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HMRC internal manual

Savings and Investment Manual

Deduction of tax: qualifying private placements: the regulations: the relevant security

The regulations: the relevant security

For the purposes of the Qualifying Private Placement Regulations, a relevant security is a security or loan relationship, which meets all qualifying conditions on or after 1 January 2016. It does not matter when the instrument was first entered into. As SAIM9320 explains, the regulations apply to both bond-like and loan-like instruments. 

Regulation 4(2) requires the security to have a term not exceeding 50 years. Perpetual debt instruments cannot qualify for the exemption.

Regulation 4(3) requires the relevant security to have a minimum value of £10m, or where a placement consists of several relevant securities, the total value of the placement must be at least £10m. The £10m value means the Sterling value of the relevant security when it was entered into and not at any other time. A relevant security originally entered into, with a value of £10m or more, which is repaid over a term will continue to be a qualifying private placement even if the amount outstanding falls below £10m.

A placement may consist of debt drawn down in several stages under the same agreement or arrangements. In these circumstances, where the initial amount borrowed is £10m or more, further amounts will be considered part of the original qualifying private placement, and covered by the exemption, even if they are individually less than £10m.

A placement may be made where the initial amount borrowed is less than £10m but future drawdowns will bring the value of the placement above £10m in total. In this case, the placement will only meet the minimum value condition where any future amounts, bringing the overall amount lent up to £10m, are non-contingent. That is, they must be non-discretionary under the terms of the original placement agreement. If they can be drawn down at the discretion of the debtor or creditor, they will not be taken into account in considering whether the minimum value test is met.