Part IIIncome Tax, Corporation Tax and Capital Gains Tax
Chapter IGeneral
Securities
93Deep discount securities: amendments
Schedule 10 to this Act (which amends Schedule 4 to the Taxes Act 1988) shall have effect.
94Deep gain securities
Schedule 11 to this Act (which contains provisions about securities capable of yielding a deep gain) shall have effect.
95Treasury securities issued at a discount
1
Section 126 of the Taxes Act 1988 (tax not to be charged on certain securities in respect of discount under Case III of Schedule D) shall be amended as mentioned in subsections (2) and (3) below.
2
In subsection (2) (the securities affected) for the words “except Treasury bills” there shall be substituted the words
except—
a
Treasury bills,
b
relevant deep discount securities, and
c
deep gain securities.
3
The following subsection shall be inserted after subsection (2)—
3
For the purposes of subsection (2) above—
a
a relevant deep discount security is a security falling within paragraph 1(1)(dd) of Schedule 4 to this Act, and
b
a deep gain security is a security which is a deep gain security for the purposes of Schedule 11 to the Finance Act 1989.
4
The preceding provisions of this section shall apply—
a
in the case of a deep discount security, where there is a disposal (within the meaning of Schedule 4 to the Taxes Act 1988) on or after 14th March 1989;
b
in the case of a deep gain security, where there is a transfer within the meaning of Schedule 11 to this Act, or a redemption, on or after 14th March 1989.
5
Subsection (7) below applies where—
a
by virtue of paragraph 19(2) of Schedule 4 to the Taxes Act 1988, a security falls to be treated as a deep discount security as there mentioned, and
b
after the time mentioned in paragraph 19(1)(d) of that Schedule there is a disposal (within the meaning of that Schedule) of the security.
6
Subsection (7) below also applies where—
a
by virtue of paragraph 20(2) of Schedule 11 to this Act, a security falls to be treated as a deep gain security as there mentioned, and
b
after the time mentioned in paragraph 20(1)(d) of that Schedule there is a transfer (within the meaning of that Schedule) or a redemption of the security.
7
In a case where this subsection applies, section 126 of the Taxes Act 1988 shall not apply in the case of the disposal, transfer or redemption (as the case may be).
96Securities: miscellaneous
1
In section 452(8) of the Taxes Act 1988 (special reserve funds) for the words from “In paragraph (a) above” to the end there shall be substituted—
In paragraph (a) above “income” includes—
- a
annual profits or gains chargeable to tax by virtue of section 714(2) or 716(3),
- b
amounts treated as income chargeable to tax by virtue of paragraph 4 of Schedule 4, and
- c
amounts treated as income chargeable to tax by virtue of paragraph 5 of Schedule 11 to the Finance Act 1989.
2
In section 687 of the Taxes Act 1988 (payments under discretionary trusts) the following shall be inserted after subsection (3)(g)—
h
the amount of any tax on an amount which is treated as income of the trustees by virtue of paragraph 4 of Schedule 4 and is charged to tax at a rate equal to the sum of the basic rate and the additional rate by virtue of paragraph 17 of that Schedule;
i
the amount of any tax on an amount which is treated as income of the trustees by virtue of paragraph 5 of Schedule 11 to the Finance Act 1989 and is charged to tax at a rate equal to the sum of the basic rate and the additional rate by virtue of paragraph 11 of that Schedule;
3
The following subsections shall be inserted at the end of section 132A of the [1979 c. 14.] Capital Gains Tax Act 1979 (deep discount securities)—
5
Where by virtue of paragraph 18(3) of Schedule 4 to the Taxes Act 1988 trustees are deemed for the purposes of that Schedule to dispose of a security at a particular time—
a
they shall be deemed to dispose of the security at that time for the purposes of this Act, and
b
the disposal deemed by paragraph (a) above shall be deemed to be at the market value of the security.
6
Where by virtue of paragraph 18(4) of Schedule 4 to the Taxes Act 1988 trustees are deemed for the purposes of that Schedule to acquire a security at a particular time—
a
they shall be deemed to acquire the security at that time for the purposes of this Act, and
b
the acquisition deemed by paragraph (a) above shall be deemed to be at the market value of the security.
4
The new paragraphs (b) and (c) inserted by subsection (1) above, and subsection (2) above, shall apply—
a
in the case of a deep discount security, where there is a disposal (within the meaning of Schedule 4 to the Taxes Act 1988) on or after 14th March 1989;
b
in the case of a deep gain security, where there is a transfer within the meaning of Schedule 11 to this Act, or a redemption, on or after 14th March 1989.