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HMRC internal manual

Capital Gains Manual

Debt on a security: essential characteristics of: held as an investment

For a debt to be held as an investment it should either

  • carry a commercial rate of interest; or
  • carry a premium on repayment, equivalent to the interest which would have been paid; or
  • be issued at a discount, so that repayment at face value again reflects the interest which would have been paid on the debt.

Where these criteria are not met and the return on the investment is clearly uncommercial, debt on a security status should not be accepted.