CFM82240 | Old rules: convertibles pre 2005: return on the security

From HM Revenue & Customs · Corporate Finance Manual

Return on a convertible security

This guidance applies to periods of account beginning before 1 January 2005

Any return on the security that came in addition to the shares had to satisfy both of two conditions.

	Condition	Guidance	Old legislation
1	The security was not a relevant discounted security or an excluded indexed security and	CFM82250	S92(1)(d)
2	the terms didn’t require the holder to sell the security to another person for an amount equivalent to a deep gain.	CFM82260	S92(1)(dd)

The main aim of those conditions was to ensure returns that were in the form of a discount came within loan relationships, not chargeable gains.