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HMRC internal manual

Capital Gains Manual

Conversion of securities: change in status of debt S88 FA 1997

The scope of TCGA92/S132 was broadened in Finance Act 1997. FA97/S88 provides that if the tax status of a debt changes - from a debt which is not a qualifying corporate bond (QCB) into a QCB, or vice versa, either

  • as a result of an alteration in the terms of the debt,


  • as a result of the operation of the terms of the debt

the change is treated as a conversion of securities. The rules apply to any disposal on or after 26 November 1996, and in relation to such disposals the rules also apply to any change taking place prior to that date.

These rules are described in detail at CG55024+.