Income Tax (Trading and Other Income) Act 2005 section 152

Consolidation of gilt strips

Section 152 sets out how trading profits are calculated when a trader reassembles individual gilt strips back into a single gilt-edged security.

• When a trader exchanges gilt strips to reconstitute a single gilt-edged security, each strip is treated as having been redeemed at its market value at the time of the exchange
• The trader is treated as having acquired the reconstituted gilt-edged security for an amount equal to the total market values of all the strips exchanged
• This treatment ensures that any profit or loss arising on consolidation is recognised for tax purposes, even if it does not appear in the accounts of the trade
• The rules apply equally to trades, professions and vocations