This section applies if any part of the additional payments in respect of investment bond arrangements is excluded from being alternative finance return by section 564L(4) because it equates in substance to discount.

That part is treated in accordance with section 381 of ITTOIA 2005 (discounts) unless subsection (3) applies.

If the arrangements are deeply discounted securities for the purposes of Chapter 8 of Part 4 of that Act (profits from deeply discounted securities), that part is treated in accordance with that Chapter.

In this section “additional payments” has the same meaning as in section 564G of this Act (see subsection (1)(d)(iii) of that section).