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51 Relevant Discounted Securities

Volume 403: debated on Monday 14 April 2003

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Resolved,

That—

(1) In paragraph 1 of Schedule 13 to the Finance Act 1996—

  • (a) at the end of sub-paragraph (2)(b) there shall be inserted "(no account being taken of any costs incurred in connection with the transfer or redemption of the security or its acquisition)";
  • (b) in sub-paragraph (3)(a) the words "reduced by the amount of any relevant costs" shall be omitted;
  • (c) sub-paragraph (4) shall be omitted.
  • (2) Paragraph 2 of that Schedule shall be omitted.

    (3) In paragraph 6(3) of that Schedule, for "paragraphs 1(1) and 2(1) above do not apply" there shall be substituted "paragraph 1(1) above does not apply".

    (4) Paragraphs 6(4) to (6), 7, 9A and 11 of that Schedule shall be omitted.

    (5) In paragraph 14 of that Schedule—

  • (a) for the heading there shall be substituted "Strips of government securities";
  • (b) in sub-paragraphs (2) and (3), the words "gilt-edged" shall be omitted;
  • (c) in sub-paragraph (4), the words after paragraph (c) shall be omitted.
  • (6) After that paragraph there shall be inserted—

    "Strips of government securities: losses

    14A (1) A person who sustains a loss in any year of assessment from the discount on a strip shall be entitled to relief from income tax on an amount of his income for that year equal to the amount of the loss.

    (2) The relief is due only if the person makes a claim before the end of twelve months from the 31st January following that year.

    (3) For the purposes of this paragraph a person sustains a loss from the discount on a strip where—

  • (a) he transfers the strip or becomes entitled, as the person holding it, to any payment on its redemption, and
  • (b) the amount paid by him for the strip exceeds the amount payable on the transfer or redemption (no account being taken of any costs incurred in connection with the transfer or redemption of the strip or its acquisition).
  • The loss shall be taken to be equal to the amount of the excess, and to be sustained in the year of assessment in which the transfer or redemption takes place.

    (4) In sub-paragraph (3) above the reference to a transfer in paragraph (a) includes a reference to a deemed transfer under paragraph 14(4) above (and paragraph (b) shall be read accordingly).

    (5) This paragraph does not apply in the case of—

  • (a) any transfer of a strip for the time being held under a settlement the trustees of which are not resident in the United Kingdom, or
  • (b) any redemption of a strip which is so held immediately before its redemption.".
  • (7) In the definition of "strip" in paragraph 15(1) of that Schedule, for "is a strip of a gilt-edged security" there shall be substituted "is a strip of a security, or would be if that section had effect with the substitution in subsection (1B) of "issued by or on behalf of the government of any territory" for "issued under the National Loans Act 1968"".

    (8) In section 710(3) of the Taxes Act 1988, after paragraph (e) there shall be inserted—

    "(f) any relevant discounted security within the meaning of Schedule 13 to the Finance Act 1996 (see paragraphs 3 and 14(1) of that Schedule).".

    (9) Subject to paragraph (10) below—

  • (a) the amendments made by paragraphs (1) and (5)(c) of this Resolution shall apply in relation to costs incurred on or after 27th March 2003;
  • (b) the amendments made by paragraphs (2), (3), (4), (6) and (8) of this Resolution shall apply in relation to any loss sustained from the discount on a relevant discounted security transferred or redeemed on or after that date;
  • (c) the amendments made by paragraphs (5)(a) and (b) and (7) of this Resolution shall apply in relation to any security acquired on or after that date.
  • (10) The amendments mentioned in paragraph (9)(a) and (b) above shall not apply in relation to costs incurred, or losses sustained, on the transfer or redemption of a relevant discounted security if—

  • (a) the person transferring or redeeming the security held it continuously since a time before 27th March 2003, and
  • (b) the security was listed on a recognised stock exchange at any time before that date.
  • (11) No losses may be carried forward under paragraph 6(6) of Schedule 13 to the Finance Act 1996 to any year of assessment after 2002–03.

    And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.