Consultation outcome

Draft regulations: amendment to new rules on taxation of hybrid capital instruments

From:
HM Revenue & Customs
Published
5 July 2019
Last updated
11 September 2019 — See all updates
This consultation has concluded

Detail of outcome

Responses to this consultation contributed to The Taxation of Hybrid Capital Instruments (Amendment of Section 475C of the Corporation Tax Act 2009) Regulations 2019.

Original consultation

Summary

This technical consultation seeks views on draft regulations that will ensure new rules on the taxation of hybrid capital instruments work as intended for instruments with a takeover or change of control clause.

This consultation ran from
to

Consultation description

Hybrid capital instruments are a form of debt with some features of equity. This can lead to uncertainty as to whether the payments under the hybrid instrument should be taxed as interest (which is typically deductible) or as distributions (which are not).

At schedule 20 of Finance Act 2019, the government introduced new rules on the taxation of hybrid capital instruments across all sectors to ensure that, subject to certain conditions, interest payments on all debt-like instruments are deductible, thus removing tax uncertainty.

The government has published draft legislation to amend the definition of a conversion event used in the new rules.

This is to ensure that the new rules operate as intended for instruments whose terms include a takeover or change of control provision. The amendment allows tax deductions for interest paid on instruments of this type, so long as they meet other conditions in legislation.

Before submitting your response, you can read these publications:

  • (draft) The taxation of hybrid Capital Instruments (Amendment of section 475C of the Corporation Tax Act 2009) Regulations 2019,
  • (draft) explanatory memorandum,
  • (draft) tax information and impact note

Additionally a meeting has been arranged at 10 South Colonnade, Canary Wharf, London, E14 4PU at 10am on Friday 12 July 2019 for anyone who would like to discuss these draft regulations in an open forum.

Space will be limited and there is controlled access to the building. Therefore, for reasons of practicality and security, if you would like to attend, please email Ursula Crosbie or phone her on 03000 589086 by 10 July.

Documents

(Draft) The taxation of hybrid capital instruments (amendment of section 475c of the Corporation Tax Act 2009) regulations 2019

PDF, 129 KB, 2 pages

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(Draft) tax information and impact note

PDF, 238 KB, 3 pages

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(Draft) explanatory memorandum

PDF, 157 KB, 5 pages

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Published 5 July 2019
Last updated 11 September 2019 + show all updates

  1. Added consultation outcome, including a link to final regulations.

  2. First published.

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