|
| |
|
| payments corresponding to a part of every payment remaining to be made |
| |
under the underlying security. |
| |
(5) | After the balance has been struck for a dividend on any underlying security, a |
| |
payment to be made in respect of that dividend is treated for the purposes of |
| |
conditions A to C as not being a payment remaining to be made under the |
| 5 |
| |
445 | Strips of government securities: acquisitions and disposals |
| |
(1) | A person who receives strips of a security (“the underlying security”) in |
| |
exchange for the underlying security is treated as having acquired each strip |
| |
by the payment of an amount equal to—![equation: cross[char[A],over[char[B],char[C]]]](missing.gif) |
| 10 |
| |
A is the market value of the underlying security at the time of the |
| |
| |
B is the market value of the strip at that time, and |
| |
C is the total of the market values at that time of all the strips received in |
| 15 |
| |
(2) | F or the purposes of this Chapter— |
| |
(a) | a person who holds a strip of a security on 5th April in any tax year is |
| |
treated as having transferred the strip on that day, and |
| |
(b) | an amount equal to its market value on that day is treated as payable |
| 20 |
| |
(3) | For the purposes of this Chapter that person is also treated as having |
| |
immediately re-acquired the strip for the same amount. |
| |
(4) | Subsections (2) and (3) do not apply if there is any other disposal of the strip on |
| |
| 25 |
(5) | Section 439(4) (deduction of incidental expenses incurred before 27th March |
| |
2003) does not apply to transfers and reacquisitions within subsections (2) and |
| |
| |
(6) | For the purposes of this Chapter— |
| |
(a) | the consolidation of a strip of a security with other such strips into a |
| 30 |
single security is a disposal of the strip by the person consolidating it |
| |
(whether or not it would be apart from this subsection), and |
| |
(b) | an amount equal to the market value of the strip at the consolidation is |
| |
treated as payable on the disposal. |
| |
(7) | Section 438 (timing of transfers and acquisitions) does not apply to an exchange |
| 35 |
within subsection (1) or a consolidation within subsection (6). |
| |
(8) | Subsections (1) and (6) apply instead of sections 440(4) (market value on |
| |
general conversions of deeply discounted securities) and 441 (market value |
| |
| |
|
| |
|
| |
|
446 | Strips of government securities: relief for losses |
| |
(1) | Relief from income tax may be claimed under this section for any loss made on |
| |
the disposal of a strip of a security. |
| |
(2) | If such a claim is made, an amount of income for the tax year in which the |
| |
disposal occurs which is equal to that loss is not charged to income tax. |
| 5 |
(3) | For this purpose a person makes a loss on the disposal of a strip if— |
| |
(a) | the person disposes of the strip, and |
| |
(b) | the amount the person paid for the strip, ignoring any incidental |
| |
expenses incurred in connection with the acquisition, exceeds the |
| |
amount payable on the disposal, ignoring any incidental expenses |
| 10 |
incurred in connection with the disposal. |
| |
(4) | The loss is an amount equal to the excess. |
| |
(5) | A claim under this section must be made on or before the first anniversary of |
| |
the normal self-assessment filing date for the tax year in which the disposal |
| |
| 15 |
(6) | The relief may be claimed by the person making the disposal. |
| |
(7) | Relief for a loss on a disposal may not be claimed under this section if section |
| |
454 (listed securities held since 26th March 2003: relief for losses) applies in |
| |
| |
(8) | This section is subject to— |
| 20 |
(a) | section 448 (restriction of losses on strips by reference to original |
| |
| |
(b) | section 449 (strips of government securities: manipulation of |
| |
acquisition, sale or redemption payments), and |
| |
(c) | section 458(2) (strips held by non-UK resident trustees). |
| 25 |
447 | Restriction of profits on strips by reference to original acquisition cost |
| |
(1) | This section applies if— |
| |
(a) | a person makes a profit on the disposal of a strip (apart from this |
| |
| |
(b) | the person’s original acquisition cost for the strip (see subsection (4)) |
| 30 |
exceeds the amount that falls to be brought into account as the amount |
| |
paid by the person to acquire the strip in determining the amount of the |
| |
| |
(2) | If the amount that falls to be brought into account as the amount payable on the |
| |
disposal in determining the amount of the profit exceeds the person’s original |
| 35 |
acquisition cost for the strip, the amount of the profit is restricted to that excess. |
| |
(3) | Otherwise the person is treated as not making a profit on the disposal. |
| |
(4) | For the purposes of this section and section 448, a person’s original acquisition |
| |
cost for a strip is the amount that falls to be taken into account as the amount |
| |
paid by the person to acquire the strip in determining whether the person |
| 40 |
makes a profit or loss on its disposal if 5th April disposals and acquisitions are |
| |
| |
(5) | In subsection (4) “5th April disposals and acquisitions” means— |
| |
(a) | disposals under section 445(2) (other than the disposal in question), and |
| |
|
| |
|
| |
|
(b) | acquisitions under section 445(3). |
| |
448 | Restriction of losses on strips by reference to original acquisition cost |
| |
(1) | This section applies if— |
| |
(a) | a person makes a loss on the disposal of a strip (apart from this section), |
| |
| 5 |
(b) | the person’s original acquisition cost for the strip exceeds the amount |
| |
that falls to be brought into account as the amount payable on the |
| |
disposal of the strip in determining the amount of the loss. |
| |
(2) | If the amount that falls to be brought into account as the amount paid by the |
| |
person to acquire the strip in determining the amount of the loss exceeds the |
| 10 |
person’s original acquisition cost for the strip, the amount of the loss is |
| |
| |
(3) | The amount of the reduction is A - B where— |
| |
A is the person’s original acquisition cost for the strip, and |
| |
B is the amount that falls to be brought into account as the amount |
| 15 |
payable on the disposal of the strip in determining the amount of the |
| |
| |
(4) | If subsection (2) does not apply, the person is treated as not making a loss on |
| |
| |
(5) | In this section any reference to making a loss on the disposal of a strip has the |
| 20 |
meaning given in section 446(3) and (4). |
| |
449 | Strips of government securities: manipulation of acquisition, transfer or |
| |
| |
(1) | This section applies if— |
| |
(a) | as a result of a scheme or arrangement an amount referred to in |
| 25 |
subsection (2)(a), (b) or (c) differs from the market value of a strip in a |
| |
way specified in that subsection, and |
| |
(b) | the obtaining of a tax advantage by any person is the main benefit, or |
| |
one of the main benefits, that might have been expected to accrue from, |
| |
or from any provision of, the scheme or arrangement. |
| 30 |
| |
(a) | the amount paid by a person in respect of the acquisition of the strip is |
| |
or was more than the market value at the time of the acquisition, |
| |
(b) | the amount payable to a person on transferring the strip is less than the |
| |
market value at the time of the transfer, or |
| 35 |
(c) | on redemption of the strip the amount payable to a person, as the |
| |
person holding the strip, is less than the market value on the day before |
| |
| |
(3) | In a case within subsection (2)(a), for the purposes of sections 439(1) and 446(3) |
| |
on transferring the strip the person is treated as if the person had paid to |
| 40 |
acquire the strip an amount equal to the market value of the strip at the time of |
| |
| |
(4) | In a case within subsection (2)(b), for those purposes the person is treated as if |
| |
the amount payable to the person on the transfer were an amount equal to the |
| |
market value of the strip at the time of the transfer. |
| 45 |
|
| |
|
| |
|
(5) | In a case within subsection (2)(c), for those purposes the person is treated as if |
| |
the amount payable to the person on redemption were an amount equal to the |
| |
market value of the strip on the day before redemption. |
| |
(6) | For the purposes of this section, no account is to be taken of any incidental |
| |
expenses incurred in connection with any disposal or acquisition of a strip. |
| 5 |
450 | Market value of strips etc. |
| |
(1) | This section and section 451 (market value of strips etc. quoted in foreign stock |
| |
exchange lists) deal with— |
| |
(a) | determining the market value at any time of a strip for the purposes of |
| |
| 10 |
(b) | determining the market value at any time of a security exchanged for |
| |
strips of that security for the purposes of section 445(1). |
| |
(2) | The market value on any day on which the Stock Exchange is open of any strip |
| |
or security quoted in The Stock Exchange Daily Official List is— |
| |
(a) | the lower of the two figures shown in that List for the strip or security |
| 15 |
| |
(b) | one-quarter of the difference between those two figures. |
| |
(3) | The market value on any day on which the Stock Exchange is closed of any |
| |
such strip or security is the lower of— |
| |
(a) | its market value on the latest previous day on which the Stock |
| 20 |
| |
(b) | its market value on the earliest subsequent day on which the Stock |
| |
| |
(4) | The Treasury may by regulations make provision as to the manner of |
| |
determining, for any of the purposes mentioned in subsection (1), the market |
| 25 |
| |
| |
(b) | any security exchanged for strips of that security. |
| |
(5) | The regulations may amend or modify— |
| |
(a) | subsection (2) or (3), or |
| 30 |
(b) | any provision of section 451. |
| |
| |
(a) | make different provision for different cases, and |
| |
(b) | contain such incidental, supplemental, consequential and transitional |
| |
provision and savings as the Treasury consider appropriate. |
| 35 |
451 | Market value of strips etc. quoted in foreign stock exchange lists |
| |
(1) | This section applies if the strip or security referred to in section 450(1)— |
| |
(a) | is a security, or a strip of a security, issued by or on behalf of the |
| |
government of a territory outside the United Kingdom, and |
| |
(b) | is not quoted in The Stock Exchange Daily Official List, but |
| 40 |
(c) | is quoted in a foreign stock exchange list. |
| |
(2) | The market value on any day on which the foreign stock exchange to which |
| |
that list relates is open is— |
| |
|
| |
|
| |
|
(a) | the lower of the two figures shown in that list for the strip or security |
| |
| |
(b) | one-quarter of the difference between those two figures. |
| |
(3) | The market value on any day on which the foreign stock exchange to which |
| |
that list relates is closed is the lower of— |
| 5 |
(a) | its market value on the latest previous day on which that exchange is |
| |
| |
(b) | its market value on the earliest subsequent day on which that exchange |
| |
| |
(4) | But subsections (2) and (3) have effect subject to any modifications that are |
| 10 |
necessary because of the form of quotation adopted in the exchange in |
| |
| |
(5) | In particular, if a single figure only is published, that figure is to be taken as the |
| |
| |
(6) | If a strip or security is quoted in more than one foreign stock exchange list— |
| 15 |
(a) | any such list published for a foreign stock exchange in the territory of |
| |
the issuing government is to be used for the purposes of this section in |
| |
preference to any other such list, and |
| |
(b) | any such list published for a foreign stock exchange which is regarded |
| |
as the major exchange in that territory for strips or securities is to be |
| 20 |
used for those purposes in preference to any other such list. |
| |
| |
“foreign stock exchange” means a recognised stock exchange in a territory |
| |
outside the United Kingdom on which strips are traded, |
| |
“foreign stock exchange list” means any publication which performs in |
| 25 |
the case of a foreign stock exchange a function equivalent, or broadly |
| |
similar, to that performed by The Stock Exchange Daily Official List in |
| |
| |
“issuing government” means the government which issued the security |
| |
mentioned in subsection (1)(a). |
| 30 |
452 | Power to modify this Chapter for strips |
| |
(1) | The Treasury may by regulations provide that this Chapter is to apply to a strip |
| |
with such modifications as they consider appropriate. |
| |
(2) | This section is without prejudice to the general power to make regulations |
| |
under section 202 of FA 1996 (gilt stripping). |
| 35 |
Special rules for listed securities held since 26th March 2003 |
| |
453 | Application of sections 454 to 456 |
| |
(1) | In the case of a disposal of a deeply discounted security that meets conditions |
| |
A and B, the rules in sections 454 to 456 apply for— |
| |
(a) | providing for relief for losses on the disposal, and |
| 40 |
(b) | calculating the amount of profits chargeable under this Chapter on the |
| |
disposal or the losses for which such relief may be given. |
| |
|
| |
|
| |
|
(2) | Condition A is that the person making the disposal has held the security |
| |
continuously since a time before 27th March 2003. |
| |
(3) | Condition B is that the security was listed on a recognised stock exchange at |
| |
any time before 27th March 2003. |
| |
454 | Listed securities held since 26th March 2003: relief for losses |
| 5 |
(1) | A person may claim relief from income tax under this section for a loss the |
| |
person has made on disposing of deeply discounted securities. |
| |
(2) | For this purpose a person makes such a loss only if A exceeds B, where— |
| |
A is the amount the person paid for the securities, excluding any |
| |
incidental expenses incurred in connection with the acquisition, and |
| 10 |
B is the amount payable on the disposal, excluding any incidental |
| |
expenses incurred in connection with the disposal. |
| |
(3) | For the calculation of the amount of the loss, see section 455(2) to (4) (under |
| |
which those expenses are taken into account). |
| |
(4) | If a claim under this section is made by a person other than a trustee, an |
| 15 |
amount of income for the tax year in which the disposal occurs which is equal |
| |
to that loss is not charged to income tax. |
| |
(5) | If such a claim is made by a trustee, the amount of profits arising in the tax year |
| |
in which the disposal occurs that is charged under this Chapter is reduced by |
| |
| 20 |
(6) | A claim under this section must be made on or before the first anniversary of |
| |
the normal self-assessment filing date for the tax year in which the disposal |
| |
| |
(7) | This section is subject to section 458(2) (securities held by non-UK resident |
| |
| 25 |
455 | Listed securities held since 26th March 2003: calculating the profit or loss on |
| |
| |
(1) | A person’s profit on a disposal, as calculated under section 439, is reduced by |
| |
any incidental expenses incurred by that person in connection with the |
| |
disposal or the acquisition of the security that have not been deducted under |
| 30 |
| |
(2) | A person’s loss on a disposal for the purposes of section 454 (relief for losses) |
| |
is the amount by which the deductible costs exceed the amount payable on the |
| |
| |
(3) | In this section the “deductible costs” means— |
| 35 |
(a) | the amount paid by the person to acquire the security, and |
| |
(b) | the incidental expenses incurred by that person in connection with the |
| |
disposal or the acquisition. |
| |
(4) | Where a person re-acquires a security, any previous acquisition of it is ignored |
| |
in determining the person’s incidental expenses within subsection (1) or |
| 40 |
deductible costs on a subsequent disposal. |
| |
|
| |
|
| |
|
(5) | For the purposes of this section, no incidental expenses are treated as incurred |
| |
in connection with transfers and reacquisitions within section 445(2) and (3) |
| |
(transfer and immediate reacquisition of strips on 5th April). |
| |
456 | Securities issued to connected persons etc. at excessive price: subsequent |
| |
transfers to connected persons |
| 5 |
(1) | No loss is taken to occur for the purposes of section 454 on a transfer of a deeply |
| |
discounted security to a person connected with the transferor if conditions A |
| |
and B and either condition C or conditions D and E are met. |
| |
(2) | Condition A is that the transferor acquired the security on its issue. |
| |
(3) | Condition B is that the amount paid by the transferor to acquire the security |
| 10 |
exceeded the market value of the security at the time of its issue. |
| |
(4) | Condition C is that at that time the transferor was connected with the issuer. |
| |
(5) | Condition D is that at that time the issuer was a close company. |
| |
(6) | Condition E is that at that time the transferor controlled that company with |
| |
other persons to whom securities of the same kind were also issued. |
| 15 |
(7) | Section 414 of ICTA (close companies) has effect for the purposes of this section |
| |
with the omission of subsection (1)(a) (which excludes non-UK resident |
| |
| |
(8) | In this section “control” has the meaning given by section 416 of ICTA. |
| |
| 20 |
| |
(1) | This section applies if profits are taken to arise on a disposal of a deeply |
| |
discounted security by trustees. |
| |
(2) | For the purposes of Chapter 5 of Part 5 (settlements: amounts treated as income |
| |
of settlor), the profits are to be taken to be income arising under the settlement |
| 25 |
| |
(3) | For the purposes of Chapter 1C of Part 15 of ICTA (settlements: liability of |
| |
trustees), the profits are to be taken to be income arising to the trustees. |
| |
(4) | Income tax that is charged on the trustees is to be charged at the rate applicable |
| |
to trusts for the tax year in which the disposal occurs. |
| 30 |
(5) | If the trustees are trustees of a scheme to which section 469 of ICTA applies |
| |
(unauthorised unit trusts), subsections (2) to (4) do not apply to any profits |
| |
treated as income in the scheme’s accounts. |
| |
458 | Non-UK resident trustees |
| |
(1) | Tax is not charged under this Chapter if the disposal is made by the trustees of |
| 35 |
a settlement and they are non-UK resident. |
| |
(2) | The following provisions do not apply if the disposal falls within subsection |
| |
| |
section 446 (strips of government securities: relief for losses), and |
| |
|
| |
|