Corporation Tax Act 2009 section 401

Gilt strips

Section 401 sets out the tax treatment that applies when a gilt-edged security is either broken down into its individual strips or when strips are reassembled back into a single gilt-edged security.

• When a gilt is stripped, it is treated as redeemed at market value, and each strip is treated as acquired at a proportionate share of that market value
• When strips are consolidated back into a single gilt, each strip is treated as redeemed at its market value
• The reconstituted gilt is treated as acquired for an amount equal to the total market values of all the strips exchanged
• Both stripping and consolidation are deemed disposal and acquisition events for loan relationship purposes