The exchange of a gilt-edged security for strips of that security is treated for the purposes of this Chapter as a transfer of the security by the person who exchanges the security.

But no one is treated as the transferee.

The exchange of strips of a gilt-edged security for a single gilt-edged security consolidating those strips is treated for the purposes of this Chapter as a transfer of the single security to the person who exchanges those strips.

But no one is treated as the transferor.

An exchange within subsection (1) or (3) is treated as a transfer without accrued interest if it is made at any time after the balance has been struck for a dividend on the security but before the day on which that dividend is payable.

In any other case, such an exchange is treated as a transfer with accrued interest.

If an exchange is treated as a transfer under subsection (1) or (3), any transaction forming part of the exchange is not itself a transfer for the purposes of this Chapter.

In this section “strip” has the meaning given by section 444 of ITTOIA 2005.

For the meaning of “gilt-edged security”, see section 1024.