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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Qualifying corporate bonds: exemption

TCGA 1992 section 115(1) provides that on the disposal of an asset which is a qualifying corporate bond (QCB) any gain is not a chargeable gain. The definition of what is a QCB is within section 117, see CG53704 - 09.

Similar treatment is afforded to gilt edged securities, see CG54901+, and any option or contract to acquire gilt edged securities or QCBs. For example where an option is in place and the underlying asset is a QCB then any gain on disposal of the option is not a chargeable gain, see section 115(1)(b) & (2).

Section 115 also provides specific directions for dealing with futures that involve gilt edged securities or QCBs. These will apply where participants enter into a contract, the first contract, and that contract may be closed out by a second contact where the obligations of the second contract are reciprocal to the first contract. Where that is the case section 115(3) provides that the transaction is to be treated as a disposal of the asset that is the outstanding obligation in the first contract. See CG56000+ for a more detailed explanation of futures.