Taxes Consolidation Act 1997 section 739A

Reorganisation of undertakings for collective investment

Section 739A provides relief from capital gains tax where one undertaking for collective investment transfers assets to another such undertaking in exchange for units, thereby facilitating tax-neutral reorganisations of domestic collective funds.

• Where one collective investment fund transfers assets to another in exchange for units issued by that other fund, no chargeable gain arises on the transfer.
• The term "undertaking for collective investment" carries the same meaning as in section 738(1).
• When the units received in exchange are later disposed of, the acquisition cost of those units is taken to be the value of the transferred assets at their most recent annual deemed disposal under section 738(4)(a)(i), or, if no such deemed disposal has occurred, the original cost of those assets.
• The relief ensures that fund reorganisations can proceed without triggering a tax charge, while preserving the appropriate base cost for any future disposal of the units acquired.