SolvedSection 401 | Gilt strips
From legislation.gov.uk
(1)This section applies if a loan relationship is represented by—
(a)a strip of a gilt-edged security, or
(b)any other gilt-edged security.
(2)Subsections (3) and (4) apply if a person exchanges a gilt-edged security for strips of that security.
(3)The security is treated as having been redeemed at the time of the exchange by the payment to that person of its market value.
(4)The person is treated as having acquired each strip for an amount equal to—
Formula
where—
A is the market value of the security at the time of the exchange,
B is the market value of the strip at that time, and
C is the total of the market values at that time of all the strips received in the exchange.
(5)Subsections (6) and (7) apply if strips of a gilt-edged security are consolidated into a single gilt-edged security by being exchanged by any person for that security.
(6)Each strip is treated as having been redeemed at the time of the exchange by the payment to that person of the amount equal to its market value.
(7)The person is treated as having acquired the security for the amount equal to the total of the market values of all the strips given in the exchange.
(8)For the meaning of “market value” and “strip” in relation to securities, see section 402 and section 403 respectively.