814 Taxation of income deemed to arise from transactions in certificates of deposit and assignable deposits

Summary

This is an anti-avoidance measure to ensure that gains on the disposal of certificates of deposit (and other assignable deposits) is within the charge to income tax.

Details

Definitions

(1) “assignable deposit” is a deposit of money, in any currency, which may or may not carry interest on repayment and which may be assigned by the depositor, with or without interest, to some other person.

“certificate of deposit” is a document issued by a bank which relates to money (in any currency) certifying that a deposit has been made with the bank which is repayable to the bearer or to order, with or without interest, and this right to repayment being transferable.

Application

(2) The section applies to any right —

• to receive money which is stated in a certificate of deposit, or
• to receive money being a right arising from an assignable deposit.

The charge to tax

(3) Unless taxed on the recipient as a trading receipt, a charge to tax under Case IV of Schedule D applies to any profit from the disposal of a right to which the section applies where this right was acquired by the person after 3 April, 1974.

(4) Where the right was acquired on or before 3 April, 1974 and disposed of after that date, the gain is divided and only the part referable to the period after that date is charged to tax.

(5) If a loss on the disposal of a right is sustained, this may be set off or carried forward against the interest on the certificate of deposit on which the person is chargeable to tax.

(6) The inclusion by a life assurance company of a gain on the disposal of a certificate of deposit in the notional Case 1 computation made for the purposes of management expenses relief under section 707 will not prevent a charge on that gain under Case IV of Schedule D being imposed under subsections (3) and (4).

Relevant Date: Finance Act 2019