SCHEDULES

SCHEDULE 20Taxation of hybrid capital instruments

PART 2Corporation tax, income tax and capital gains tax

13Commencement for purposes of corporation tax

1

If there is a difference between—

a

the tax-adjusted carrying value of a transitional qualifying instrument which is an asset or liability at the end of an accounting period ending on 31 December 2023, and

b

the tax-adjusted carrying value of that instrument at the beginning of the 2024 period,

a credit or debit (as the case may be) of an amount equal to the difference must be brought into account for the purposes of Part 5 of CTA 2009 for the 2024 period in the same way as a credit or debit which is brought into account in determining the company’s profit or loss for that period in accordance with generally accepted accounting practice.

2

For the purposes of this paragraph “tax-adjusted carrying value” is to be construed in accordance with—

a

section 465B of CTA 2009 (tax-adjusted carrying value in relation to the asset or liability representing a loan relationship), and

b

section 702 of CTA 2009 (tax-adjusted carrying value in relation to a contract).

3

Where in the 2024 period, in accordance with generally accepted accounting practice, the rights and liabilities under the transitional qualifying instrument have been treated as divided between—

a

a loan relationship, and

b

one or more derivative financial instruments or equity instruments,

the reference in this paragraph to the tax-adjusted carrying value of the transitional qualifying instrument means the sum of the tax-adjusted carrying values for each of those component instruments.

4

In sub-paragraph (3)equity instrument” has the meaning it has for accounting purposes.