Office of Public Sector Information
PART 12 continued CHAPTER 2 continued
(1) In the case of a transfer treated as made under section 649 (new securities issued with extra return), the amount of the payment treated as made under section 632(1) (payment on transfer with accrued interest) is not determined under section 632(2) to (5).
(2) Instead, that amount depends on whether under the issue arrangements the person to whom the new securities are issued accounts to the issuer separately—
(a) for the extra return, and
(b) for the rest of the issue price.
(3) If the person does account for them separately, the amount of the payment is the amount of the extra return separately accounted for.
(4) If the person does not account for them separately, the amount of the payment is an amount equal to—
where—
I is the interest payable on the new securities on the first interest payment day after the new issue day (“the payment day”),
A is the number of days in the relevant period, and
B is the number of days in the period beginning with the first day of the relevant period and ending with the payment day.
(5) Subsection (4) is subject to section 659 (transfers with or without accrued interest: interest in default).
(6) In this section “the extra return”, “the new issue day”, “new securities” and “the relevant period” have the same meaning as in section 649.
(1) This section applies if—
(a) the manufactured payments conditions are met (see section 647(2)), and
(b) the nominal value of the securities subject to the seller’s contract is less than that of the securities transferred to the seller.
(2) The amount of the payment treated as made to the seller under section 633 on the transfer of the securities to the seller is reduced.
(3) The reduction is by so much of that amount as is attributable to securities (“the matched securities”) of a nominal value equal to that of the securities subject to the seller’s contract.
(4) If there is more than one transfer of securities to the seller, those transferred to the seller earlier are treated as the matched securities before those transferred later.
(5) In this section “the seller” and “the seller’s contract” have the same meaning as in section 647.
(6) For cases where subsection (1)(b) does not apply, see section 647(3) (under which the seller is treated as an excluded transferee).
(1) The sterling equivalent of the amount of the payment treated as made on a transfer of securities is determined in accordance with this section if interest on the securities is payable in a currency other than sterling (“a foreign currency”).
(2) If the payment is determined under section 632(3), 633(3) or 662(3) (transfers under an arrangement by which interest is accounted for separately), the amount of the payment depends on whether the sterling equivalent of the interest separately accounted for is shown in an agreement for transfer.
(3) If the sterling equivalent is so shown, the amount of the payment is taken to be that sterling equivalent.
(4) If the sterling equivalent is not so shown, the amount is taken to be the sterling equivalent on the settlement day of the interest separately accounted for.
(5) If the amount of the payment treated as made is determined under any other provision (except section 660 (transfers with unrealised interest: interest in default)), the amount is taken to be its sterling equivalent on the settlement day.
(6) For the purposes of this section, the sterling equivalent of an amount or value in a foreign currency is to be calculated by reference to the London closing rate of exchange for the day concerned.
(1) This section applies if unrealised interest is payable in a currency other than sterling (“a foreign currency”).
(2) For the purposes of section 631(1) (amount of accrued income profits where settlement day outside interest period) the amount of the unrealised interest is taken to be its sterling equivalent on the settlement day.
(3) For the purposes of sections 660 (transfers with unrealised interest: interest in default) and 661 (successive transfers with unrealised interest in default), the value on any day of the right to receive unrealised interest is the sterling equivalent on that day of that value in the foreign currency.
(4) For the purposes of those sections unrealised interest received in a foreign currency is taken to be the sterling equivalent on the day of receipt of the amount received.
(5) For the purposes of this section, the sterling equivalent of an amount or value in a foreign currency is to be calculated by reference to the London closing rate of exchange for the day concerned.
(1) Transfers of securities by or to a person as nominee for another person (“A”) are treated for the purposes of this Chapter as transfers by or to A.
(2) Transfers of securities by or to a person (“T”) as trustee for another person (“B”) are treated for the purposes of this Chapter as transfers by or to B if B is absolutely entitled as against T.
(3) For the purposes of subsection (2) where T is the transferor, B is absolutely entitled as against T if immediately before the transfer B has the exclusive right to direct how the securities are to be dealt with.
(4) For the purposes of subsection (2) where T is the transferee, B is absolutely entitled as against T if immediately after the transfer B has that exclusive right.
(5) For the purposes of subsections (3) and (4), a right to direct how securities are to be dealt with is treated as an exclusive right despite being subject to satisfying any outstanding charge, lien or other right of the trustee to resort to the securities for payment of duty, taxes, costs or other outgoings.
(6) Subsection (1) applies to a transfer of securities by or to a person as nominee for two or more persons as it applies to a transfer of securities by or to a person as nominee for one person, taking the references to A as references to the two or more persons.
(7) This section applies to a transfer of securities by or to a person as trustee for two or more persons as it applies to a transfer of securities as trustee for one person, taking—
(a) the references to B as references to the two or more persons, and
(b) the references to B being absolutely entitled as references to the two or more persons being jointly absolutely entitled.
(8) The fact that a person is an infant or otherwise lacks legal capacity is to be disregarded in determining for the purposes of this section whether the person is absolutely entitled as against T.
(1) If the trustees of a settlement are treated as making qualifying accrued income profits, those profits are to be taken to be income arising under the settlement for the purposes of Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor).
(2) Subsection (3) applies if the trustees of a settlement—
(a) are non-UK resident or domiciled outside the United Kingdom throughout a tax year in which an interest period or part of an interest period falls, and
(b) would have been treated as making an amount or an additional amount of qualifying accrued income profits in the interest period if the trustees had been UK resident or domiciled in the United Kingdom during a part of each such tax year.
(3) The amount or additional amount of qualifying accrued income profits that the trustees would have been treated as making is to be taken to be income arising under the settlement for the purposes of Chapter 5 of Part 5 of ITTOIA 2005.
(4) In this section—
(a) “qualifying accrued income profits” means accrued income profits which are treated as made—
(i) under section 628(5), or
(ii) under section 630(2) in respect of a transfer of variable rate securities, and
(b) in any case where there are no trustees of a settlement, references to such trustees are to any persons entitled to securities comprised in the settlement.
(5) In the case of qualifying accrued income profits within subsection (4)(a)(ii)—
(a) the reference in subsection (2)(a) to an interest period is to the period—
(i) beginning with the day after the last day of the only or last interest period of the securities, and
(ii) ending with the settlement day, and
(b) the reference in subsection (2)(b) to making qualifying accrued income profits in the interest period is to be read as making them in the tax year in which settlement day falls.
(1) This section applies if—
(a) a person is liable for income tax on accrued income profits,
(b) the profits are calculated by reference to payments treated as made to the person in an interest period,
(c) the payments are so treated as a result of the person making transfers of foreign securities of a particular kind, and
(d) the proceeds of the transfers are unremittable in the tax year.
(2) If the person makes a claim for relief under this section—
(a) the profits are reduced by the amount of the payments treated as made to the person, or
(b) if that amount exceeds the profits, the profits are reduced to nil.
(3) But see section 670 (withdrawal of relief).
(4) In this section and section 669 “foreign securities” means securities which are situated outside the United Kingdom.
(5) For the purposes of this section and sections 669 and 670, proceeds of transfers of foreign securities are unremittable in relation to a person if the person is prevented from transferring them to the United Kingdom because of—
(a) the laws of the territory where the securities are situated,
(b) executive action of its government, or
(c) the impossibility of obtaining there currency that could be transferred to the United Kingdom.
(6) For the purposes of this section the place where securities are situated is to be determined in accordance with sections 275(1) and (2)(b) and 275C of TCGA 1992.
(7) Any claim under this section must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year for which the profits would be chargeable to tax if no claim were made.
(8) A person’s personal representatives may make any claim under this section which the person might have made.
(1) This section applies if—
(a) a person is liable for income tax on accrued income profits within section 630(2) (making accrued income profits: settlement day outside interest period),
(b) the person is so liable as a result of making transfers of foreign securities of a particular kind, and
(c) the proceeds of the transfers are unremittable in the tax year.
(2) If the person makes a claim for relief under this section the profits are reduced to nil.
(3) But see section 670 (withdrawal of relief).
(4) Any claim under this section must be made on or before the fifth anniversary of the normal self-assessment filing date for the tax year for which the profits would be chargeable to tax if no claim were made.
(5) A person’s personal representatives may make any claim under this section which the person might have made.
(1) This section applies if—
(a) a claim under section 668(2) or 669(2) has been made in relation to profits, and
(b) the proceeds of the transfers cease to be unremittable.
(2) The claimant is treated as making accrued income profits of an amount equal to the reduction under that section.
(3) If the claimant has died, the claimant’s personal representatives are so treated.
(1) In this Chapter “interest” includes dividends and any other return (however described).
(2) But it does not include a return consisting of the difference between the amount payable on a security’s redemption and its issue price.
(1) In this Chapter “interest payment day”, in relation to securities of any kind, means a day on which interest on those securities is payable.
(2) If a particular payment of interest may be made on one of a number of days, the first of them is the interest payment day.
(1) The general rule is that for the purposes of this Chapter—
(a) the first interest period of securities of any kind begins with the day after that on which those securities are first issued and ends with the first interest payment day or, if it is earlier, the expiry of 12 months, and
(b) any other interest period of those securities begins with the day after the last day of their previous interest period and ends with the next interest payment day or, if it is earlier, the expiry of 12 months.
(2) Subsection (1) is subject to subsections (3) and (4).
(3) The last interest period of securities of any kind ends with the last interest payment day for those securities, unless subsection (4) applies.
(4) An interest period of securities of any kind in which either of the events specified in subsection (5) occurs is treated as ending on the day on which it would have ended apart from that event.
(5) The events are—
(a) a conversion of those securities, and
(b) if those securities are gilt-edged securities, the exchange of those securities for strips of those securities.
(6) In this section “strip” has the meaning given by section 444 of ITTOIA 2005.
(7) See also section 667(5) (construction of reference to “interest period” in section 667(2)).
(1) For the purposes of this Chapter the settlement day for a transfer of securities in accordance with the rules of a recognised market is—
(a) the day on which the transferee agrees to settle, or
(b) if the transferee may settle on one of a number of days, the day on which settlement actually occurs.
(2) The settlement day for a transfer of securities which is not in accordance with such rules is determined in accordance with subsection (3), (4) or (6) (and see also section 649(6): settlement day where new securities issued with extra return).
(3) If—
(a) the consideration for the transfer is money alone, and
(b) the transferee agrees to pay the whole of it on or before the first interest payment day after an agreement for the transfer is made,
the settlement day is the day on which the transferee agrees to make the payment or, if payment may be made on one of a number of days, or on a number of different days, the latest of them.
(4) If—
(a) there is no consideration for the transfer, or
(b) the transfer is a transfer because of a provision specified in subsection (5),
the settlement day is the day on which the securities are transferred.
(5) The provisions are—
section 620(1)(b) or (c) (conversion, or redemption of variable rate securities),
section 648(1) or (3) (exchanges relating to strips of gilt-edged securities),
section 650 (trading stock appropriations etc),
section 651 (owner becoming entitled to securities as trustee), and
section 652 (securities ceasing to be held on charitable trusts).
(6) If neither subsection (3) nor (4) applies, the settlement day is such day as an officer of Revenue and Customs decides.
(7) The jurisdiction of the General Commissioners or the Special Commissioners on any appeal includes jurisdiction to affirm or replace such a decision.
(1) For the purposes of this Chapter, a person holds securities—
(a) at a particular time if the person is entitled to them at that time, and
(b) on a particular day if the person is entitled to them throughout that day or becomes and does not cease to be entitled to them on that day.
(2) A person acquires securities when the person becomes entitled to them.
(3) If a Scottish partnership carries on a trade or business—
(a) any partnership dealings are treated as dealings by the partners and not by the partnership as such, and
(b) the partners are treated as being entitled to securities held by the partnership.
(1) If the interest on securities is expressed to be payable by reference to a given value, for the purposes of this Chapter their nominal value is that value.
(2) In any other case, the nominal value of securities for those purposes is their price when they were issued.
(3) See section 677 if the nominal value of the securities is expressed in a currency other than sterling.
(1) If the nominal value of securities is expressed in a currency other than sterling (“a foreign currency”), for the purposes of this Chapter their nominal value on any day is taken to be the sterling equivalent on that day of that value.
(2) For the purposes of this section, the sterling equivalent of a value in a foreign currency is to be calculated by reference to the London closing rate of exchange for the day concerned.
(1) This Chapter confers exemptions relating to interest on securities.
(2) Expressions used in this Chapter and in Chapter 2 have the same meaning as in that Chapter.
(3) Accordingly, for the meanings of the following expressions see the sections indicated—
“interest” see section 671,
“interest payment day” see section 672,
“interest period” see section 673,
“makes accrued income losses” see section 628(6),
“securities” see section 619,
“transfer with unrealised interest” see section 625(1),
“transferee” see section 621,
“transfer” see section 620, and
“unrealised interest” see section 625(2).
(4) Section 666 (certain transfers by or to nominees or trustees treated as made by or to others) applies for the purposes of this Chapter as it applies for the purposes of Chapter 2.
(1) This section applies if—
(a) a person is liable for income tax on interest on securities of any kind which is due at the end of an interest period of the securities,
(b) in that period accrued income losses are made as a result of transfers of those securities, and
(c) the period ends with an interest payment day.
(2) No liability to income tax arises in respect of the interest to the extent that it does not exceed the losses.
(3) If, apart from this subsection, a person would be entitled to the exemption under this section in more than one tax year, the person is so entitled only in the tax year in which the interest period ends.
(4) For cases where the interest period does not end with an interest payment day, see section 637 (accrued income losses treated as payments in next interest period).
(1) This section applies if—
(a) the trustees of a settlement are non-UK resident or domiciled outside the United Kingdom throughout a tax year in which an interest period or part of an interest period of securities falls,
(b) the trustees' income is or includes interest from those securities,
(c) the interest falls due at the end of that interest period, and
(d) had the trustees been UK resident, or domiciled in the United Kingdom, during a part of each such tax year the interest would have been wholly or partly exempt from income tax under section 679.
(2) No liability to income tax arises as a result of Chapter 5 of Part 5 of ITTOIA 2005 (settlements: amounts treated as income of settlor) in respect of so much of the interest as would have been exempt from income tax under section 679.
(3) For cases where the interest period does not end with an interest payment day, see section 637 (accrued income losses treated as payments in next interest period).
(1) This section applies if—
(a) securities are transferred with unrealised interest,
(b) the transferee is not an excluded transferee in relation to the transfer for the purposes of Chapter 2 (see sections 638 to 647),
(c) the transferee receives some or all of the unrealised interest, and
(d) apart from this section, the transferee would be liable to income tax on the unrealised interest.
(2) No liability to income tax arises in respect of the unrealised interest received by the transferee, unless conditions A and B are met.
(3) Condition A is that section 660 (transfers with unrealised interest: interest in default) applies on the transfer.
(4) Condition B is that the unrealised interest received by the transferee exceeds the residual value of the interest.
(5) In this section “the residual value of the interest” means—
(a) the value on the day of the transfer of the right to receive the unrealised interest, less
(b) the total amount of any of that unrealised interest received previously by the transferee.
(6) If conditions A and B are met, no liability to income tax arises in respect of the unrealised interest to the extent that it does not exceed the residual value of the interest.
(7) Section 665 (foreign currency securities: unrealised interest payable in foreign currency) applies for the purposes of this section as it applies for the purposes of sections 660 and 661.
Income Tax Act 2007