Taxation of Chargeable Gains Act 1992 section 117

Meaning of "qualifying corporate bond"

Section 117 defines what constitutes a "qualifying corporate bond" (QCB) for capital gains tax purposes and sets out the conditions that a security or other asset must meet to fall within this definition, which is important because gains on QCBs are exempt from capital gains tax.

• For corporation tax purposes, a QCB is simply any asset representing a loan relationship of a company; for other tax purposes, a corporate bond must be a sterling-denominated security representing a normal commercial loan, with no provision for conversion into or redemption in another currency
• The definition of corporate bond extends to deeply discounted securities, certain qualifying shares in building societies (including permanent interest bearing shares), certain debentures issued on or after 16 March 1993, and investment bonds under alternative finance arrangements that meet specified conditions
• A corporate bond generally becomes a "qualifying" corporate bond if it was issued after 13 March 1984, or if it was issued on or before that date but subsequently acquired after that date otherwise than through an excluded disposal (such as a no gain/no loss transfer or a gift relief disposal)
• Excluded indexed securities issued on or after 6 April 1996 are specifically prevented from being corporate bonds, and therefore cannot be QCBs; those issued before that date are only treated as corporate bonds in limited circumstances relating to reorganisations