inserted by S.I. 2013/1400. Section 211B was inserted by S.I. 2013/1400 and amended by S.I. 2017/1204. Relevant amendments to section 212 were made by paragraph 1 of Schedule 23 to the Finance Act 1993 (c. 34), section 137 of the Finance Act 2006 (c. 25), paragraph 1 of Schedule 27 to the Finance Act 2007 (c. 11), S.I. 2009/3001, paragraph 249 of Schedule 1 to the Corporation Tax Act 2010 (c. 4), paragraph 85 of Schedule 16 of the Finance Act 2012, S.I. 2013/1400 and paragraph 56(1) of Schedule 2 to the Finance Act 2022 (c. 3). Subsection 288(8) was amended by section 118(4)(b)(i) of the Finance Act 2004, paragraph 26(1) of Schedule 12 to the Finance Act 2006, paragraph 202 of schedule 8 to the Taxation (International and Other Provisions) Act 2010 (c. 8), paragraph 148(3)(b) of Schedule 45 to the Finance Act 2013 (c. 29), S.I. 2013/1400, S.I. 2017/1204 and paragraph 87(3) of Schedule 1 to the Finance Act 2019.

(2)

Schedule 5AAA was added by paragraph 21 of Schedule 1 to the Finance Act 2019 (c. 1); relevant amendments were made by S.I. 2020/315 and 2021/213.

(3)

Schedule 7AC was inserted by paragraph 1 of Schedule 8 to the Finance Act 2002 (c. 23). Paragraphs 3A, 3B and 30A of Schedule 7AC were inserted by section 28 of the Finance (No. 2) Act 2017 (c. 32).

(4)

S.I. 2013/2819.