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FORTHCOMING CHANGE: HMRC consultation on proposed changes to the alternative finance rules as they apply to refinancing transactions involving diminishing shared Ownership arrangements. The consultation is mainly focused on trying to ensure that a person refinancing a property does not incur a capital gains tax charge as a result of using alternative finance arrangements rather than conventional debt financing. The consultation also seeks evidence on the extent to which capital allowances issues arise for those using these alternative financing arrangements to help the government to identify whether changes to the capital allowance rules are also required. For more information, including for any updates relating to the consultation, see Practice Note: Tax—consultation and legislation tracker.

Shari’a-compliant financing arrangements (also known as Islamic financing arrangements) can take a number of forms. The UK has introduced specific provisions known as the alternative finance arrangement rules to deal with the direct tax treatment of certain forms of Shari’a financing. The UK alternative finance arrangement rules are intended to allow Shari’a financing arrangements to be