Part IV Shares, securities, options etc.
Chapter 4Alternative finance arrangements
F1Special rules for investment bond arrangements
151TInvestment bond arrangements are qualifying corporate bonds
(1)
For the purposes of section 117, investment bond arrangements are a corporate bond, issued on the date on which the arrangements are entered into, if each of conditions A to D is met.
(2)
Condition A is that the capital is expressed in sterling.
(3)
Condition B is that the arrangements do not include provision for the redemption payment to be in a currency other than sterling.
(4)
Condition C is that entitlement to the redemption payment is not capable of conversion (directly or indirectly) into an entitlement to the issue of securities apart from other arrangements to which section 151N applies.
(5)
Condition D is that the additional payments are not determined wholly or partly by reference to the value of the bond assets.
(6)
Section 117(2) applies for the purposes of this section as it applies for the purposes of section 117(1).
F2(7)
Expressions used in this section have the same meaning as in section 151N.
F3151UTreatment of bond-holder and bond-issuer
(1)
This section applies for the purposes of this Act and any other enactment about capital gains tax and irrespective of the position for other purposes.
(2)
The bond-holder under investment bond arrangements is not treated as having a legal or beneficial interest in the bond assets.
(3)
The bond-issuer under such arrangements is not treated as a trustee of the bond assets.
(4)
Gains accruing to the bond-issuer in connection with the bond assets are gains of the bond-issuer and not of the bond-holder (and do not arise to the bond-issuer in a fiduciary or representative capacity).
(5)
Payments made by the bond-issuer by way of redemption payment or additional payment are not made in a fiduciary or representative capacity.
(6)
The bond-holder is not entitled to relief for capital expenditure in connection with the bond assets.
(7)
Expressions used in this section have the same meaning as in section 151N.
F4151VTreatment as securities
(1)
Investment bond arrangements are securities for the purposes of this Act and any other enactment about capital gains tax.
(2)
For those purposes—
(a)
a reference in an enactment to redemption is to be taken as a reference to making the redemption payment, and
(b)
a reference in an enactment to interest is to be taken as a reference to alternative finance return.
(3)
In subsection (2) “the redemption payment” has the same meaning as in section 151N (see subsection (1)(d)(ii) of that section).
F5151WInvestment bond arrangements not unit trust scheme or offshore fund
Investment bond arrangements are not—
(a)
a unit trust scheme for the purposes of this Act, or
(b)
an offshore fund for the purposes of section 354 of TIOPA 2010 so far as relating to capital gains tax.