SCHEDULES

SCHEDULE 13Discounted securities: income tax provisions

Redemption to include conversion

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(1)

This paragraph applies where a relevant discounted security is extinguished by being converted, in pursuance of rights conferred by the security, into shares in a company or into any other securities (including other relevant discounted securities).

(2)

For the purposes of this Schedule the conversion shall be deemed—

(a)

to constitute the redemption of the security which is extinguished; and

(b)

to involve a payment on redemption of an amount equal to whatever, at the time of the conversion, is the market value of the shares or other securities into which the security in question is converted.

(3)

This paragraph does not apply to an exchange to which paragraph 14 below applies.