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HMRC internal manual

Capital Gains Manual

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HM Revenue & Customs
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Qualifying corporate bonds: relevant: excluded indexed securities

FA96/SCH13/PARA13A security is an excluded indexed security where the amount which has to be paid to discharge the debt (whether on redemption or otherwise) is calculated by applying a relevant percentage change in the value of chargeable assets to the amount of the original loan.

A CHARGEABLE ASSET, for this purpose, is an asset where a gain on disposal by the person in question would be a chargeable gain, on the assumptions that

  • it was not a disposal in the course of a trade, profession or vocation carried on by that person, and
  • TCGA92/S100 (exemption for authorised unit trusts etc) does not apply.Gains accruing under TCGA92/S116 (10), see CG53820+, are to be disregarded.

A RELEVANT PERCENTAGE change refers to the percentage change in the value of the chargeable assets, or any index of the value of those assets, over (broadly) the life of the loan.

The retail prices index (RPI), and any similar general index

such an index may still amount to a relevant discounted security.

For detailed interpretation of these conditions, see IM1545.