Discounted securities meaning

Pitt v HMRC [2024] UKUT 21 (TCC) Back in 1999, the taxpayer undertook steps to buy and sell loan notes treated as relevant discounted securities, and asserted an income tax loss approaching £700,000 for 1998/99. HMRC commenced an enquiry and moved to refuse that loss. It then served a follower notice, arguing that the principles and reasoning in the First-tier Tax Tribunal decision in Audley v HMRC [2022] UKFTT 222 (TC), if applied to these arrangements, would eliminate the tax advantage sought. The taxpayer declined to take corrective steps by amending his return to strip out the loss, so HMRC issued a closure notice to the same effect. HMRC also imposed a penalty in relation to the claimed position and the failure to take the specified corrective action as directed...

The types of income chargeable to tax as 'savings and investment income' include: interest, being income within ITTOIA 2005, ss 369–381 purchased life annuities, being income within ITTOIA 2005, ss 422–426 deeply discounted securities (DDS), being income within ITTOIA 2005, ss 427–460 income arising under the accrued income scheme chargeable event gains on life policies for which an individual (or the personal representatives of a deceased individual) is liable to income tax This Practice Note primarily examines how interest, the leading form of savings income, is taxed. It also addresses income falling under the accrued income scheme. Interest can be viewed as consideration for one person’s use (or retention) of money that belongs to another. Consequently, for a payment to qualify as interest there must be an identifiable principal on which the return is computed, and both the principal and the interest must be owed to the same person. The most familiar examples are amounts credited by banks...

The qualifying asset holding company (QAHC) regime The qualifying asset holding company (QAHC) regime is an optional, tax-favoured framework for particular holding entities, described as 'asset holding companies' or 'AHCs', used within collective and institutional investment arrangements to own investment assets. The QAHC rules came into force on 1 April 2022. They formed a key early strand of the broader review of the UK funds regime, first announced by the UK government at Spring Budget 2020. AHCs that satisfy the conditions and elect into the QAHC regime receive modified tax treatment for their qualifying investment business, which is ring-fenced from any other ancillary activities they conduct. They also benefit from adjusted tax rules in relation to certain payments that they make and remit in practice. The QAHC regime is not designed to alter the taxation of profits from trading activities that a QAHC may undertake (these will fall outside the ring-fence), nor will it change the taxation of any non-qualifying investment activities that a QAHC undertakes (also outside the...

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime The Finance Act 2025 (FA 2025), which obtained Royal Assent on 20 March 2025, legislates to scrap the remittance basis of taxation and bring in a residence-based system from 6 April 2025. It also replaces domicile as the primary determinant of liability to inheritance tax. Additional reforms include: Revisions to the rules that decide excluded property status Removal of the protected settlements status for offshore trusts Amendments to overseas workday relief For details on these developments, see: Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. The loan relationships provisions in Part 5 of the Corporation Tax Act 2009 (CTA 2009) contain an anti-avoidance measure concerning so-called deeply discounted securities (DDS). Where triggered, these rules can delay when a debtor company may claim a corporation tax deduction for the discount. Note that the scope of...