Part 2

Trading income
Chapter 11

Trade profits: other specific trades

Dealers in securities etc.

Exchanges of gilts for gilt strips
151
1
This section applies for the purpose of calculating the profits of a trade if—
a
the person carrying it on (“the trader”) exchanges a gilt-edged security for strips of the security, and
b
a profit on the sale of the security would be brought into account in calculating the profits of the trade.
2
The security is treated as having been redeemed at the time of the exchange by the payment to the trader of its market value.
3
The trader is treated as having acquired each strip for the proportion of the market value of the security given by the following fraction.
4
The fraction is—
SV/TV
where—
SV is the market value of one strip, and
TV is the total of the market values of all the strips received in exchange for the security.
5
In this section references to market value are to market value at the time of the exchange.
6
This section applies to professions and vocations as it applies to trades.
7
See also—
- section 153 (meaning of “gilt-edged security” and “strip”), and
- section 154 (regulations for determining market value of securities or strips).