Taxation of Chargeable Gains Act 1992 section 151L

Deposit arrangements

Section 151L defines a type of alternative finance arrangement where a depositor places money with a financial institution and receives profit-based payments that are equivalent to interest.

• A depositor places money with a financial institution, which pools it with deposits from other persons and uses the combined funds to generate a profit.
• The institution periodically makes or credits payments to the depositor from the profits earned, in proportion to the amount that depositor has deposited.
• The payments made or credited must, in substance, equate to the return the depositor would receive on a conventional interest-bearing investment.
• The section is subject to an arm's length exclusion under section 151O, which can disqualify arrangements that are not conducted on arm's length terms.