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The government has proposed changing the capital gains tax (CGT) rules to ensure that alternative finance arrangements are taxed in the same way as other arrangements.
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Alternative finance, such as, Islamic finance, involves selling, purchasing or renting assets in such a way that no interest is paid or received. The rules for alternative finance intend to give the same tax outcome as for conventional finance. The government is consulting on changes to the rules to ensure this is the case.
The government believes that some arrangement types could have unintended CGT consequences. The government’s solution is to treat a qualifying refinancing arrangement as exempt from CGT. The legislation will set out the conditions that must be met for this treatment to apply. It will also include provisions to prevent abuse of the relief. Similar changes will be made for capital allowances purposes if needed.
The consultation is open until 9 April 2024. If you have comments on the proposals that could contribute to a response from ICAEW, please contact Lindsey Wicks.
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