Jurisdiction(s):
United Kingdom

Key definition

Bond definition

What does Bond mean? A bond is a tradable debt security used to raise finance: the issuer borrows from investors and agrees to pay interest (a coupon) and to repay principal on a stated maturity date. Bonds may pay fixed, floating or index‑linked coupons, be zero‑coupon, and redeem at maturity or amortise over time. “Bond” is a descriptive market term rather than a single statutory definition, though bonds sit within the wider regulatory category of transferable securities. Documentation typically comprises a prospectus or offering memorandum and terms and conditions, often constituted by a trust deed with a bond trustee acting for bondholders. Key...

UK tax considerations for corporate bond issuers across issuance, servicing and redemption: loan relationships, connected party rules, interest deductibility, withholding tax, stamp taxes, VAT, FATCA and FTT

Published by a LexisNexis Tax expert

Practice notes

If a UK-resident company opts to issue a Bond to raise debt finance, it should, alongside the many other commercial and legal considerations, assess the tax consequences for it of taking the bond route, from the initial issuance, the continuing servicing of the bond and the redemption (that is, repayment) of the bond at the end of its term. The key areas that will arise, and which are outlined in this note, relate to:

loan relationships
withholding tax
stamp taxes, and
VAT

An Issuer of bonds will also need to take account of certain international developments such as the Foreign Account Tax Compliance Act (FATCA) and the potential introduction of the EU financial transactions tax (FTT) (for which, see: FATCA and FTT below). The taxation of bondholders will also matter for the issuer because:

it will affect the marketability of the bond, and
the issuer will need to deal effectively with the taxation of bondholders in the bond documentation

These matters are explained in Practice Note: Tax issues for bondholders.

Loan relationships

Where the issuer is a UK-resident company, it will (almost invariably) be regarded as having under the applicable provisions as summarised in this note and related guidance materials...

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Web page updated on 22/05/2026

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