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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Shares and securities: securities

Chapter 5, CG53400+, deals with securities under the heading of debts. (In this context, “securities” can be thought of as acknowledgements by a company or similar body of debts owed by it on account of funds loaned to it).

Normally a debt will only be chargeable to Capital Gains Tax if it is “the debt on a security” or if it is no longer held by the original creditor. There are two special categories of security, Qualifying Corporate Bonds (also known as QCBs; see CG53700+) and Gilt-Edged Securities (Gilts; see CG54900+), which are exempt from Capital Gains Tax.

Many securities are covered by an Income Tax regime which treats amounts that would normally be regarded as capital as income. There are special rules to adjust the Capital Gains Tax computation to take account of the amounts treated as income. These are dealt with in the sections on the Accrued Income Scheme (see CG54500+) and deep discount securities (CG54600+).

Most debt (including securities) held by companies is not within the scope of statute relating to chargeable gains. Instead, any profits or losses on redemption or other disposal of the debts - also called loan relationships - are dealt with as income receipts or payments. See CG54000 and (for advice on the Corporation Tax treatment of debts) CTM50060+.