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Version Superseded: 06/04/2007
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Income and Corporation Taxes Act 1988, Section 587A is up to date with all changes known to be in force on or before 02 September 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
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(1)This section applies where—
(a)securities (old securities) of a particular kind are issued by way of the original issue of securities of that kind,
(b)on a later occasion securities (new securities) of the same kind are issued,
(c)a sum (the extra return) is payable in respect of the new securities, by the person issuing them, to reflect the fact that interest is accruing on the old securities,
(d)the issue price of the new securities includes an element (whether or not separately identified) representing payment for the extra return, and
(e)the extra return is equal to the amount of interest payable for the relevant period on so many old securities as there are new (or, if there are more new securities than old, the amount of interest which would be so payable if there were as many old securities as new),
[F2but this section shall not apply for the purposes of corporation tax, except where the issue of the new securities was before 1st April 1996.]
(2)Anything payable or paid by way of the extra return shall be treated for the purposes of the Tax Acts as payable or paid by way of interest (to the extent that it would not be so treated apart from this subsection).
(3)But as regards any payment by way of the extra return, relief shall not be given under any provision of the Tax Acts to the person by whom the new securities are issued; and “relief” here means relief by way of deduction in computing profits or gains or deduction or set off against income or total profits.
(4)For the purposes of this section securities are of the same kind if they are treated as being of the same kind by the practice of a recognised stock exchange or would be so treated if dealt with on such a stock exchange.
(5)For the purposes of this section the relevant period is the period beginning with the day following the relevant day and ending with the day on which the new securities are issued.
(6)For the purposes of this section the relevant day is—
(a)the last (or only) interest payment day to fall in respect of the old securities before the day on which the new securities are issued, or
(b)the day on which the old securities were issued, in a case where no interest payment day fell in respect of them before the day on which the new securities are issued;
and an interest payment day, in relation to the old securities, is a day on which interest is payable under them.]
Textual Amendments
F1S. 587A inserted by Finance Act 1991 (c. 31, SIF 63:1), s. 54, Sch. 12 para. 1 (with application as referred to in Sch. 12 para. 5 of that Act)
F2Words in s. 587A(1) inserted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 33 (with Sch. 15)
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