Commentary

C2.1171 Property rich collective investment vehicles—rebasing of UK land under the exemption election

Capital gains tax
Capital gains tax | Commentary

C2.1171 Property rich collective investment vehicles—rebasing of UK land under the exemption election

Capital gains tax | Commentary

C2.1171 Property rich collective investment vehicles—rebasing of UK land under the exemption election

A form of rebasing of UK land held within a fund structure can occur in the following cases1:

  1.  

    •     where a right or interest in a company is disposed of by a qualifying fund or qualifying company, or another company owned by a qualifying fund or company, and the assets being rebased have been covered by an exemption election (whether wholly or to an appropriate proportion2) for a period of 12 months prior to disposal, or

  2.  

    •     where a qualifying fund or qualifying company, which has been covered by an exemption election3 for a continuous period of five years, leaves the exemption regime other than in 'disqualifying circumstances' or the fund manager starts to take steps to dispose of all of the assets of the fund so that it can be wound up

These rules effectively ensure that the value of the exemption from tax on gains on UK land is preserved within the relevant fund structure as without rebasing the value of the UK land assets held by the fund would be discounted to reflect the unrealised gains.

For the meaning of qualifying fund or qualifying company, see C2.1165.

Rebasing of UK land held by companies previously owned by a fund

UK land held by a

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