Income Tax (Trading and Other Income) Act 2005 section 81

Deeply discounted securities: restriction of profits and losses on strips

Section 81 provides a transitional rule that exempts strips of government securities acquired before 15 January 2004 from the profit and loss restriction rules in sections 447 and 448.

• Sections 447 and 448 restrict the amount of profit or loss recognised on strips by reference to the original acquisition cost of the underlying gilt.
• These restriction rules do not apply to any strip that was acquired before 15 January 2004.
• When determining the acquisition date, deemed acquisitions arising under the old rules in Schedule 13 to FA 1996 or under section 445(3) of this Act are ignored.
• Only the date of actual acquisition matters for determining whether a strip falls within the exemption.