Part 4Savings and investment income
Chapter 8Profits from deeply discounted securities
Special rules for strips of government securities
444Meaning of “strip” in Chapter 8
1
In this Chapter “strip”, in relation to any stock or bond (“the underlying security”), means a security which—
a
meets conditions A to C,
b
if it was acquired after 26th March 2003, was issued by or on behalf of the government of any territory, and
c
if it was acquired on or before that date, was issued under the National Loans Act 1968 (c. 13) in a case where the underlying security was itself a gilt-edged security.
2
Condition A is that the security is issued for the purpose of representing the right to or of securing—
a
a payment corresponding to a payment of interest or principal remaining to be made under the underlying security, or
b
two or more payments each corresponding to a payment to be so made.
3
Condition B is that the security is issued in conjunction with the issue of one or more other securities which, together with that security—
a
represent the right to, or
b
secure,
payments corresponding to every payment remaining to be made under the underlying security.
4
Condition C is that the security is not itself a security which—
a
represents the right to, or
b
secures,
payments corresponding to a part of every payment remaining to be made under the underlying security.
5
After the balance has been struck for a dividend on any underlying security, a payment to be made in respect of that dividend is treated for the purposes of conditions A to C as not being a payment remaining to be made under the underlying security.
F16
Nothing in this section affects the meaning of the expression “corporate strip” in this Chapter (see section 452E).