Old rules: convertibles pre 2005: return on the security
Return on a convertible security
This guidance applies to periods of account beginning before 1 January 2005
Any return on the security that came in addition to the shares had to satisfy both of two conditions.
|1||The security was not a relevant discounted security or an excluded indexed security and||CFM82250||S92(1)(d)|
|2||the terms didn’t require the holder to sell the security to another person for an amount equivalent to a deep gain.||CFM82260||S92(1)(dd)|
The main aim of those conditions was to ensure returns that were in the form of a discount came within loan relationships, not chargeable gains.