Section 845 | Extra return to be treated as interest etc

(1)This section applies if—

(a)securities (“old securities”) of a particular kind are issued by way of an original issue of securities of that kind,

(b)on a later occasion securities (“new securities”) of the same kind are issued,

(c)a sum (“the extra return”) is payable in respect of the new securities by the issuer of them to reflect the fact that interest is accruing on the old securities,

(d)the issue price of the new securities includes an element (whether or not separately identified) representing payment for the extra return, and

(e)the extra return is equal to the amount of interest mentioned in subsection (2).

(2)The amount of interest referred to in subsection (1)(e) is—

(a)the amount of interest payable for the relevant period on so many old securities as there are new, or

(b)if there are more new securities than old, the amount of interest which would be so payable if there were as many old securities as new.

(3)A sum paid or payable by way of the extra return is treated for income tax purposes as if it were paid or payable as interest (so far as it would not be treated in that way apart from this subsection).

(4)No relief for the extra return is to be given to the issuer of the new securities.