Commentary on Sections Structure of Chapters Overview Section 555: Charge to tax under Chapter 12
2172.This section charges to tax profits and gains arising on a disposal of a future or option to which the Chapter applies. It is based on paragraph 1 of Schedule 5AA to ICTA.
2173.The section refers to “profits and gains”, as in the source legislation, since the profits arising may also be gains for the purposes of TCGA. There are provisions to ensure that a double charge under both this Chapter and TCGA does not arise. See new section 148A of TCGA (futures and options involving guaranteed returns) in paragraph 435 of Schedule 1 to this Act.
2174.The word “disposal” (see section 562 (when disposals of futures or options occur: general)) replaces “transaction to which this Schedule applies” since a gain can only arise on a disposal, although not all transactions are necessarily disposals.
2175.Subsection (1) refers to a disposal of a future or option rather than a disposal of futures or options as in paragraph 2(1) of Schedule 5AA to ICTA. A taxpayer is taxed on a disposal of a future or an option. A similar reference to a disposal of a future or option appears in sections 559 and 560 where the source legislation refers to a disposal of futures or options.
2176.Subsection (2) provides that profits which, but for this Chapter, would be capital profits, may be charged under this Chapter.
2177.Profits and gains from a trade, whether arising in the United Kingdom or abroad, are excluded and dealt with under Part 2 of this Act. See section 366(1) which gives the charge in Part 2 priority. That aside, the charge under this Chapter is on both UK and foreign profits and gains. See Change 101 in Annex 1.