Elect a qualifying company for tax exemption on UK capital gains

Question

Accepted Answer

Before making an election, you should review the legislation in Schedule 5AAA to the Taxation of Chargeable Gains Act 1992.

Who can make the election

You must be the fund manager or authorised to act on behalf of the fund manager to make an exemption election for one or more qualifying companies on behalf of a fund.

The fund must be a collective investment vehicle and one of the following:

a limited partnership collective investment scheme (LP CIS)
a co-ownership authorised constructed scheme (CoACS)
another form contractual arrangement
a unit trust

For unit trusts or other contractual arrangements, the fund must have already made a transparency election to HMRC.

Qualifying conditions

To qualify for election, the company must be UK property rich (broadly, 75% or more of the value of the assets derive from UK land) and either the:

fund must meet the genuine diversity of ownership condition
company must meet the UK tax and the non-close conditions

What you鈥檒l need

You鈥檒l need the:

fund鈥檚 name, tax residence or place of establishment, and registered address
fund鈥檚 UK Unique Taxpayer Reference (UTR), if held
name, address, tax residence or place of establishment, and UTR of each qualifying company covered by the election
name, address and percentage owned by the qualifying company for each entity covered by the election

If there are more than 5 qualifying companies or entities, you will need to upload these details in a document.

For each fund participant with one or more relevant disposals made on or after 6 April 2019, you鈥檒l need to provide their:

name
address
date of birth, if the fund participant is an individual
UK UTR, if held
total relevant disposal value
total capital gain
total capital loss

You only need to include relevant disposals made within the last 2 years. Do not include disposals made before 6 April 2019.

If you are providing disposal details for more than 5 fund participants you鈥檒l need to upload these details in a document.

How to make the election

If you already have a Government Gateway user ID and password use this form to make an election.

If you do not have a Government Gateway user ID and password you should use this form to make an election.

After you have made the election

You鈥檒l receive a confirmation email to let you know that HMRC has received your form.

You鈥檒l need to register for the Secure Data Exchange Service (SDES) and send exemption election reports to HMRC.

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