Corporation Tax Act 2009 section 623

Index-linked gilt-edged securities with embedded contracts for differences

Section 623 prevents credits and debits arising from an embedded derivative within an index-linked gilt-edged security from being brought into account under the derivative contracts rules, provided certain conditions are met.

• Where accounting standards require a company to split an index-linked gilt into a host loan relationship and an embedded derivative treated as a contract for differences, special rules apply.
• The embedded derivative must arise from a creditor relationship that is an index-linked gilt-edged security, and must be treated as a contract for differences under the embedded derivative provisions.
• The credits and debits on the host loan relationship must be non-trading in nature for the accounting period in question.
• If all conditions are met, the credits and debits that would otherwise arise under the derivative contracts rules are disregarded entirely.